Senate Report 104-326 - NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT OF 1996

[Senate Report 104-326]
[From the U.S. Government Publishing Office]

Calendar No. 505
104th Congress Report
SENATE

2d Session 104-326
_______________________________________________________________________

NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT OF 1996

_______

July 19, 1996.--Ordered to be printed

_______________________________________________________________________

Mrs. Kassebaum, from the Committee on Labor and Human Resources,
submitted the following

R E P O R T

together with

ADDITIONAL VIEWS

[To accompany S. 969]

The Committee on Labor and Human Resources, to which was
referred the bill (S. 969) to require that health plans provide
coverage for a minimum hospital stay for a mother and child
following the birth of the child, and for other purposes,
having considered the same, reports favorably thereon with an
amendment in the nature of a substitute and recommends that the
bill as amended do pass.

CONTENTS

Page
I. Summary of the legislation.......................................1
II. Background and need for legislation..............................2
III. Legislative history and committee action.........................5
IV. Committee views..................................................6
V. Cost estimate...................................................11
VI. Regulatory impact statement.....................................17
VII. Section-by-section analysis.....................................17
VIII.Additional views................................................20

i. summary of the legislation

Senate bill 969 requires health plans and insurance
carriers to provide coverage for postpartum hospital stays of
48 hours for uncomplicated vaginal deliveries and 96 hours for
caesarean sections. Coverage can be provided for shorter
hospital stays at the discretion of the attending provider, in
consultation with the mother. In the case of an early
discharge, health plans must offer patients follow-up care.
This legislative structure is based on current medical practice
guidelines devised by the American College of Obstetricians and
Gynecologists (ACOG) and the American Academy of Pediatrics
(AAP), which recommend that when no complications are present,
the postpartum hospital stay ranges from 48 hours for vaginal
delivery to 96 hours for caesarean birth, excluding the day of
delivery.

ii. background and need for legislation

A. Overview

Senate bill 969 requires health plans and insurance
carriers to provide coverage for postpartum hospital stays of
at least 48 hours for uncomplicated vaginal deliveries and 96
hours for caesarean sections. Coverage can be provided for
shorter hospital stays at the discretion of the attending
provider in consultation with the mother. In the case of an
early discharge, health plans must offer follow-up care. This
structure is based on current medical practice guidelines
devised jointly by the American College of Obstetricians and
Gynecologists (ACOG) and the American Academy of Pediatrics
(AAP), which recommend that when no complications are present,
the postpartum hospital stay ranges from 48 hours for vaginal
delivery to 96 hours for caesarean birth, excluding the day of
delivery.
The legislation was introduced in response to a growing
trend among insurers and health plans to limit coverage to
postpartum care. With health costs rising rapidly, many plans
now cover stays of only 24 hours, including the day of
delivery. In some cases, insurers limit postpartum coverage to
as little as 12 hours, or even 8 hours
While efforts to limit postpartum coverage have received
national attention only recently, unwarranted early discharge
has been a source of concern for women and their doctors for
some time. Clinical data has shown that, in many cases, early
discharge increases the health risks for mothers and newborns,
including health risks from preventable medical conditions. For
example, infants released from the hospital in 24 hours or less
have experienced an increase in conditions such as severe
jaundice which, left untreated, can result in brain damage or
death.
In addition, physicians have been under intense pressure
from payers to limit stays to 24 hours or less, even when their
medical judgment suggests the need for a longer stay.
In the past year, 26 States followed New Jersey and
Maryland in enacting legislation or adopted regulations to
address postpartum coverage for mothers and their newborns.
Despite these State efforts, the committee believes that
federal legislation is necessary to provide protection for
adequate coverage for postpartum care. There are many women who
are not affected by State legislation because they receive
health benefits through employer-sponsored self-insured health
plans shielded from State insurance laws by the preemption
provisions of the Employee Retirement Income Security Act
(ERISA). In the State of Kansas, for example, only 40 percent
of companies providing insurance offer insured plans that are
subject to State regulation. In addition, as implementation of
the New Jersey law has demonstrated, women who live in one
State and work in another, or whose employers are based outside
of a State that has passed a maternity stay law may not be
protected by State legislation.

B. Postpartum length of stay in the United States and medical
guidelines

The actual length of hospital stay following the delivery
of a child in the United States has decreased over the last two
decades. Prior to the 1970s, postpartum hospital stays ranged
from 4 to 5 days for a routine vaginal delivery and 1 to 2
weeks for a cesarean delivery. During the 1970s, there was a
move toward earlier discharge, much of which has been
attributed to consumer demand to decrease medical interventions
surrounding childbirth and provide a more family-centered birth
experience. The Centers for Disease Control report that between
1970 and 1992 the median length of stay for women who give
birth vaginally decreased from 3.9 to 2.1 days, and for those
who had a cesarean delivery from 7.8 to 4 days.
This data includes complicated deliveries, meaning that the
median length of stay for uncomplicated vaginal or cesarean
deliveries was probably considerably shorter. This trend is in
sharp contrast with the length of postpartum stays in many
European nations and Japan, where the length of stay ranges
anywhere from 3 to 7 days after an uncomplicated vaginal
delivery.
During the initial trend of decreased hospital stay after
delivery, a consensus formed among obstetric care providers
about the appropriate length of stay. This consensus was
formalized into guidelines in 1983, and ACOG and AAP jointly
published the first edition of Guidelines for Perinatal Care.
The exact wording of the guidelines has evolved over the years,
but the recommendation of a minimum 48-hour postpartum stay has
been consistent.
The first edition of the Guidelines stated, ``A patient who
has had an uncomplicated delivery is usually discharged 48 to
72 hours after deliver * * * the patient should not be
discharged until the physician is reasonably certain there are
no major postpartum complications.'' Postpartum stays for
cesarean delivery were not addressed in these first guidelines.
The second edition of the Guidelines, published 5 years
later in 1988, stated, ``When no complications are present (the
postpartum stay) ranges from 48 hours for vaginal delivery to
96 hours for cesarean birth, excluding the day of delivery.''
The guidelines also were revised to state that ``special
criteria once designed to accommodate early discharge now apply
to the average length of stay for most patients.'' Therefore,
it was the view of ACOG and AAP that stays of 48 hours
constituted early discharge.
The current edition of the Guidelines was published in
1992. In addition to recommending stays ranging from 48 hours
for uncomplicated vaginal deliveries to 96 hours for cesarean
deliveries, the most recent guidelines further specify that
early discharge is acceptable as long as certain criteria are
met. These criteria include determination that the course of
pregnancy and delivery was uncomplicated, the collection of all
pertinent laboratory data for both the mother and infant,
demonstration of maternal readiness to assume independent
responsibility for her newborn, and identification of a
physician-directed source of continuing medical care for both
mother and baby, which should be arranged for within 48 hours
of discharge.

C. Scientific data and clinical experience

Available data with regard to the results of early
discharge is inconclusive. A recent study by Dr. Judith Frank
of readmission rates at New Hampshire hospitals found that
within an infant's first 2 weeks of life, there is a 50 percent
increased risk of readmission and a 70 percent increased risk
of emergency room visits if the infant is discharged at less
than 2 days of age. Other studies have indicated that early
release of infants may result in jaundice, feeding problems,
respiratory difficulties, metabolic disorders, and infections
in the cord, ears, and eyes.
However, studies generally provide conflicting evidence on
the safety of early discharge, and many are not
methodologically sound. A critical review of the existing
literature conducted by Bravemen et al. and recently published
in Pediatrics, found that studies have not yet conclusively
demonstrated the safety of early discharge.
There is substantial clinical experience--reflected in the
guidelines of AAP and ACOG--to guide obstetrical providers.
According to testimony supplied to the committee, the care
provided in the first few days after delivery is crucial to the
health and well-being of both mother and infant, as significant
maternal physiologic changes and newborn adaption occur during
the first few days of life. Moreover, not all serious maternal
or newborn complications are evident within the first few hours
following birth.
In addition, there is increasing anecdotal evidence of
serious problems in newborns following early discharge. These
problems, such as decreased completion of newborn screening and
undetected jaundice, have resulted in more serious medical
conditions and led to increasing hospital readmission. While
these conditions have been more prevalent among infants of
women who are young, uneducated, and poor, they are by no means
confined to those populations. The committee heard from three
witnesses from varying backgrounds whose newborn infants had
experienced a range of health problems--in one case, resulting
in the death of a child--following early discharges.
While early discharges can create health problems for
newborns, providers who testified before the committee also
explained that it takes time for mothers, especially first-time
mothers, to recover from the pain and exhaustion of labor.
Moreover, opportunities for educating new mothers in the care
of their newborns, including learning to feed and identify
health problems, are lost when inappropriate early discharge
occurs. For example, the initiation of breast-feeding and
lactation is a very important process that occurs over the
first few days following birth. Dehydration in infants can
occur if mothers experience difficulty in breast-feeding. Such
difficulty is not uncommon among new mothers, regardless of
whether a woman feels adequately prepared to care for her
infant. In fact, many of the anecdotal reports of infant
dehydration associated with early discharge have occurred in
infants of middle-class, well-educated mothers who were
experiencing difficulty breast-feeding.
Some have proposed that home care services can adequately
provide education regarding maternal recovery and newborn care.
However, such instruction may not always be an effective
substitute for the education and care provided in the hospital
and may preclude the opportunity for expert observation of both
the mother and infant. Moreover, the availability, structure,
and content of home care services vary widely across the
country.

iii. legislative history and committee action

The Newborns' and Mothers' Health Protection Act of 1996,
S. 969, was first introduced on June 27, 1995, by Senators
Kassebaum, Bradley, and Rockefeller. The bill seeks to assure
that mothers and their newborn children will not be forced to
leave the hospital in the first few critical days following
birth because of arbitrary insurance company or health plan
limits on the number of hours or days patients may remain in
the hospital. The bill allows new mothers and their doctors,
rather than insurance companies and other third-party payers,
to make decisions about the appropriate length of stay.
The Senate Committee on Labor and Human Resources held
hearings on S. 969 on September 12, 1995. The bill was
reintroduced on March 28, 1996, by Senators Bradley, Kassebaum,
Frist, and DeWine et al., and currently has 42 cosponsors (27
Democrats and 15 Republicans). Representative Solomon (R-N.Y.)
and Representative Miller (D-CA.) introduced a companion
measure in the House of Representatives.
In executive session on April 17, 1996, the full committee
considered an amendment in the nature of a substitute offered
by Chairman Kassebaum and voted to report that measure
favorably by a roll call vote of 14 to 2.
YEAS NAYS
Kassebaum Gregg
Jeffords Faircloth
Coats
Frist
DeWine
Ashcroft
Gorton
Kennedy
Pell
Dodd
Simon
Harkin
Mikulski
Wellstone

Before adopting the amendment in the nature of a
substitute, three amendments directing the Secretary of HHS to
conduct studies regarding maternal and child health, early
discharge, and the impact of the legislation were agreed to by
voice vote. Those studies are contained in section 11 of the
legislation.
After a division, a separate amendment offered by Senate
Jeffords to sunset the bill in 5 years was defeated on a tie
roll call vote of 8 to 8.
YEAS NAYS
Jeffords Kassebaum
Coats Kennedy
Gregg Pell
Frist Dodd
DeWine Simon
Ashcroft Harkin
Gorton Mikulski
Faircloth Wellstone

iv. committee views

A. General overview of S. 969

According to numerous witnesses who appeared before the
committee, it is becoming increasingly common for health plans
and insurance carriers to limit the length of hospital stays
following the delivery of a child--in some cases to 24 hours or
less. The Centers for Disease Control report that between 1970
and 1992 the median length of stay for women who give birth
vaginally decreased from 3.9 to 2.1 days, and for those who had
a cesarean delivery from 7.8 to 4 days. Because this data
includes complicated deliveries, the median length of stay for
uncomplicated vaginal or cesarean deliveries was probably
considerably shorter. In contrast, joint guidelines issued by
the American College of Obstetricians and Gynecologists (ACOG)
and the American Academy of Pediatrics (AAP) indicate that the
length of hospital stay following uncomplicated births should
range from 48 hours for vaginal delivery to 96 hours for
cesarean delivery, exclusive of the day of delivery.
Modeled after the ACOG and AAP guidelines, S. 969 is
intended to ensure that mothers and newborns receive adequate
care in the critical first few days following birth. The
legislation requires health plans and insurance carriers to
allow new mothers and their infants to remain in the hospital
for 48 hours after a normal vaginal birth, and 96 hours after a
caesarean delivery. Mothers and doctors may agree that a
shorter hospital stay is appropriate if a follow-up visit is
provided. One of the sites offered for follow-up care must be
the home.
The committee is concerned that the recent trend toward
shorter hospital stays following delivery appears to be driven
primarily by financial motivations of health plans and
insurers, rather than the clinical judgment of health
professionals. Therefore, despite some hesitation about the
precedential nature of this legislation, the committee believes
this limited legislation is a necessary and appropriate step to
help protect the health of mothers and their newborn children.
Particularly in the absence of conclusive data about the impact
of reduced hospital stays on the health of mothers and
newborns, the committee believes that decisions regarding early
discharge should be made on a case-by-case basis and should be
a mutual decision between the patient and the health care
provider.
It has been argued that S. 969 amounts to legislating
medical practice. However, nothing in this legislation
interferes with a doctor's ability to make a medical decision
in the best interest of his or her patient. To the contrary, S.
969 would transfer decision-making authority from third-party
prayers to providers and would promote mutual decision making
on a case-by-case basis by patients and their providers.
Furthermore, S. 969 would not force mothers to stay in the
hospital against their will or to give birth in a hospital. The
legislation simply guarantees that insurance will cover the
costs of allowing patients and their doctors to determine the
appropriate length of stay within a period of 48 hours in the
case of a vaginal delivery and 96 hours in the case of a
cesarean birth.
The medical community is virtually unanimous in its support
of this legislation. For example, Dr. Palma Formica testified
before the committee on behalf of the AMA that although ``[t]he
AMA has long opposed congressional intervention into a
physician's clinical decision making,'' in the postpartum
context, ``we believe that S. 969 is necessary to stem the tide
of insurers who are replacing the physician's judgment of what
is best for the patient with what is the cheapest way to pay
for health care.'' Dr. Formica went on to state that ``S. 969
would ensure that the decision of when to discharge a mother
and newborn is made by the physician and not dictated by
financial considerations of the managed care company.'' Dr.
Michael Menutti, representing ACOG, added that ``insurers are
now pressuring doctors to make decisions based on economics. S.
969 would protect doctors from the continual pressure of
insurers for early discharge. In the absence of responsible
action by insurers to provide adequate postpartum care
coverage, Federal intervention is entirely appropriate.''
ACOG has stated that selective, early discharge is safe and
desirable for some mothers and babies. However, a decision for
early discharge should be individualized and should be a mutual
decision between the patient and her obstetric provider--taking
into account medical condition, medical risk factors, support
systems for the family, and the readiness of the mother to care
for herself and her newborn. The trend among insurers of
limiting coverage for hospital stays of only 24 hours or less
is preventing this sound medical decision-making process from
occurring. According to ACOG testimony before the committee:

What we now have is a situation where physicians are
pressured to make a decision about early discharge not
based on the best medical interests of their patients
but, rather, based on the dictates of their patients'
insurance policies. This pressure from insurers for
early discharge appears to be driven primarily by
financial motivations. It is a source of great
frustration to ACOG that, after physicians have been
encouraged by policy makers for years to develop
practice guidelines to encourage uniform, quality
patient care, we now see such guidelines completely
ignored by insurers who believe they know best.

Senate bill 969 seeks to remedy this situation by requiring
insurers to provide adequate postpartum coverage for mothers
and their newborns as defined by current medical guidelines and
as recommended by individual providers.

B. Overview of substantive changes to S. 969 contained in legislation
adopted by the committee

The chairman's amendment in the nature of a substitute
adopted by the committee contained several significant changes
from the legislation that was originally introduced.
1. Coverage for minimum hospital stay following birth
The chairman's substitute modified the legislation's
coverage requirements to make clear that there is a time period
of up to 48 hours in the case of vaginal deliveries and 96
hours in the case of cesarean births where ultimate deference
is accorded the decisions of providers and patients regarding
the appropriate length of stay. As such, the legislation now
requires health plans and insurance carriers that provider
maternity benefits, including benefits for childbirth, to
provide coverage to mothers and their newborns for at least 48
hours of inpatient stay following a normal vaginal delivery and
at least 96 hours following a cesarean section without
requiring the attending provider to obtain authorization from
the health plan for such stays. Health plans and carriers are
not required to provide coverage for this period if two
conditions are met. First, the attending provider, in
consultation with the mother, decides to discharge the mother
earlier and, second, the plan provides coverage for
postdelivery follow-up care.
2. Postdelivery follow-up care
The chairman's substitute also made changes to the bill's
requirements for follow-up care. The modifications are designed
to provide more flexibility to health plans and insurers, to
assure that follow-up care is appropriate to monitor the health
of the newborn and mother, and to provide plans more certainty
about the required scope of follow-up care without imposing
overly prescriptive requirements. The legislation now provides
that where a mother and newborn are discharged from the
hospital prior to 48 hours following a normal vaginal delivery
or 96 hours following a cesarean section, health plans are
required to provide postdelivery follow-up care not more than
72 hours following the discharge. Such care is to be provided
by a registered nurse, physician, nurse practitioner, nurse
midwife, or physician's assistant experienced in maternal and
child health. Care may be provided at home, hospital, doctor's
office, birthing center, intermediate care facility, federally
qualified health center, State health department maternity
clinic, or other setting determined appropriate by the
Secretary of Labor in consultation with the Secretary of Health
and Human Services (HHS), but mothers must be given the option
of receiving care in the home.
3. Plan prohibitions
The chairman's substitute includes a new consumer
protection section designed to prohibit health plans and
insurers from: (1) dropping mothers and newborns from health
insurance coverage because they comply with the act; (2)
providing monetary payments or rebates to mothers to encourage
them to request less than 48/96 hours of stay; (3) penalizing
doctors because they comply with the act; or (4) providing
incentives to doctors to induce them to provide treatment in a
manner inconsistent with the act.
4. Applicability
This section was added in the chairman's substitute to
clarify that States have primary responsibility for enforcing
the requirements of this act with respect to insurers and
health maintenance organizations as they do under current law,
that the Secretary of Labor has sole responsibility for
ensuring that the requirements of the act are met by employer-
sponsored ERISA plans, and that nothing in this act should be
construed to affect or modify the preemption provisions of
ERISA.
5. Enforcement
As introduced, S. 969 did not contain any enforcement
provisions. The chairman's substitute specifies how the
requirements of the legislation are to be enforced. States are
to enforce the requirements of the act with respect to insurers
and HMOs, and States may apply whatever penalties for
noncompliance they deem appropriate. Employer-sponsored plans
may be subject to civil enforcement penalties contained in
sections 502, 504, 506, and 510 of ERISA. If a State fails to
``substantially'' enforce the requirements of the act, the
Secretary of Labor, in consultation with the Secretary of HHS,
will enforce the requirements with respect to insurers and HMOs
using civil penalties provided under ERISA. This construct is
necessary to ensure enforcement but to avoid imposing unfunded
mandates on the States.
6. Definitions
This section of the chairman's substitute defines the terms
``Attending Provider,'' ``Beneficiary,'' ``Employee Health
Benefit Plan,'' ``Group Purchaser,'' ``Health Plan,'' ``Health
Plan Issuer,'' ``Participant,'' and ``Secretary.'' Of
particular note is the expansion of the term ``Attending
Provider'' to include ``obstetrician-gynecologists,
pediatricians, family physicians, nurse practitioners, nurse
midwives, or other physicians primarily responsible for the
care of a mother and her newborn child'' (the original bill
only applied to ``physicians'').
7. Preemption
The chairman's substitute clarifies that the act does not
preempt those State laws and regulations that: (1) provide
greater protection to patients and policyholders; (2) require
health plans to provide coverage for at least 48/96 hours; (3)
require health plans to provide coverage in accordance with
guidelines established by the American College of Obstetricians
and Gynecologists, the American Academy of Pediatrics, or other
established professional medical associations; or (4) leave
decisions about length of stay entirely to the doctor in
consultation with the mother. With regard to follow-up care,
the act does not preempt State laws providing greater
protection to patients and policyholders or providing an option
of timely follow-up care in the home.
8. Studies
Separate amendments by Senators Jeffords, DeWine, and
Kennedy containing studies and reports on childbirth and the
effect of reduced hospital stays were adopted by voice vote
during the committee's executive session. These amendments were
then combined into a single section of the bill. In this
section, the Secretary of Health and Human Services is directed
to establish an advisory panel to review data on health care
services provided to mothers and newborns. The Secretary is
also to study several issues related to quality of care and
length of maternity stay, and to report to Congress within 5
years on a series of issues related to private sector
improvements in prenatal and postnatal care. An interim report
is required in 18 months.
This section would set up an advisory panel designed to
bring together public and private organizations that have been
working independently to determine appropriate methods for
measuring the quality, safety, and effectiveness of the health
care services provided to mothers and newborns following
childbirth.
It became evident during the committee's deliberation that
there was inadequate data available to suggest an appropriate
length of stay and treatment protocol for mother and newborn
after delivery. Moreover, the length of stay in the hospital
was only one of the factors contributing to the health of
mothers and newborns.
There is some data regarding postdelivery health outcomes
currently in both the public and the private sectors. The
Secretary of Health and Human Services shall, in consultation
with the advisory panel, review the current data and conduct
additional studies as necessary to explore the factors which
affect the health of mothers and newborns.
Health consequences can be linked to specific maternal
factors as well as newborn factors. Some maternal factors
include the maternal age, number of pregnancies, and health
knowledge. Some newborn factors include birth weight,
infection, or delivery complications. Health care provider
interventions at any point along the continuum can influence
ultimate outcomes. The Secretary is directed to study these
factors and the influence of these factors on length of stay.
The committee also recognizes that there is a diversity of
measures of positive and negative consequences for mothers and
newborns. This study should give focus to the particular
benefits to be promoted or avoided. For instance, a negative
outcome for a newborn could include infant death, jaundice, or
a hospital readmission.
Postnatal care has changed significantly over the last
several decades as have the settings in which treatment is
delivered. An analysis of the advantages and disadvantages of
different approaches during the postnatal period is another
part of the studies. The introduction of financial incentives
by health plans could also have an impact upon the health of
mothers and newborns. Incentives have been provided directly to
the mothers and/or to providers encouraging shorter hospital
stays.
The committee intends for the advisory panel to consist of
at least 15 members but no more than 21. The members of the
panel should be chosen from public and private organizations
and should have knowledge or experience in areas such as
patient care, patient education, quality assurance, outcomes
research, and consumer issues. The public entities would
include federal agencies (such as the Maternal and Child Health
Bureau and the Agency for Health Care Policy and Research) and
State associations (such as the National Association of
Insurance Commissioners). Private sector organizations would
include organizations such as the American College of
Obstetricians and Gynecologists and the American Academy of
Pediatrics representing providers, as well as those
representing insurers. Other private sector members could
include consumer groups, private foundations, the National
Committee for Quality Assurance, the Joint Commission on
Accreditation of Health Care Organizations, and employer
representatives, including those involved in the development of
the Health Plan Employer Data Information Set (HEDIS).
The committee recognizes the valuable leadership of HRSA's
Maternal and Child Health Bureau (MCHB) support for research
studies on safe hospital discharge practices for mothers and
neonates. The MCHB's approach--in cooperation with such
national organizations as the American Academy of Pediatrics,
the American College of Obstetricians and Gynecologists, and
the American Medical Association--emphasizes the benefits of
bringing sound clinical judgment and state-of-the-art research
methodologies to bear in exploring how length of stay and other
common postdelivery services can affect health outcomes for
mothers and newborns. A Scientific Summit sponsored by the MCHB
concerned with ``Assuring Quality Care for Moms and Babies''
already has brought together researchers, providers, health
plans, hospital administrators, consumers, employers, and
representatives of federal and State governments to address
appropriate medical procedures during the perinatal period, and
to identify opportunities to strengthen the family and
establish beneficial health care practices during the perinatal
and postpartum periods. The committee expects the work of the
advisory committee to build upon these timely efforts.
The committee intends for the advisory panel to work to
establish consensus among its members as to the appropriateness
of the act requiring health plans to provide a minimum length
of stay for mothers and newborns following childbirth. The
committee also intends that a summary of best practices for the
care of newborns and mothers, recommendations for improvements
in prenatal, postnatal, and follow-up care, and limitations on
the databases in existence on the date of enactment of the act
be reported to Congress.
The committee intends that the Secretary of HHS report to
Congress at 18 months and at 3 years after the enactment of the
act as to the progress and plan developed, and data from the
study as available. A final report shall be given by the
Secretary at no later than 5 years after the date of enactment
of this act.

v. cost estimate

U.S. Congress,
Congressional Budget Office,
Washington, DC, July 17, 1996.
Hon. Nancy Landon Kassebaum,
Chairman, Committee on Labor and Human Resources,
U.S. Senate, Washington, DC.
Dear Madam Chairman: The Congressional Budget Office (CBO)
has reviewed S. 969, the Newborns' and Mothers' Health
Protection Act of 1996, as ordered reported on April 17, 1996.
Enclosed are CBO's federal cost estimate and estimates of the
costs of intergovernmental and private-sector mandates.
The bill would affect direct spending and thus would be
subject to pay-as-you-go procedures under section 252 of the
Balanced Budget and Emergency Deficit Control Act of 1985.
If you wish further details on these estimates, we will be
pleased to provide them. The CBO staff contacts are identified
in the separate estimates.
Sincerely,
James L. Blum
(For June E. O'Neill, Director).

congressional budget office federal cost estimate

1. Bill number: S. 969.
2. Bill title: The Newborns' and Mothers' Health Protection
Act of 1966.
3. Bill status: As ordered reported by the Senate Committee
on Labor and Human Resources, April 17, 1996.
4. Bill purpose: The bill would require that health
insurers cover a mother and newborn for at least two nights in
the hospital after most births and at least four nights after a
caesarean section. Coverage of fewer days would be permissible
if agreed to by the attending provider in consultation with the
mother, and if a timely follow-up visit was covered. An
advisory commission would be established within the Department
of Health and Human Services.
5. Estimated cost to the Federal Government: CBO and the
Joint Committee on Taxation (JCT) estimate that S. 969 would
increase the federal deficit by about $265 million between 1997
and 2002 (see attached table). As a result of increases in
employer-paid health premiums, federal income and payroll tax
revenues would fall by about $130 million over that period.
Federal outlays for Medicaid would increase by about $120
million, and mandatory outlays for federal employees' health
benefits would increase by about $15 million over the period.
Discretionary spending for benefits of active federal workers
and for the advisory commission would rise by another $20
million, assuming appropriation of the necessary amounts.
6. Basis of the estimate: CBO estimates that the proposal
would initially raise private group health insurance premiums
by about 0.06 percent. In response, employers and employees
would reduce coverage or drop benefits for other services.
Because of these reactions, we assume that employer
contributions for health insurance would rise by only 0.02
percent. Most of that increase would be passed back to
employees in lower wage. The lower wages, in turn, would reduce
federal income and payroll tax revenues. JCT estimates that
revenues would fall by about $130 million between 1997 and
2002.
CBO assumes that the number of hospital days would increase
by about 400,000 under employer-sponsored plans, and that the
marginal costs to health plans of each additional hospital day
would be $400. In addition, CBO estimates that the number of
home health or other follow-up visits would increase by about
200,000 at a cost of $100 per visit. The estimated federal cost
of S. 969 is reduced to the extent that states have enacted or
are likely to enact similar legislation.
CBO estimates that S. 969 would increase the federal share
of Medicaid by about $120 million over the period. Although the
bill's requirements would not necessarily apply to Medicaid as
a direct payer, plans contracting to provide care to Medicaid
recipients would be affected. CBO assumes that about 80,000
additional hospital days and home health visits would be
provided by those plans at a cost of about $300 for each
additional hospital day and $75 for each home health visit. On
average, Medicaid costs would rise by about $35 million a year,
with the federal share increasing by about $20 million a year
and the states' share increasing by about $15 million a year.
Costs for federal employees' health benefits would also
increase slightly. Direct spending for annuitants' benefits
would rise by about $15 million over the period, and
discretionary spending for active workers would rise by another
$15 million, assuming appropriation of the necessary amounts.
7. Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act of 1985 set up pay-as-you-go
procedures for legislation affecting direct spending or
receipts through 1998. The bill would have the following pay-
as-you-go impact:

------------------------------------------------------------------------
1996 1997 1998
------------------------------------------------------------------------
Change in outlays...................... 0 19 20
Change in receipts..................... 0 -13 -20
------------------------------------------------------------------------

8. Previous CBO estimate: None.
9. Estimate prepared by: Jeff Lemieux (private insurance
and federal employees' benefits) and Jean Hearne (Medicaid).
10. Estimate approved by: Paul N. Van De Water, Assistant
Director for Budget Analysis.

S. 969, THE NEWBORNS' AND MOTHERS' HEALTH PROTECTION ACT OF 1996.
[By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 1997-2002
----------------------------------------------------------------------------------------------------------------
DIRECT SPENDING AND RECEIPTS

Outlays:
Medicaid................................... 17 18 19 20 22 23 119
Federal employees health benefits.......... 2 2 3 3 3 3 15
----------------------------------------------------------------
Total, outlays........................... 19 20 22 23 25 26 134
Revenues:
Income and payroll taxes................... -13 -20 -22 -23 -25 -27 -130
Deficit.................................... 32 40 44 46 50 53 264

SPENDING SUBJECT TO APPROPRIATION

Federal employees health benefits:
Budget authority........................... 2 2 3 3 3 3 16
Outlays.................................... 2 2 3 3 3 3 16
Advisory Commission:
Budget authority........................... 1 1 1 1 1 0 5
Outlays.................................... 1 1 1 1 1 0 5
Total, Discretionary Spending:
Budget authority........................... 3 3 4 4 4 3 21
Outlays.................................... 3 3 4 4 4 2 21
----------------------------------------------------------------------------------------------------------------
Sources: Congressional Budget Office, Joint Committee on Taxation.

CONGRESSIONAL BUDGET OFFICE ESTIMATED COST OF INTERGOVERNMENTAL
MANDATES

1. Bill number: S. 969.
2. Bill title: The Newborns' and Mothers' Health Protection
Act of 1996.
3. Bill status: As ordered reported by the Senate Committee
on Labor and Human Resources on April 17, 1995.
4. Bill purpose: S. 969 would require health plans,
including employer sponsored health plans, that provide
maternity benefits to allow mothers and newborns to stay in the
hospital for 48 hours after a normal vaginal delivery and 96
hours after a caesarean section. Hospital stays could be
shortened if the attending provider, in consultation with the
mother, agreed to a shorter stay and if the health plan covered
a timely follow-up visit. Finally, health plans would have to
notify each participant of the change in maternity benefits
within 120 days of enactment.
5. Intergovernmental mandates contained in bill: The
maternity benefit and notification requirements are mandates as
defined by Public Law 104-4, the Unfunded Mandates Act of 1995.
State and local governments as sponsors of health insurance for
their employees would have to comply with these requirements.
6. Estimated direct costs of mandates to State, local, and
tribal governments:
(a) Is the $50 Million Threshold Exceeded? No.
(b) Total Direct Costs of Mandates: S. 1028 would
increase the cost of health insurance for covered
employees of state and local governments, but this cost
would primarily be borne by the employees themselves
and not state or local taxpayers. Although the amount
of total compensation paid by state and local
governments would remain unchanged in the long run,
states and local governments would remain unchanged in
the long run, states and local governments would face
additional costs of $1 million to $10 million over
about two years as they change other elements of their
employees' compensation packages.
(c) Estimate of Necessary budget Authority: None.
7. Basic of estimate: CBO estimates that the new maternity
benefit would increase health care costs by about 0.06 percent.
State and local governments spend about $40 billion on their
employees' health care. Therefore, this bill would raise these
costs by about $25 million. We assume, however, that these cost
would be passed on to state and local employees. Economists
generally believe, and CBO's cost estimates have long assumed,
that workers as a group bear most of the cost of employers'
health insurance premiums. The primary reason for this
conclusion is that the supply of labor is relatively
insensitive to changes in take-home wages. Because most workers
continue to work even if their take-home pay declines,
employers have little trouble shifting most of the cost of
additional health insurance to workers' wages or other fringe
benefits.
During a transition period of about two years, however,
state and local governments would face additional costs of $1
million to $10 million. State and local governments would be
unable to immediately adjust the compensation packages of all
their employees. About 40 percent of state and local employee
are represented by unions, and many of these employees are
covered by collective bargaining agreements, which last about 2
years.
8. Appropriation or other Federal financial assistance
provided in bill to cover mandate costs: None.
9. Other impacts on State, local, and tribal governments:
The maternity benefit would also apply to managed care plans
that contract with states to cover Medicaid recipients. As a
result, CBO estimates that Medicaid costs for states would
annually increase by about $15 million. States would have the
flexibility to reduce their coverage of optional services or
benefits in order to pay for the additional Medicaid costs.
States would have the option of enforcing the requirements
of S. 969 on issuers of health insurance in the group and
individual markets. If a state decides not to enforce the new
requirements, the federal government would do so. Because
enforcement would be voluntary, this provision would not impose
an intergovernmental mandate as defined in Public Law 104-4.
However, the enforcement provisions would have a budgetary
impact on state governments. States currently regulate the
group and individual markets, and CBO does not expect any state
would give up this authority and responsibility. States thus
would incur additional costs as they enforce the new
requirements. In 1995, according to the National Association of
Insurance Commissioners, states spent $650 million regulating
all forms of insurance (health and others). CBO expects that S.
969 would increase their costs only marginally.
10. Previous CBO estimate: None.
11. Estimate prepared by: John Patterson.
12. Estimate approved by: Paul N. Van de Water, Assistant
Director for Budget Analysis.

congressional budget office estimate of costs of private-sector
mandates

----------------------------------------------------------------------------------------------------------------
1997 1998 1999 2000 2001
----------------------------------------------------------------------------------------------------------------
Direct private-sector cost......................................... 130 180 190 200 220
----------------------------------------------------------------------------------------------------------------

Basis of the estimate: The direct costs of the maternity
mandates in S. 969 consist of the costs of the additional
hospital days and follow-up visits that health plans would now
have to cover. Reductions in future insured costs resulting
from the increased services required under the bill would be
subtracted from the additional costs, but those savings appear
to be relatively small.
After adjusting for state laws that already mandate similar
coverage, CBO concluded that about 900,000 insured births a
year currently have shorter lengths of stay than the minimums
specified in the bill. Under S. 969, some of those births would
have an additional inpatient day, while others would have a
follow-up visit. But some of the latter group already receive a
timely follow-up visit under current law, and so would incur no
additional costs. Thus, CBO estimated that the bill would
result in about 400,000 additional inpatient days and 200,000
additional follow-up visits annually. Assuming that an
additional post-delivery hospital day would have a marginal
cost to health plans of $400 in 1996 and a postpartum visit
would cost $100, CBO concluded that the bill would result in an
increase in insured costs or 0.06 percent of all employment-
based and individually purchased premiums. Applying that
percentage to private-sector premiums only, leads to the
estimate that the direct private-sector costs of S. 969 would
be about $130 million in 1997 rising to about $220 million in
2001.
Not all of those costs would be transformed into higher
premiums. Employers, for example, might reduce the generosity
of other benefits to offset the increased maternity costs.
People purchasing policies in the individual market might also
choose to purchase less generous policies rather than pay
higher premiums. Any net increases in premiums paid by
employers would most likely be passed on to workers in the form
of lower wages and other fringe benefits.
CBO's estimates do not take into account any benefits from
the additional coverage that might accrue to parties other than
health plans--such as to new parents. Nor do the estimates
incorporate other indirect costs or benefits. Although such
factors may be important for weighing the merits of the bill,
the Unfunded Mandates Reform Act restricts CBO's estimates of
the mandates' effects to direct costs and savings.
7. Appropriations or other Federal financial assistance:
None.
8. Previous CBO estimate: None.
9. Estimate prepared by: James Baumgardner.
10. Estimate approved by: Joseph R. Antos, Assistant
Director for Health and Human Resources.

vi. regulatory impact statement

The committee has determined that there will be no increase
in the regulatory burden of paperwork as the result of this
bill.

vii. section-by-section analysis

Section 1. Short title

The act is cited as the ``Newborns' and Mothers' Health
Protection Act of 1996.''

Section 2. Findings

The chairman's substitute contains a new findings section
stating that: (1) the length of postdelivery inpatient care
should be based on unique characteristics of each mother and
her newborn child, and (2) the decision to discharge a mother
and newborn from the hospital should be made by the attending
provider in consultation with the mother.

Section 3. Required coverage for minimum hospital stay following birth

This section requires health plans that provide maternity
benefits, including benefits for childbirth, to provide
coverage to mothers and their newborns for at least 48 hours of
inpatient stay following a normal vaginal delivery and at least
96 hours following a caesarean section without requiring the
attending provider to obtain authorization from the health
plan. Health plans are not required to provide coverage for the
48/96 hour period if two conditions are met: (1) the attending
provider, in consultation with the mother, decides to discharge
the mother earlier; and (2) the health plan provides coverage
for postdelivery follow-up care.

Section 4. Postdelivery follow-up care

Where a mother and a newborn are discharged from the
hospital prior to 48 hours following a normal vaginal delivery
or 96 hours following a caesarean section, health plans are
required to provide postdelivery follow-up care not more than
72 hours following the discharge. Such care is to be provided
by a registered nurse, physician, nurse practitioner, nurse
midwife, or physician's assistant experienced in maternal and
child health. Care may be provided at home, hospital, doctor's
office, birthing center, intermediate care facility, federally
qualified health center, State health department maternity
clinic, or other setting determined appropriate by the
Secretary of Labor in consultation with the Secretary of Health
and Human Services (HHS), but mothers must be given the option
of receiving care in the home.

Section 5. Prohibitions

This section of the chairman's substitute prohibits health
plans from: (1) dropping mothers and newborns from coverage
because they comply with the act; (2) providing monetary
payments or rebates to mothers to encourage them to request
less than 48/96 hours of stay; (3) penalizing doctors because
they comply with the act; or (4) providing incentives to
doctors to induce them to provide treatment in a manner
inconsistent with the act.

Section 6. Notice

This section of the chairman's substitute requires both
insurers and employer-sponsored plans covered by the Employee
Retirement Income Security Act (ERISA) to notify plan
participants and policyholders of the coverage required by this
act.

Section 7. Applicability

This section, which works in conjunction with Section 8 on
``Enforcement,'' clarifies that States have primary
responsibility for enforcing the requirements of this act with
respect to insurers and HMOs--as they do under current law,
that the Secretary of Labor has sole responsibility for
ensuring that the requirements of the act are meet by employer-
sponsored ERISA plans, and that nothing in this act should be
construed to affect or modify the preemption provisions of
ERISA.

Section 8. Enforcement

This section specifies that State enforce the requirements
of the act with respect to insurers and HMOs and that they may
apply whatever penalties for noncompliance they wish. Employer-
sponsored plans may be subject to civil enforcement penalties
contained in sections 502, 504, 506, and 510 of ERISA. If a
State fails to ``substantially'' enforce the requirements of
the act, the Secretary of Labor, in consultation with the
Secretary of HHS, will enforce the requirements with respect to
insurers and HMOs using civil penalties provided under ERISA.
This construct is necessary to ensure enforcement but to avoid
imposing unfunded mandates on the States.

Section 9. Definitions

This section of the chairman's substitute defines the terms
``Attending Provider,'' ``Beneficiary,'' ``Employee Health
Benefit Plan,'' ``Group Purchaser,'' ``Health Plan,'' ``Health
Plan Issuer,'' ``Participant,'' and ``Secretary.'' Of
particular note is the expansion of the term ``Attending
Provider'' to include ``obstetrician-gynecologists,
pediatricians, family physicians, nurse practitioners, nurse
midwives, or other physicians primarily responsible for the
care of a mother and her newborn child'' (the original bill
only applied to ``physicians'').

Section 10. Preemption

The act does not preempt those State laws that: (1) provide
greater protection to patients and policyholders; (2) require
health plans to provide coverage for at least 48/96 hours; (3)
require health plans to provide coverage in accordance with
guidelines established by the American College of Obstetricians
and Gynecologists, the American Academy of Pediatrics, or other
established professional medical association; or (4) leave
decisions about length to stay entirely to the doctor in
consultation with the mother. With regard to follow-up care,
the act does not preempt State laws providing greater
protection to patients and policyholders or providing an option
of timely follow-up care in the home.

Section 11. Study and reports concerning childbirth

The act directs the Secretary of Health and Human Services
to establish an advisory panel to review data on health care
services provided to mothers and newborns and postpartum care.
It also directs the Secretary to study several issues related
to quality of care and length of maternity stay, and to report
to Congress within 5 years on a series of issues related to
private sector improvements in prenatal and postnatal care. An
interim report is required in 18 months.

Section 12. Effective date

The act is effective on the first day of the plan year or
contract year beginning on or after January 1, 1997.
ADDITIONAL VIEWS OF SENATOR JAMES M. JEFFORDS

We have never in the past stepped legislatively in the
realm of defining what, specifically, should be covered by a
health plan in treating a particular disease or medical
condition. This Act suggests a specific treatment guideline for
the length of stay after child-birth and follow-up care in
federal legislation. The Act refers to a specific ``window of
time'' in which providers and mothers can make their own
decision about when to leave the hospital. The time frame is 48
hours after a vaginal birth and 96 hours after cesarean
section.
During consideration of the ``Newborns' and Mothers' Health
Protection Act of 1996'' in Committee it became apparent that
there has not been enough data collected on the impact of
shorter hospital says for mothers and newborns. It is a problem
that some health plans have moved ahead with shorter and
shorter stays without such data, but it is also concerning that
we commit ourselves in legislation to a specific length of
hospital stay without this data in order to solve this problem.
Medical practices change over time with innovations, new
clinical information, public pressure and changes in the social
environment. Several years ago it was thought that longer stays
in the hospital for mothers and newborn were necessary than are
routinely practiced today. In addition, health outcomes for
mothers and newborns are dependent upon the continuum of care
they receive before, during and after the delivery event
involving a broader range of factors than simply the care given
in the hospital setting. For example, a young inexperienced
mother might have the same length of hospital stay as a more
experienced mother, but the outcomes would be very different
because maternal education is a very important factor
influencing outcomes. Both the health plans and the medical
community would concur on this: there is not enough data out
there to say what is the ``optimum length of stay'' for mothers
and newborns after delivery.
I supported this legislation out of the Committee because I
believe we should err on the side of caution. I am concerned
about the health risks for mothers and their newborns if they
are being discharged from the hospital too soon. I also believe
that we need to do the required research to make an informed
decision about the optimum length of stay and best practices
for mothers and newborns while essentially putting a moratorium
on health plans shortening the length of stay. As more
information is available on the optimum length of stay for
mothers and newborns the federal role should be minimized.
We are in an era of cost containment for our health care
delivery system. Hospital inpatient stays are more costly than
managing patients on an outpatient basis. There was no formal
CBO scoring on this legislation, but by some estimates a .5%
increase in premiums is anticipated. Legislation such as this
also inhibits the manner in which plans work toward cost-
containment by specifying what should be covered by them.
Requiring specific hospital stays impedes market competition
among plans to achieve the most cost-effective care.
I offered an amendment that would sunset this bill in 5
years after an advisory panel reports to Congress as to the
appropriateness of the requirements of this Act. My amendment
directed the Secretary of Health and Human Services to
establish an advisory panel of experts in maternal and child
health and health outcomes that would review the data currently
available and then recommend that, if required, additional data
be gathered through the appropriate channels. It is anticipated
that such review and research can be successfully done in
approximately 3 to 5 years. The advisory panel, composed of
representation from both the public and private sectors, will
come to consensus about the length of stay and best practices
for mothers and newborns after childbirth so that deliveries
can be both safe for mothers and newborns, and cost effective
for plans. The Secretary of Health and Human Services shall
then report this information to Congress and thus, raise again
the question as to the need for this legislation. It may be
found by that time that 48 hours time for a hospital stay for
mother and newborn after delivery is obsolete. Unfortunately
only the study portion of my amendment was passed by the
committee. I believe the combined study with the potential
sunset best keeps this Act timely, accurate and responsible.

Jim Jeffords.