Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending amendments be temporarily laid aside so the Senator from Minnesota may offer up to three amendments in succession.

Mr. BAUCUS. Mr. President, I ask unanimous consent the pending amendments be temporarily set aside.

Mr. BAUCUS. Mr. President, on behalf of Senator Stabenow, I send an amendment to the desk regarding State rebate agreements.

Mr. BAUCUS. I ask unanimous consent the reading of the amendment be dispensed with.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending amendments be temporarily laid aside so the Senator from West Virginia can offer his amendments.

Mr. BAUCUS. Mr. President, I see the Senator from West Virginia is in the Chamber. Mr. President, I suggest the absence of a quorum.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the amendment be temporarily laid aside.

Mr. BAUCUS. Mr. President, I send to the desk an amendment on behalf of Senator Lautenberg with respect to moving the effective date of this legislation 1 year forward.

Mr. BAUCUS. Mr. President, I would like to say a couple of words about one of the two amendments offered by the distinguished Senator from West Virginia regarding the true out-of-pocket expenses, where the employers' contributions to retirees' health care plans be considered in calculating the out-of-pocket expense that would determine when a senior citizen reaches the stop loss provisions of this bill. This may sound like a fairly arcane point, but it is a very important one. Let me just describe the provisions of the bill. Under the bill, after a $275 deductible, the provisions of this bill require that employees would receive a contribution from the Government of 50 percent of each prescription he or she filled, up to $4,500 in drug expenses. After that amount, $4,500, then seniors would pay 100 percent of the costs until the beneficiary's spending reached $3,700. This should not be confused with total spending, of which the beneficiary spent $3,700 out of his pocket. It would be $5,812. Anyway, after the beneficiary spends $3,700 out of pocket, the total stop loss coverage kicks in and the Government picks up 90 percent of the beneficiary's drug spending and the beneficiary, him or herself, pays 10 percent. The real question is, What about the employers' contributions? Would they count toward the stop loss coverage? Under the underlying bill, all spending must be provided by the beneficiary, not on behalf of the beneficiary. As a consequence, employers' contributions would not count. The CBO estimates up to 37 percent of retiree health coverage would therefore be dropped by employers. Just to recapitulate, the amendment offered by the Senator from West Virginia basically provides that the stop loss amounts in the underlying bill should be based on out-of-pocket costs, and the employers' contribution towards retiree health benefits could count towards that stop loss computation. What about this? Frankly, I have a lot of sympathy for the Senator's amendment. That is, as it currently stands, the beneficiary, a senior citizen, would have to spend $3,700 before the stop loss would be calculated. Under the amendment offered by the Senator from West Virginia, that amount would be quite a bit lower. I mentioned earlier that CBO estimates about 37 percent of retirees who now are covered by health plans under their employer health coverage would no longer receive drug coverage because those employers would drop coverage. Or, to say it differently, CBO estimates that, because the employer's contributions do not now count towards stop loss, about 11 percent of the seniors generally would lose their employer-sponsored health coverage. As I mentioned, I share my colleague's desire to prevent the loss of employer-sponsored coverage; that is, to the extent possible. We have our work cut out for us because retiree coverage is already on the decline. According to the Kaiser Family Foundation/Hewitt Study, that was released last December, one in five large employers is likely to eliminate retiree health coverage for future retirees in the next 3 years. That is a lot. That is irrespective of the provisions of this bill with respect to prescription drug coverage. If one out of five large employers in fact does eliminate retiree health coverage for their retirees within the next 3 years, it is going to have a huge impact, clearly, on those retirees, and also on the portion of the health care system that is not paid for by larger companies. That study also found that nearly 80 percent of large employers are likely to increase the amount paid directly by their employees for health care. That is, most--four-fifths of all employers--are likely to have their employees pay more than they, the employers, are paying. We know about the negotiations between General Electric and its employees not too long ago, where both agreed to shift more of the rising cost of health care to employees. Clearly, we should be doing all we can to ensure that a bad situation does not get worse. The chairman of the committee, Senator Grassley, and I have been looking for ways to address concern about employer-sponsored coverage. We are looking at ways to make employers' participation in the new Part D benefit more manageable, so employers have flexibility with respect to the offering of these benefits. I, certainly, personally am willing to entertain proposals that would allow more employer coverage, and also help address the out-of-pocket situation the Senator from West Virginia would like to cover with his amendment. The slight problem we have, as most of us know, is that we are working within the confines of $400 billion over 10 years. If the amendment offered by the Senator from West Virginia were to be agreed to, according to CBO, that would cost approximately $65 billion. That is $65 billion, generally, over the $400 billion that has been set aside for this bill. Senator Grassley and I are working with various groups in and out of the Senate, trying to address the potential loss of employer retiree coverage. It is a great concern of ours. There have been several proposals offered as to how we might deal with that, in addition to the ones contained in the amendment by the Senator from West Virginia. I am hopeful that during the next several days, before the final passage of this bill--hopefully before the weekend--we will be able to significantly address this issue. So far, we do not have it nailed down. But as you might expect, this and a lot of other issues are kind of hovering about as we try to find ways to fit the pieces together so we can get a very good bill passed. I also remind my colleagues who are slightly concerned about the complexity of this bill--and this bill is somewhat complex--there was an interesting piece in, I think it was today's New York Times; it might have been yesterday's. In any event, it was about the complexity of the bill and how bewildered some people are because of the complexity. I think the article did a good job in explaining why major social policy, almost by definition, is complex; that is, it is a result of compromises. In this case, the big compromise is between about half of this body, who wants to provide prescription drug benefits under Medicare, and about half of this body, who wants prescription drug benefits to be provided under private competition. It is difficult to put those two pieces together. It is the attempt to put those two pieces together that has caused a lot of the complexity that does exist in this bill. I might say, however, that Medicare itself is already quite complex. They could come back and say: Why make something complex even more complex? But it has to be weighed against another factor. That is, do we want to provide a prescription drug benefit to seniors or not? The choice at the end of this week is going to be, do we want something that is a little bit complex but provides prescription drug benefits for seniors--and does a good job doing so? Maybe with not as many benefits as some seniors would like and some Members of this body would like, but still does a pretty good job and is a bit complex. Or, on the other hand, do we want to do nothing? Do we want to let senior citizens today, who do not have prescription drug coverage, remain without coverage? That is basically the question we are going to be facing later on this week. To ask the question, I think, is to answer it. Namely, we should do a pretty good job, trying to get a pretty good bill passed, even though there is some complexity, even though there are some tradeoffs, rather than have nothing. I suspect this body is always going to be somewhat split. I do not think one party is going to be totally in control at one time or the other party is going to be totally in control at another time. I think it is the nature of the American body politic that people want to hedge their bets, that they want to have both Democrats and Republicans working together. Certainly, our Founding Fathers set up our Government that way under our Constitution. They absolutely distrusted power. They distrusted it almost absolutely. That is why we have power dispersed by definition. That means in order to get something of consequence passed, there is going to have to be some compromise. In this bill there certainly is a lot of compromising. A final point contained in that article--and I thought it was a pretty good article--is that when we, in this country, have passed other major social policy--let's say Medicare and Social Security--it has been based somewhat on faith, and we have worked to fix it, to make it even better after it has been passed. But you have to start somewhere. And I think, certainly, we have to start somewhere with respect to prescription drug benefits, and certainly, we should provide prescription drug benefits for seniors. So I urge my colleagues to keep that in mind as we are working on amendments, which are designed to make this bill better. We can accept some amendments, but some in this body will not accept others. Nevertheless, all of us are generally working together toward the same goal. In that vein, Mr. President, I ask unanimous consent that the pending amendments be temporarily set aside so the Senator from Hawaii may offer two amendments in sequence.

Mr. BAUCUS. Mr. President, I ask unanimous consent that all pending amendments be temporarily set aside so the Senator from Arkansas may offer an amendment.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending amendments be set aside so the Senator from New Mexico can offer three amendments in sequence.

Mr. BAUCUS. Mr. President, I thank the Senator from New Mexico. I think he has a very good point. The current assets test is degrading, unworkable. It is just not good policy. It is also extremely complicated. Currently, assets tests apply to various kinds of benefits--sometimes Medicaid or Medicare, or certain categories of Medicare. It defies logic, it is so complicated. Frankly, if this Senator had his way, we would repeal a lot of the assets tests which have not been updated for a good number of years--since 1987 or 1989. We are talking about $9,000 a year or something like that. On the other hand, we are dealing with $400 billion in this bill. A total repeal of the assets test on drugs only would be--I don't know the cost, but it would be expensive. The Senator from New Mexico, in his good-faith effort to try to deal with unnecessary complications--which is bad public policy--is trying to modify a repeal of the assets test to a smaller category. Frankly, it has a lot of appeal. But as the Senator knows very well, probably as well if not better than most Members of this body, that would only go part way toward correcting some of the inequities caused by the assets test. Even if the Senator's amendment to totally repeal the asset test applying to drugs would go into effect, nevertheless, the asset test with respect to the rest of the categories would still apply under Medicare. That is low-income categories that are mandatory. It is incredibly complex, which is to say I am very sympathetic with the Senator and I am hopeful we get this score back from CBO on the Senator's asset test amendment, that it is one that certainly can work within the $400 billion limit we are operating under. I, for one, believe it should pass. I thank the Senator very much for persistently and very forthrightly, with a lot of good information, bringing this up to be dealt with. Mr. President, I ask unanimous consent that all pending amendments be temporarily laid aside.

Mr. BAUCUS. On behalf of Senator Edwards, I send an amendment to the desk with respect to consumer advertising.

Mr. BAUCUS. Mr. President, I ask unanimous consent all pending amendments be temporarily set aside.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, we are now awaiting the arrival of Senator Lincoln from Arkansas who has two amendments she wishes to offer. She will be arriving shortly. Until she arrives, I have a few words about a particular provision in the bill. It is called MARCIA, Medicare Appeals Regulatory and Contracting Improvements Act. Last year I joined my colleagues, Senator Grassley, Senator Kerry, and now-Governor Murkowski, in introducing what we called the Medicare Appeals Regulatory and Contracting Improvements Act, otherwise know as MARCIA. Today this bill is an essential part of our Medicare improvement proposal, the underlying bill. The purpose of the provision is to make Medicare a better business partner to providers, a smarter purchaser of services for our taxpayers, and a more customer-friendly organization for our beneficiaries. MARCIA will strengthen and improve Medicare and will help bring the program's administration into the 21st century. The provisions provide for regulatory improvements. I have heard from hundreds of doctors, as I know all in this body have, and many providers who complain that the sheer number and complexity of Medicare regulations can drive them crazy and, at times, drive them out of business. While we cannot make Medicare into a simple program, this bill would make and does take some helpful steps in the right direction. For one thing, it will require the Secretary on a regular basis to review the thousands of pages of statutes and regulations to see if there are any inconsistencies in Medicare's many requirements. Just a couple of days ago, the majority leader from Tennessee held up a book which showed the Medicare requirements back, I think it was 1965. It was a fairly thick volume, actually. Then alongside that he also held up a book with the current Medicare regulations, which was a gigantic volume. It is similar to the problems we face in the Tax Code, as we all know. I am not standing here to say the provisions of this bill are going to make Medicare simple and easy, that we are going to cut the number of pages down to half. But I am saying we are trying to do our very best, and the provisions in this bill should help reduce some of the inconsistencies and the complexities that do now occur in the Medicare regulations. At least we are focusing on that problem and requiring the Secretary to address that, specifically giving that direction. Second, our legislation would cut down on the CMS practice of using so-called interim final rule authority to impose major new regulations without even giving the public an opportunity to comment. It just stands to reason that the public should have an opportunity to comment on rules because it is more likely if they do, the rules are going to be better rules or, on the other side of the coin, if there is not an opportunity for the public to comment, there is going to be a tendency over time for CMS or any agency to be a little less sensitive to what that is really all about, which is about serving people because, after all, we are all public servants, including CMS personnel. Our real job is to serve the people in the country, and I think this will help move CMS in that direction. The third provision would make sure that new regulations cannot be applied retroactively. Intuitively, I think it makes sense that it does not apply retroactively. I think these new requirements are just a simple matter of fairness. The underlying bill, as we are talking about the regulatory provisions, would also make improvements to the Medicare appeals system. In the year 2001, on average it took 441 days to complete an appeal before an administrative law judge. The next level of appeal took almost 2 years. It is true certain provisions in the 2000 law that we passed tried to speed up the appeals process, but unfortunately that law did not provide the resources or the realistic timeframes necessary to make these changes work. MARCIA, the regulatory provisions, would make some important improvements to get this appeals system back on track so our Medicare beneficiaries and providers can get justice more quickly. Clearly, 441 days for the first level of appeal and 2 years for the second is not right, for a whole host of obvious reasons. The bill also requires CMS to submit a plan to develop and train a group of dedicated Medicare ALJs, administrative law judges. This plan would ensure that administrative law judges remain truly independent, which I think is a crucial feature of any fair appeals system. Medicare contractors will also have to bid and compete for contracts under this bill. That is a very significant change from current practice. Essentially, under the current practice, Medicare contractors, especially talking about the intermediaries, are essentially nominated by the intermediaries. They themselves nominate who it is going to be, and there is no limit to how long a contracting period can be. I think it tends to be a little bit too close and there is not enough fresh air to help assure, at least the best we can, that the contractor selection process is one that provides more efficiency and better service to our people. The Medicare contractors will have to bid now. They are going to have to compete for contracts under this bill--that is new--thereby assuring that the Medicare Program and the taxpayers are getting the best service for the lowest price the market will allow. In assessing the bids, CMS will have to consider customer service and accuracy. That is required when CMS is now selecting contractors and getting bids from contractors. Again, we are talking generally about the so-called intermediaries who are the ones who deal directly with providers. They deal between the providers and the beneficiaries and the Government. In assessing the bids, CMS will have to consider customer service and accuracy, as I said, and contractors will also have to provide much more information to providers and to beneficiaries. If the providers raise questions about Medicare claims or policies, contractors will have to answer them in writing. That, too, is new. The bill also would require the Secretary to standardize the way in which Medicare conducts audits, the way it conducts prepayment and postpayment reviews of provider claims. We often hear of great, almost gross, inconsistencies among different parts of the country, different regions. It makes sense to standardize this a little bit better. I am encouraged that CMS has already taken steps in this direction to make the audit process more fair but to ensure that providers are treated fairly and consistently, I believe the law has to require it. Finally, I am pleased this bill also contains money for continued strong enforcement against waste, fraud, and abuse in the Medicare Program. I have long believed the Medicare integrity programs must be firm, but they must also be fair. This bill takes important steps to ensure honest dealing with taxpayer money and fair treatment for the professionals who serve our seniors every day. Essentially, these are provisions that hopefully address a good part of the regulatory complaints, the legitimate complaints that all of us in this body have been hearing about from doctors and hospitals as they try to do their very best job in providing care, in this case, to seniors. I think these are good, solid provisions. Turning to another matter, as we did for Senator Graham and Senator Kerry, I would now like to make it possible for the Senator from Arkansas to offer her amendments. I ask unanimous consent that the pending amendments be temporarily set aside and that the Senator from Arkansas be recognized to offer up to three amendments in succession.

Mr. BAUCUS. Mr. President, I ask that all pending amendments be laid aside temporarily.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the pending amendments be laid aside.

Mr. BAUCUS. Mr. President, I call up amendment No. 942 on behalf of the Senator from Washington, Ms. Cantwell.

Mr. BAUCUS. I suggest the absence of a quorum.

Mr. BAUCUS. I was expecting a longer speech, frankly. I suggest the Senator speak for, say, 10, 15 minutes or whatever time the Senator wishes to take.

Mr. BAUCUS. Mr. President, I suggest the absence of a quorum.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am proud to support Senator Bingaman's legislation to ensure equitable tax treatment for Oldsmobile dealers impacted by General Motors' sudden decision to eliminate the Oldsmobile from its product line. General Motors did agree to partially compensate Oldsmobile dealers for their loss. Senator Bingaman's bill ensures that like-kind exchange treatment, which defers the gain on the exchange of business or investment property until it is ultimately sold, is also available for motor vehicle dealers who receive payments when the brand of automobile they carry is eliminated by the manufacturer. The proposal allows such reinvested payments to be treated as a like-kind exchange of property if exchanged within 2 years from receipt of the payments, thus deferring the tax consequences. As such, the proposal encourages capital investment by recognizing that a longer period of time is required for dealers to obtain a new franchise or establish a new car sales business. The manufacturer, not the automobile dealer, makes the unilateral decision to eliminate vehicle brands. Nonetheless, the dealer is the one who invests years of hard work in bringing a particular brand to his or her local community. When a manufacturer decides to eliminate a brand, many family-owned dealerships face a complete loss of business as well as an increased threat to the viability of other brands located in the same facility. Approximately one-third of the 2,801 Oldsmobile dealers across the country are expected to reinvest the GM payments into another franchise or other retail motor vehicle sales business. Many of the 27 Oldsmobile dealers in Montana have expressed their interest in reinvesting the GM payments they received, if this legislation becomes law. These Montanans have been stripped of a source of income at a time when the economy is not too forgiving. I urge my colleagues to support this important legislation.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I am proud to support Senator Bingaman's legislation to ensure equitable tax treatment for Oldsmobile dealers impacted by General Motors' sudden decision to eliminate the Oldsmobile from its product line. General Motors did agree to partially compensate Oldsmobile dealers for their loss. Senator Bingaman's bill ensures that like-kind exchange treatment, which defers the gain on the exchange of business or investment property until it is ultimately sold, is also available for motor vehicle dealers who receive payments when the brand of automobile they carry is eliminated by the manufacturer. The proposal allows such reinvested payments to be treated as a like-kind exchange of property if exchanged within 2 years from receipt of the payments, thus deferring the tax consequences. As such, the proposal encourages capital investment by recognizing that a longer period of time is required for dealers to obtain a new franchise or establish a new car sales business. The manufacturer, not the automobile dealer, makes the unilateral decision to eliminate vehicle brands. Nonetheless, the dealer is the one who invests years of hard work in bringing a particular brand to his or her local community. When a manufacturer decides to eliminate a brand, many family-owned dealerships face a complete loss of business as well as an increased threat to the viability of other brands located in the same facility. Approximately one-third of the 2,801 Oldsmobile dealers across the country are expected to reinvest the GM payments into another franchise or other retail motor vehicle sales business. Many of the 27 Oldsmobile dealers in Montana have expressed their interest in reinvesting the GM payments they received, if this legislation becomes law. These Montanans have been stripped of a source of income at a time when the economy is not too forgiving. I urge my colleagues to support this important legislation.