Pete Stark

Mr. STARK

Mr. STARK. Mr. Speaker, I rise today to recognize Chancellor Chang- Lin Tien of the University of California, Berkeley, who is being honored this month by the Oakland Chinese Community Council for his leadership and contributions to the Oakland Asian community. Chancellor Tien was born in China. He came to this country in 1956 and became a naturalized citizen of the United States. Since coming to America, he has tirelessly worked to broaden the democratic reach of education to all groups of the community. After becoming the first Asian-American to head a major research university, Tien earned a reputation for being openminded, sensitive, and accessible. Determined to stay in touch with the needs of the campus population, Tien frequently lectures to freshman classes and continues to supervise graduate student research. Chancellor Tien's reputation as an educator and a scientist is remarkable. He is internationally recognized for his research in heat transfer technology and has received many awards including the Max Jakob Memorial Award, the highest international honor in the field of heat transfer. Tien has been a member of the National Academy of Engineering since 1976 and is a fellow of the American Academy of Arts and Sciences. In the Oakland community, Chancellor Tien pushed for education reform programs for both primary and secondary schools. As an active member of the Pacific Council on International Policy and the U.S. Committee for Economic Development, he traveled the globe to promote the American values of democracy and freedom and to pursue greater communication between the East and the West. After 7 years as chancellor, and over 38 years of service to the University of California, Chancellor Tien will relinquish his position by June 30, 1997. The service of this accomplished educator and dedicated community leader clearly sets an example for our entire community. I joint the Oakland Chinese Community Council in commending him on his decades of outstanding service to Oakland.

Mr. STARK

Mr. STARK. Mr. Speaker, today I rise to pay tribute to Albert C.M. Wong, a giving and selfless servant of the Asian community of Oakland, CA. This year, the Oakland Chinese Community Council will honor Mr. Wong as a keynote speaker at its 29th Annual Fundraising dinner. The OCCC is a multiservice agency which has provided services to the Oakland Asian community since 1968. Over the years, OCCC has done much to help new immigrants reach their goals, and is best known for its outstanding employment services, training programs, career referral programs, English instruction classes, and voter registration programs. Mr. Wong has had a history of outstanding dedication, generosity, and devotion to these programs and the Asian community in general. Albert C.M. Wong was born in Hong Kong, and lived in China for 5 years. At the age of 14 he moved to the United States and became a citizen. After working his way through the public school system and Laney College at U.C. Berkeley, he successfully completed a chemistry degree from the University of California, San Francisco. Mr. Wong's giving acts are testimony to his generosity. He has selflessly donated his time and services to the Oakland Asian Library and the Asian Health Services. Mr. Wong also volunteers as a pharmacy consultant for the Hong Fook Adult Day Health Care Program, sponsored by the OCCC, and was instrumental in coordinating the annual senior luncheon where he helped to serve a nutritional meal to more than 600 seniors. As vice president of the Lion's Club, he helped establish the Lion's Club Annual Health Fair in Chinatown. He is also looking forward to playing an active role in the Mayor's Toy Drive for underprivileged children during the holidays. Albert Wong is a premier example of the American spirit. Not only is Mr. Wong a great citizen, but in giving back to the people of his community, he helps to fulfill dreams and make the realization of goals possible. We should honor and take note of Mr. Wong's special role in the accomplishments of the Oakland Asian community.

Mr. STARK

Mr. STARK. Mr. Speaker, today, I am reintroducing a bill that could dramatically improve the quality of medical care received by our Nation's elderly. This legislation calls for implementation of an online prescription drug information management program for Medicare beneficiaries. This system, referred to as the Medicare Medication Evaluation and Dispensing System [MMEDS], would provide beneficiaries and their health care providers with tools and information that are necessary to reduce instances of adverse drug interactions, over- medication, prescription drug fraud, and other problems that plague the elderly related to prescription drug use. Background The inappropriate use of prescription drugs is a health problem that is particularly acute for the elderly. The elderly not only use more prescription drugs than any other age group, but are more likely to be taking several drugs at once--thereby increasing the probability of adverse drug reactions. In July 1995, the General Accounting Office reported that 17.5 percent of almost 30 million noninstitutionalized Medicare recipients 65 or older used at least one drug identified as generally unsuitable for elderly patients. In a study published by the Journal of the American Medical Association [JAMA], researchers concluded that nearly one in four noninstitutionalized elderly patients take prescription drugs that experts regard as generally unsuitable for their age group. Accounting for other scenarios, such as incorrect dosage levels, the number of Medicare patients affected by the inappropriate use of prescription drugs would far exceed 25 percent. Several studies featured in the January 1997, issue of JAMA demonstrate the consequences of adverse drug reactions and errors in medication prescribing. One study found that adverse drug events [ADE's] lead to longer lengths of hospital stay, increased costs of hospitalization, and an almost twofold increase in the risk of death. Inappropriate use of prescription drugs has been proven expensive as well as dangerous to the health of the elderly. The Food and Drug Administration estimates that 6.4 percent of all hospital admissions are caused by inappropriate drug therapy--imposing costs of $20 billion; others estimate costs to be as high as $77 billion. JAMA also recently reported that drug-related morbidity and mortality have been estimated to cost more than $136 billion per year in the United States. Researchers found that a major component of these costs was ADE's which may account for up to 140,000 deaths annually. The study analyzed one hospital in Salt Lake City and found that a total of 567 ADE's caused direct hospital costs of over $1 million in 1992 alone. Moreover, another JAMA study concluded that the costs of ADE's are underestimated since they exclude malpractice as well as injuries to patients. The researchers concluded that the high cost of ADE's economically justify investment in preventive efforts. Therefore, the researchers recommended a solution similar to MMEDS--reduction of system complexity, improved education, expanded use of the expertise of pharmacists, and computerization and standardization of the drug prescribing process.

Mr. STARK

Mr. STARK. Mr. Speaker, on February 4, Representive Coyne and myself introduced a bill to provide for an immediate correction of a serious Medicare beneficiary problem: the overcharging of seniors and the disabled by Hospital Outpatient Departments [HOPD]. The President's budget also calls for a correction of this problem, but phases in the correction over a 10-year period. In Medicare, the program generally pays 80 percent of Part B bills and the patient pays 20 percent. But because of the way the HOPD benefit was drafted, currently beneficiaries are paying about 45 percent and Medicare 55 percent. Simply put, the problem arises because Medicare pays the hospital on the basis of reasonable cost, while the beneficiary is stuck with 20 percent of charges--and charges can be anything the hospital wants to say they are. Last the American Association of Retired Persons asked its members for examples of problems they had had with HOPD billings. They received an overwhelming response, and over the coming weeks, I would like to enter some of these letters in the Record. These examples are the proof of why we need to fix this problem ASAP. The first is from Mr. Warren Risser of Santa Barbara, who had an HOPD cataract operation and was charged $4,102.15. His 20 percent share of that change was $820.43. But he found out that Medicare determined the reasonable cost was less than half of that and Medicare paid $1,025.54. Mr. Risser paid 44% of the total payment--a far cry from Medicare's promise of an 80-20 split. Next is a letter from Mr. Keith Roberts of Garden Valley, CA. As his letter so well explains, he paid 54 percent of a test due to charges that defy all rhyme or reason. Both letters are a testament to the need to pass H.R. 582. AARP Outpatient Stories, Washington, DC. Dear Sirs: Your article ``Medicare Outpatient Debacle'' by Don McLeod was excellent. On March 7, 1995, I had cataract surgery on my right eye. I was in the hospital approximately 6 hours incurring a hospital bill of $4,102.15. I was billed 20 percent ($820.43). The Medicare Statement from Blue Cross shows Medicare paid the balance of $3,281.72 which was incorrect. They paid only $1,025.54 after writing off an adjustment of $2,256.18. I wrote Blue Cross stating I paid my 20 percent and they paid 25 percent and requested an explanation. Enclosed is their response. They had lowered their portion by 55 percent of the bill. Gosh, I wish I could run a business this way. Keep up your good work. Sincerely, Warren H. Risser Santa Barbara, CA.

Mr. STARK

Mr. STARK. Mr. Speaker, it's a day of biblical proportions--Congress debates the Ten Commandments and Charlton Heston prepares to present the staff he used as Moses to Mickey Mouse. The theater of the absurd becomes reality on the Hill and off. I walk through the valley of congressional hypocrisy and take spiritual inventory of the less than holy works of my colleagues on welfare. Without trying to upstage Moses, I offer the following principles for consideration: Treasure the children. Thou shalt not prioritize money above them. Thous shall not take the status of legal immigrants in vain. Thou shall not willfully push over 1 million children into poverty. Thou shall not deny disability payments to over 260,000 of the poorest children of our nation. Thou shall not bear false witness to over 800,000 elderly legal immigrants by terminating Medicaid and SSI assistance. Thou shall not deceive our nation's governors, forced to bear the burden of a disintegrated safety net and an evaporated entitlement, with the false prophecies of bonus payments and block grants. Thou shall not disgrace a nation in a time of widening gaps of wealth under the guise of reform. If Members look to the Bible for justification of their actions, they would profit from the book of Job: Do you limit wisdom to yourself? What do you know that we do not know? What insights do you have that we do not have? The gray-haired and the aged are on our side, men even older than your father. Why has your heart carried you away, and why do your eyes flash, so that you vent your rage against the meek, the humble, the poor of our nation? Job 15:8-13.

Mr. STARK

Mr. STARK. Mr. Speaker, I rise today to recognize a young man of outstanding character, courage, and compassion. Seanta Johnson, an African-American youth and a junior at Hayward High School in my district, is showing us what he's made of--and is encouraging other bay area youth to do the same. Much to the delight of his mom, who describes him as a ``self- starter,'' Seanta finds time to juggle school, sports, and community service. Seanta is an inquisitive student who is enthusiastic about school and who has maintained a high grade point average throughout his high school career. The second of three children, Seanta will be the first in his family to attend a 4-year college. He hopes to continue to study his favorite subjects, physiology and anatomy, and to prepare to enter the field of sports medicine. Seanta is also a member of the Hayward High School track and field team, and specializes in throwing the shot put. In addition to the demands of his busy schedue, Seanta has held a part-time job at Pizza Hut since age 15. During his free time, Seanta can be found at the East Oakland Youth Development Center, assisting children with organized physical development activities like weight training and basketball. More importantly, he takes the time to talk with them about working hard in school, finishing their homework, helping out at home, and treating themselves and others with respect. Seanta's family and teachers say he sets an excellent example for the youth at the center. He demonstrates confidence and leadership when advising kids at the center, and they look to him as a leader, teacher, and friend. Today, more than ever, our society is in danger of dividing itself along racial, economic, religious, political, and gender lines. The burning of black churches, the tensions over proposition 209, and the battle over welfare reform all threaten to divide us--but young men like Seanta remind us that we should be kinder to our neighbors and more sensitive to the needs of the children in our communities. This outstanding youth is devoting his time, talent, and imagination to helping the youth in the bay area to follow their dreams and pursue their goals. I believe we should learn from his shining example.

Mr. STARK

Mr. STARK. Mr. Speaker, I rise today to recognize Mr. Tom Ferrito of Los Gatos, CA, who will end his service on the Bay Area Air Quality Management District Hearing Board on April 21, 1997 as a result of the district's term limit rule. A successful full-time attorney, Tom Ferrito's accomplishments and credits earned him the State-mandated attorney position on the five- member Bay Area Quality Management District Hearing Board, on which he served 15 years. Prior to that service, Tom served 3 years on the district's board of directors. The Bay Area Quality Management District Hearing Board, a quasi- judicial body, adjudicates various types of situations and is guided by the code of judicial conduct adopted by the California Judges Association. The hearing board carries out the judicial function of the district, holding hearings on citizens' appeals on the rightful issue of permits, and disputes between air pollution control officers and operators on the interpretation of air pollution rules. Last year, the seven-county Bay Area Air Quality Management District was recognized by the Environmental Protection Agency as being the Nation's largest metropolitan clean air region. This title represents 40 years of progress toward improving air quality. It has been achieved by a long-term program of adoption and enforcement of regulations applicable to stationary sources--in a sound, methodical and sensitive manner. Tom Ferrito has played an active role in implementing that program and protecting the San Francisco Bay Area environment for over 18 years. As the senior member of the hearing board, Tom Ferrito has set high standards of honesty and excellence. He stands out as a committed citizen, willing to give of his time for the betterment of the environment at both the local and regional levels. The service of this accomplished attorney and dedicated public servant will be missed by myself and the entire Bay Area community. We wish him well in every future endeavor.

Mr. STARK

Mr. STARK. Mr. Speaker, Representative Bill Coyne and I have introduced legislation (H.R. 582) to stop immediately the overcharging of Medicare beneficiaries in hospital outpatient departments [HOPD's] I am pleased to report that the President's fiscal year 1998 Medicare budget also proposes to fix this gross overcharging of beneficiaries through a 10-year return to the 80-20 percent split that prevails in the rest of Medicare Part B. It is way past time that we fixed this problem. Four and a half years ago the National Committee to Preserve Social Security and Medicare wrote about it in their July/August issue of Secure Retirement. It is a good explanation of the problem--and why we should fix the problem this year, before it gets even worse. [From Secure Retirement, July/Aug. 1992] Why Medicare Outpatient and Inpatient Fees can be as Different as Apples and Oranges (By Jeff Archer) If you need surgery and your doctor recommends outpatient treatment, check the price first. While both physician fees and hospital inpatient charges are strictly controlled by Medicare, no similar limits are imposed on what an outpatient center may charge. As a result, Medicare beneficiaries are not protected from excessive charges by outpatient services, says a recent report by the Prospective Payment Assessment Commission, the non-partisan body created by Congress to study Medicare's payment systems. Seniors who don't have the most recent version of the Medicare Handbook might not realize this. Last year's handbook contained a chart of covered benefits for outpatient hospital treatment, which said: ``You pay . . . subject to deductible plus 20 percent of approved amount.'' But in reality, seniors may wind up having to pay more, possibly 30 percent or higher than Medicare's approved amount for the procedure. That's because Medicare actually has no direct control over the outpatient service fee. No matter how much is charged, Medicare tells beneficiaries they must pay 20 percent of the bill. Medicare does have approved amounts for these procedures, but they are used only to determine how much the health agency pays--not how much the beneficiary owes. So while the health care agency and health care providers talk apples and oranges, the beneficiary is left completely unprotected from excessive outpatient charges. The situation has been going on for years. In fact, Medicare itself has pointed out the problem and the need to control outpatient fees in the same way that hospital inpatient charges are regulated. ``Currently, the beneficiary pays 20 percent of whatever the [outpatient] hospital charges for a procedure, while Medicare pays 80 percent of a payment that is at least based on costs,'' former Medicare Administrator Gail Wilensky told Congress in 1991. ``Payment should be the same regardless of whether the procedure is performed in an outpatient department, an ambulatory surgical center or other center.'' Medicare beneficiaries also have realized the error. Kenneth Lee, of Everett, Wash., noticed the problem after his wife, Barbara, sought treatment as a hospital outpatient about two years ago. The Medicare form they received showed them having to pay 20 percent of the bill from the outpatient center. But when Mr. Lee called his Medicare representative, he found the health care agency paid the facility much less than 80 percent of the total bill. That meant the Lees actually had to pay more than 20 percent of Medicare's approved amount. ``They're saying there are two reasonable amounts, one for Medicare and one for you,'' says Mr. Lee, calling the practice double bookkeeping. ``It's misleading and false-- they don't cover 80 percent of the bill.'' The 1992 Medicare Handbook has been changed to indicate beneficiaries are responsible for 20 percent of the billed-- rather than the approved--amount. But outpatient service fees still are not controlled by Medicare. In its recent report to Congress, the Prospective Payment Assessment Commission called for controls on outpatient service fees, stating the current practice ``unfairly penalizes beneficiaries who receive care in the outpatient setting.''

Mr. STARK

Mr. STARK. Mr. Speaker, today I am introducing a bill that requires all Medicare-accrediting organizations to hold public meetings and to ensure that at least a third of the governing board consists of members of the public. Healthcare facilities must comply with certain conditions in order to participate in the Medicare Program. Through a process termed ``deemed status,'' the Health Care Financing Administration relies on accrediting organizations to assure that Healthcare facilities are providing quality services to Medicare beneficiaries. The Joint Commission on Accreditation of Healthcare Organizations is one such organization. If a facility is accredited by the joint commission, for example, it is deemed to meet Medicare's conditions of participation. When facilities are wrongly accredited, Medicare beneficiaries suffer. A 1988 Wall Street Journal investigation found that ``accreditation masks serious failings in possibly hundreds of the 5,100 hospitals in America that are inspected and approved by the joint commission.'' The Journal also reported that many patients died as a result of receiving substandard care in hospitals that were considered ``marginal'' and that ``many accredited hospitals had actually failed inspections but remained accredited for months, even years, as they sought to correct their problems.'' At a 1990 hearing, witnesses agreed on the need to improve the hospital accreditation process. Participants reported that accrediting organizations' survey standards lacked compatibility with Medicare's conditions of participation and that follow-up with noncompliant facilities was lacking. Today, I am focusing on the importance of an accrediting organization's accountability to the public. Accrediting bodies should be managed and directed by a balanced combination of healthcare professionals and community representatives and consumers. Currently, many accrediting bodies are directed solely by leaders of the same organizations which they accredit. This is nothing more than the fox watching the chicken house. The joint commission has attempted to increase its commitment to the public. Currently, 6 of its 28 accrediting board members are members of the public. Although a good start, it is not enough. We should reconsider the dependence of accrediting organizations on funding and direction from the same healthcare organizations which they survey and accredit. A July 1996 report from the public citizen health research group charged that the joint commission is ``a captive of the industry whose quality of service it purports to measure.'' Further, the group concluded that the joint commission ``fails to recognize the often conflicting interests of hospitals and the public'' and puts the interest of healthcare institutions first when conflicts arise. I question the credibility of accrediting bodies, because their income currently depends on the facilities they are supposed to be monitoring. Until a balance of representation is brought to the boards which lead accrediting organizations, we cannot assure the interests of the public are truly being considered. As the number of accrediting organizations increases, so does the need for public accountability. For this reason, I am introducing a bill that requires all Medicare-accrediting organizations to hold public meetings and to ensure that at least a third of the governing board consists of members of the public. This bill is a first step in assuring quality of care for our Nation's Medicare beneficiaries through the accreditation process. I am currently working on a more comprehensive bill that will make accrediting organizations more accountable--accountable to the public as well as to the health care financing administration. The upcoming bill will require the following: Accrediting organizations must release the status of all accredited facilities to the general public within a reasonable time frame. HCFA must scrutinize all advertising claims which use data from accrediting organizations, and must deny accreditation to all healthcare organizations which falsify accreditation-related information. Accrediting organizations must allow employees of healthcare organizations to meet with survey teams off-premises, must accept confidential testimony from healthcare workers during surveys, and must provide whistleblower protection for workers who report violations of accreditation rules. Accrediting organizations must publicly disclose all payments received from organizations that are being accredited. HCFA must work with accrediting organizations to develop a comprehensive crosswalk between the organization's and Medicare's standards and must resolve any differences. Accrediting organizations must notify HCFA when facilities are found to be noncompliant and must work with HCFA to assure that hospitals promptly correct identified problems and that HCFA is immediately informed of these actions. Some accrediting organizations are attempting to increase public accountability. For example, the joint commission publicly releases information about the performance of specific health care organizations so that beneficiaries are able to make educated decisions concerning their health care providers. the commission also has a site on the World Wide Web through which the public will be able to access status information about specific organizations by late this year. However, the joint commission is only one of the many organizations that accredits Medicare facilities. The goal of the bill I am introducing today is to begin the debate . . . accrediting organizations must be accountable to the public. We must guarantee that the public voice is represented in the organizations responsible for safety and quality in Medicare's healthcare facilities. When this is achieved, we can begin to assure beneficiaries that they will receive high quality treatment in all Medicare-approved facilities.

Mr. STARK

Mr. STARK. Mr. Speaker, today I am introducing the Essential Health Facilities Investment Act of 1997. This legislation will provide a financial helping hand to those hospitals and health centers that are in the front lines of dealing with our national health care crisis. This legislation allows for the expansion of community health services and the capital needs of safety-net health care facilities while at the same time attempting to limit the further duplication of unnecessary high technology services. This bill is similar to legislation that was introduced in the 103rd and 104th Congresses and which was included in the national health reform legislation that was approved by the Ways and Means Committee. It is my hope that this new Congress will work toward passage of this bill. At a time when we are faced with continually shrinking budgets and fiscal austerity, it is more important than ever to appropriate Federal moneys in the most cost-effective manner available while providing the most benefit to all our citizens. In terms of health care, this includes establishing and expanding community health programs designed to provide low-cost primary care to underserved populations to avoid subsequent high-cost emergency room visits. In addition, we must help to support those not-for-profit and public hospitals that deal with a disproportionate number of uninsured patients. In one comparative analysis, urban public hospitals averaged over 19,000 admissions, 242,000 outpatient visits, and nearly 4,000 live births per hospital. The urban private hospitals in the same areas registered just 7,000 admissions, 50,000 outpatient visits, and 760 live births. These safety-net facilities--the public and not-for-profit hospitals that serve a disproportionate share of uninsured and low-income patients-- are in essence the family doctor for many in our country. Though it would be far better to incorporate the uninsured into our national insurance pools and give them access to any health care facility they choose to visit, the stark reality is that they are dependent upon these safety-net hospitals for any and all of their health care. But the importance and benefits associated with public hospitals do not end there. In addition to caring for our Nation's most vulnerable populations, these hospitals provide a great deal of specialty care to their communities. Services such as trauma, burn units, and neonatal intensive care units are frequently found in these hospitals. Many of these services are too costly for other hospitals to provide. These hospitals are expected to provide quality care under extraordinary circumstances. As an example, they are frequently confronted with tragedies associated with our Nation's obsession with guns. Roughly half of all urban safety-net hospitals are equipped with a trauma center and serve as the first-line treatment facilities for victims of gun violence. The Federal Centers for Disease Control and Prevention predict that, by the year 2003, gunfire will have surpassed auto accidents as the leading cause of injury and death in the United States. Unlike victims of auto accidents who are almost always privately insured, 4 out of 5 gunshot victims are on public assistance. More than 60 urban trauma centers have already closed in the past 10 years. This means that less than one-quarter of the Nation's population resides near a trauma center. Gunshot wounds account for fewer than 1 percent of injuries in hospitals nationwide, yet account for roughly 9 percent of injury treatment costs. It is estimated that for every 1 of the 40,000 patients who die from a gunshot wound annually, 3 others suffer injuries serious enough to require hospitalization. Serving as a safety-net hospital and community provider places public hospitals at great financial risk. With threatened cutbacks and changes in the Medicare and Medicaid programs, coupled with tightened local budgets, public hospitals face an erosion of traditional sources of funding. Additionally, changes in the health care market, particularly the evolution of managed care and increased competition among providers, have further added to the financial pressures faced by these hospitals. Managed care's ability to attract tougher competition to the health care sector has decreased the urban safety-net hospital's ability to cost-shift some of the heavy losses incurred while providing uncompensated care. As a result, according to a June 1996, Prospective Payment Assessment Commission [ProPAC] report, hospitals in urban areas with high managed care penetration saw their payment-to-cost ratio decrease by 2 percent from 1992 to 1994. Declining margins have resulted in many urban hospitals cutting their level of charity care. In fact, ProPAC found that uncompensated care fell by 4.5 percent during the same time period. This represents clear evidence that more and more of the burden for providing charity care is being shifted to the public safety-net hospitals. As safety-net providers, public hospitals have historically provided large amounts of uncompensated care. In 1995, for instance, 67 of the member hospitals of the National Association of Public Hospitals [NAPH] provided $5.7 billion in bad debt and charity care, averaging $85,060,641 per hospital. Additionally, bad debt and charity care charges represented 25 percent of gross charges at these hospitals in the same year. According to data from the American Hospital Association [AHA], $28.1 billion in bad debt and charity care was provided nationwide. The NAPH member hospitals represent less than 2 percent of hospitals in the U.S., yet provide over 20 percent of bad debt and charity care nationally. During the last 15 years, public hospitals have been shouldering a greater portion of the uncompensated care burden. Additionally, private hospitals have begun competing for Medicaid patients which further erodes support for the public providers. Public hospitals rely heavily on payments from Medicare and Medicaid patients to cross-subsidize care for the indigent. As dollars from these programs move from the public to the private hospitals, the ability to function as a safety-net provider is severely tested. outline of the essential health facilities investment act of 1997 In title I of this legislation, Medicare's Essential Access Community Hospital Program [EACH] would be expanded to all States and a new urban Essential Community Provider Program [ECP] would be created. Funding would be provided for the creation of hospital and community health clinic networks that improve the organization, delivery, and access to preventive, primary, and acute care services for underserved populations. In title II, financial assistance for capital needs would be provided by the Secretary of HHS to safety-net facilities which serve a disproportionate share of uninsured and low-income patients. Funds for this legislation would be provided by a one-half percent on hospital gross receipts tax. In title III, financial and technical assistance would be provided to States engaged in review of capital expenditures for health care facilities and high technology equipment. Consideration of alternative, less costly, and existing services would be considered before any funds would be distributed. rebuilding the urban safety net Even though these essential access facilities fulfill a pivotal role in our Nation's health care system, their infrastructure suffers from gross neglect and under-investment. The buildings and systems that comprise the safety net are often antiquated. Without future re- investment, the inequities in this system will continue to grow, causing even more of America's underprivileged population to be medically abandoned. The average age of the physical plant of urban, public hospitals is nearly 27 years, compared to a national average for all hospitals of 7 years. The average capital expenditure for urban hospitals is $12,800 per bed compared to a national average expenditure for all hospitals of $23,700. A national survey of the Nation's safety-net hospitals found that lack of available hospital beds is resulting in severe overcrowding. Hospital corridors surrounding emergency rooms have begun to resemble triage units seen at the height of military campaigns. A recent study showed that approximately 50 percent of the hospitals in the three most severely impacted areas, Los Angeles, Detroit, and New York were forced to restrict emergency department access over 25 percent of the time. This is occurring despite the fact that occupancy rates of all hospitals have steadily declined during the last decade and are now barely above 60 percent. The average occupancy rate for safety-net hospitals is roughly 82 percent, with some reporting 100 percent occupancy, while private urban hospitals averaged just 67 percent. At any given time, approximately one-third of America's 924,000 hospital beds are empty. Our national priorities have created an excess of beds in areas where need doesn't exist. Likewise, a severe shortage has been created in areas where demand is overwhelming. This bill attempts to address and alleviate some of the pressure built up within the safety- net system. Historically, health care institutions have found it difficult to secure sufficient financing for capital renovation and expansion products. The financing exists within the market, yet the level of debt service required is often too burdensome for public institutions to manage. Even when revenue bonds are supported by local means, the bond ratings are frequently too low and interest rates too high. After all, these safety-net hospitals treat a high proportion of low-income patients which results in lower operating margins. These ratings have little to do with the ability of hospital administrators to manage their facilities. Rather, market analysts often consider the local appropriations sustaining these facilities to be too uncertain. Thus, the facility is simply prohibited from securing necessary capital. For facilities facing the greatest demand in our inner-city and rural areas, the traditional method of financing through Federal funding is no longer available. Many of these facilities were originally built with grants or loans under the Hill-Burton Program. These funds have not been available for years. The lack of Federal dollars available to repair and rebuild these facilities, combined with the strain on the resources of local governments, means that the capital needs of safety- net facilities have gone unmet. This legislation does not propose that the Federal Government take on a massive rebuilding program like the Hill-Burton Program. Nor does it propose that the Federal Government take sole responsibility to solve this problem. However, this legislation is designed to support State and local efforts to upgrade the capacity of these facilities. In drafting this bill, we recognized that the Federal Government has limited resources it can tap for this purpose. Therefore, funding for this program would be achieved through a 0.5 percent--one-half of 1 percent--tax which would be levied against the gross revenues of all hospitals. Hospital revenues received from Medicaid would be exempt from the tax. Revenue from this relatively modest trust fund would be used by those inner-city and rural facilities across America with the greatest need for assistance. Eligible facilities would include those designated as essential access community hospitals, rural primary care hospitals, large urban hospitals, and qualified health clinics that are members of community health networks. Assistance from the capital financing trust fund would be provided in the form of loan guarantees, interest rate subsidies, direct matching loans, and in the case of urgent life and safety needs, direct grants. The Federal assistance would be used to leverage State and local government and private sector financing. Repayment would be made back to the trust fund. For fiscal years through 2002, $995 million will be made available each year through the capital financing trust fund for these safety-net facilities. With relatively limited resources available to meet the significant health facility infrastructure needs across the Nation, decisions to finance the reconstruction, replacement, or acquisition of facilities and equipment must be made only after first considering whether existing service capacities could be tapped to meet the needs of the underserved more effectively. The next section of this bill is designed to ensure that the capital expenditure decisions supported by this legislation are considered within the context of the entire community's needs and capacities. maximizing capital resources Many communities, especially those in rural and inner-city areas, lack the facilities and equipment necessary to adequately meet the needs of their residents at the same time that other hospitals are experiencing a capital oversupply. This oversupply leads to inflationary price pressure. The Essential Health Facilities Investment Act of 1997 will expand medical services to those in need only if the planning authorities feel that the current local medical facilities are unable to meet the needs of the community. In addition, this bill specifically states that only projects that will lead to an increase in the quality of care rendered will be funded. In other words, requests for frivolous, redundant facilities will be denied funding. One area of oversupply is hospital beds. According to the ``Dartmouth Atlas of Health Care,'' published by the Dartmouth Medical School in 1996, there were more than 827,000 acute care hospital beds in the United States in 1993. The average number of beds per thousand residents was 3.3. Following adjustments for demographic differences, the number of hospital beds per thousand persons varied by a factor of 2.8 across the Nation. The range was from fewer than 2 beds per thousand residents to more than 5 beds per resident. Some of the hospitals with this excess capacity could be closed, or at the very least, denied additional public capital improvement funds. Still, we must also make every effort to ensure that every geographic and community area receives adequate hospital services. In order to avoid exacerbating the current oversupply of hospital beds, we must establish and satisfy safeguards and criteria for the allocation of Capital Financing Trust Fund, EACH, and ECP funds. Redundancies and inefficiencies with hospital facilities and services are well known. A study in the Annals of Internal Medicine showed that even though America had 10,000 mammography machines at the time of the report, we essentially used only 2,600 of them. This same study asserts that even if every woman in America had a mammography every time the American Cancer Association suggested it was appropriate, we would use only 5,000 of the 10,000 functioning mammography machines. In addition to a vast waste of valuable resources, this excess capacity can be considered detrimental to the health of patients. Applying the guidelines endorsed by the American Hospital Association and the American College of Cardiologists, 35 percent of the open-heart surgery centers in California perform less than the minimum number of procedures required to achieve an acceptable level of competency and quality. We should not reward those hospitals that insist upon maintaining high cost, redundant, tertiary care services that fail to maintain a minimum level of quality. Admittedly, the availability of reliable outcome studies covering high technology procedures is limited, but there exists reputable data concerning hip replacement surgery and coronary artery bypass surgery [CABS] success factors. The October 25, 1995 issue of the Journal of the American Medical Association cites a study titled ``Regionalization of Cardiac Surgery in the United States and Canada'' which shows that: In California, age and sex-adjusted mortality rates in hospitals performing 500 or more CABS operations per year were 49% lower than in hospitals performing fewer than 100 CABS operations * * * Hip replacement surgery data and this coronary artery bypass surgery study effectively demonstrate a direct correlation between the volume of procedures performed and the resulting success rates. I propose that in order to be considered for Medicare reimbursement, a coronary artery bypass surgery hospital must meet the minimum criteria for quality outlined by the Secretary in the Medicare Centers of Excellence for CABS operations. Expanding on this idea, I suggest that any hospital wishing to improve a tertiary care service using resources in excess of $1 million from the Capital Financing Trust Fund must not only demonstrate that they are indeed a safety-net health care provider, but also meet standards of quality for that particular service outlined by the Secretary. As additional reliable outcome studies for other expensive, capital-intensive services become available, disbursement of Capital Financing Trust Funds for improvements will be dependent upon demonstration of adequate quality performance as measured by HCFA's quality outcome measurement. expanding the each program A third provision of this legislation is designed to facilitate the organization, delivery, and access to primary, preventive, and acute care services for medically underserved populations by fostering networks of essential community providers. The Essential Access Community Hospital Program was enacted in 1989. This Medicare initiatives provides a unique Federal-State partnership to assure the availability of primary care, emergency services, and limited acute inpatient services in rural areas. The EACH Program was created to maximize resources available to rural residents by establishing regional networks of full-service hospitals [EACH's] connected to limited-service rural primary care hospitals [RPCH's]. Since 1991, over $17 million has been awarded in seven participating States. In a March 1993 report by the Alpha Center, the strengths of the EACH Program were clearly articulated. They stated: The EACH Program has released an enormous amount of creative energy focused on the development of regional networks that link health care providers in remote areas with those in more densely populated communities. A letter from the project directors of the seven EACH States contained the following comment. We believe the EACH concept will assist policymakers, regulators and changemakers in the long process of refocusing rural health care delivery. I am confident that the EACH Program provides a framework for greatly improving the quality and efficiency of primary care, emergency services, and acute inpatient services in rural areas across the country. As a result, this legislation contains language that would extend the EACH Program to all States. In addition, creating a new urban Essential Community Provider Program [ECP] would carry the network concept to our Nation's inner cities. While different from the rural EACH Program, the urban ECP Program would concentrate on networking hospitals with primary care service centers, particularly federally qualified health centers. In addition, ECP networks could combine with rural networks. A report by the General Accounting Office found that ``more than 40 percent of emergency department patients and illnesses or injuries categorized as nonurgent conditions.'' The growth in the number of patients with nonurgent conditions visiting emergency departments is greatest among patients with little or no health insurance coverage-- exactly those populations served by essential community providers. Networks of essential community provider hospitals and clinics will help steer patients to more appropriate clinical settings and, as a result, maximize the resources available in both emergency and nonemergency settings. The concept of inner-city provider networks designed to ease access and improve continuity of care is not new. Initiatives are currently being pursued in urban areas across this country to do just that. This legislation would boost these efforts through critical financial and structured technical assistance. Funding under the ECP Program would be available for the expansion of primary care sites, development of information, billing and reporting systems, planning and needs assessment, and health promotion outreach to underserved populations in the service area. Facilities eligible to participate in the ECP networks--those designated as ``essential community providers''--include Medicare disproportionate share hospitals, rural primary care hospitals, essential access community hospitals, and federally qualified health centers [FQHC] or those clinics which otherwise fulfill the requirements for FQHC status except for board membership requirements. In order to facilitate integration of hospitals and clinics into these community health networks, physicians at network clinic sites would be provided admitting privileges at network hospitals. In addition, the placement of residents at network-affiliated FQHC's would be counted in the total number of residency positions when determining the indirect medical education [IME] reimbursement to hospitals under Medicare. The authorized funding level for rural EACH and urban ECP would be increased tenfold, from the current level of $25 to $250 million annually. I am introducing the Essential Health Facilities Investment Act of 1997 because I believe this legislation is an important and necessary component of the effort to reform our Nation's health care delivery system. The initiatives in this bill are essential to ensuring access to high quality and efficient services for everyone in our communities.

Mr. STARK

Mr. STARK. Mr. Speaker, I am pleased to introduce the Patient Freedom of Choice Act of 1997. Previously, I have sponsored legislation that restricts physicians from self-referral because this practice leads to overutilization and increased health care expenses. This legislation is designed to rectify a similar problem. Today, nonprofit hospitals, forprofit hospitals, and large health care conglomerates have acquired their own posthospital entities such as home health care agencies, durable medical equipment businesses and skilled nursing facilities so as to refer discharged patients exclusively to their own services. As a result, many nonhospital based entities have seen inflows of new patients completely halted once a hospital acquires an agency in their service area. The effects of this self-referral trend are harmful. Hospitals that refer patients exclusively to their own entities eliminate competition in the market and thereby remove incentives to improve quality and decrease costs. Further, hospitals are able to selectively refer patients that require more profitable services to their own entity while sending the less profitable cases to the nonhospital based entities. The nonhospital entity is forced to either raise prices or leave the market. Worst of all, patients have no voice in deciding which entity provides the services. This legislation remedies the problem by leveling the playing field. First, hospitals will be required to provide those patients being discharged for post-hospital services with a list of all participating providers in the service area so that the patient may choose their provider. Second, hospitals must disclose all financial interest in post hospital service entities to the Secretary of Health and Human Services. In addition, they must report to the Secretary the percentage of post hospital referrals that are made to their self-owned entities as well as to other eligible entities. A hospital that fails to comply with the bill's requirements would be subject to a civil money penalty of $10,000 for each violation. This legislation does not hinder a hospital's ability to offer its own services. It merely guarantees that all providers will have an opportunity to compete in the market. Most importantly, it guarantees that patients will have choice when selecting their provider. I am drafting a similar bill for introduction later this year which would require that all providers--not just hospitals--give freedom of choice to Medicare and Medicaid beneficiaries. I see no reason why a patient should be held captive to a provider's preference for referral--it should be the patient's choice. For example, home health agencies who refer clients to nursing homes should provide the beneficiary with a complete list of all Medicare-Medicaid certified nursing homes in the area in which the patient resides. This requirement would ensure that all Medicare and Medicaid beneficiaries are given a choice of provider regardless of referral source. Additionally, I will add to the next bill a third party cause of action which would allow these providers to bring suit against hospitals for failing to adhere to the proper discharge planning process. Attached is a letter that typifies the current problem in the home health services market. Visiting Nurse Association of Greater Philadelphia, December 1, 1995. Re United States v. Heartland Health Systems Inc. Civil Action No. 95-6171-CV-SJ-6. Ms. Gail Kursh, Chief, Professions & Intellectual Property Section/Health Care Task Force Antitrust Division, U.S. Department of Justice, Washington, DC. Dear Ms. Kursh: I am writing to urge that the Justice Department not consent to the proposed final judgment in the above-referenced case, because the ``Referral Policy'' regarding provision of home health care does not adequately protect patient choice and fair competition. The VNA of Greater Philadelphia is the largest home health agency in Pennsylvania. We are a non-profit, community-based agency which has served communities in southeastern Pennsylvania, including the City of Philadelphia, for 110 years. We provide home health services to approximately 2,000 patients a day, many of whom are Medicare and/or Medicaid patients referred for care directly following an episode of hospitalization. Patient choice and fair competition are protected by both Medicare and Medicaid law and by antitrust provisions. The proposed Heartland referral policy undermines these protections. Heartland would have no obligation to provide reasonable information about other home health providers in the community for patients who have expressed no provider preference. Telling a hospitalized patient that there are other providers listed in the telephone book and then giving the patient ``time to investigate'', all in the context of the Heartland representative extolling the virtues of its home health service, clearly encourages steering patients to the hospital-owned agency. Further, a policy of stonewalling patient's requests for information about other providers, places the discharge planning staff in the position of denying knowledge that they actually have about alternate providers. This clearly undermines continuity of care for patients. Although the Heartland consent decree may have no formal precedential impact, in practice this decree could have far- reaching, negative impact on patients and on independent providers, including visiting nurse associations, because it would send a clear signal that anti-trust and patient choice protections are no longer to be taken seriously. We urge that you require a more aggressive policy to assure that vulnerable, hospitalized patients truly have access to the information they need to make an informed choice of their home health provider. Sincerely, Stephen W. Holt.

Mr. STARK

Mr. STARK. Mr. Speaker, it is America's shame that 10 million children--mostly the children of working parents--do not have health insurance. Health insurance equals access to health care. Lack of access to health care equals increased deaths and diminished lives. We must find a way to insure these children. Florida has developed a program run through the schools that provides a comprehensive set of benefits for children for about $50 per month. The Robert Wood Johnson Foundation is giving $3 million in grants to seven other States to see if they can replicate Florida's success. Following is material from the RWJ Foundation's ``Call for Proposals'' which describes the Florida program. I think that the Federal Government might look to this State example as a way it could quickly and efficiently reach most of the 10 million uninsured. If we used President Clinton's $500 tax credit idea with a program of school- based health insurance, we could obtain low cost but comprehensive insurance for millions of children without new bureaucracies or hassles. I urge everyone to think how we could combine the Florida idea with Federal tax legislation to make new money available to end the national disgrace of 10 million uninsured children. purpose Healthy Kids is a program designed to help states develop a comprehensive, affordable health insurance product for uninsured children. The program, initiated in 1988, provides grant funds to replicate a successful model in Florida that helps families that do not qualify for government aid--but that cannot afford private health insurance--buy health insurance for their children. Florida Healthy Kids is a subsidized insurance product sold through schools. School districts are used as a grouping mechanism to lower the cost of insurance for children, similar to the role employers play in providing group coverage to their employees. Up to $3 million has been made available for the Healthy Kids replication program. Under this three-year competitive program, approximately seven states will be awarded grants. These include planning grants for states to develop their programs and implementation grants for those ready to proceed. background One child out of every seven in America does not have health insurance, according to a 1996 study by the Employee Benefits Research Institute. The number of uninsured children is increasing and current trends in private health care coverage and welfare reform threaten to accelerate the rate of increase. The majority of Americans get their health insurance coverage from group insurance plans provided through their employers. Historically, covering a worker generally meant covering his or her children as well, but rising health care costs have begun to change that. Recent years have seen a drop in employer-provided dependent coverage (from 61 percent of children in 1988 to 54 percent in 1993). Additionally, many lower-wage workers cannot afford the higher costs of family coverage. Expansions in state Medicaid programs were able to cover many children who otherwise would have been uninsured. But rising health care costs and recent changes in federal welfare rules have many experts predicting that further expansions will not be possible. The result of these two trends is that children are 40 percent more likely to be uninsured than adults. For children with medical problems, lack of insurance doubles their chance of not getting care. Very few insurance companies offer policies only for children, but a model program, Florida Healthy Kids, has demonstrated that a children's insurance product has a place in the market. The feasibility of a children's school enrollment-based health insurance program was first explored in a 1988 University of Florida study and in a subsequent pilot program, jointly funded by the State of Florida and The Robert Wood Johnson Foundation. The program designed a children's insurance product and used school districts to group children into purchasing pools to make the product affordable. The product was sold to families who did not qualify for government aid, but could not afford private health insurance for their children. Moving the insurance contract from the employer to the school district also enhanced the portability of coverage, especially for families with a child with a pre-existing condition. A recent evaluation of the program found a 70 percent decrease in emergency room visits per enrollee. In 1995, enrollees had more than 110,000 primary care visits, more than 9,500 children were immunized and 719 children received eyeglasses. Teachers also reported improved attendance in school. The Florida Healthy Kids model has two goals: create a comprehensive insurance product for school children and facilitate the provision of preventive care for children. The Florida program has the following components: Eligibility: All children enrolled in school grades K-12 are eligible to participate in the program. Pre-school age siblings may also join. Benefits: The benefits package emphasizes prevention and is designed specifically for children's medical needs. It features inpatient and outpatient care, including dental, vision, and mental health. There are no pre-existing condition limitations and no medical underwriting. Co- payments are required for some services, such as emergency rooms, eyeglasses, office visits, and prescriptions. In each school district, insurance companies bid to participate in the program. To participate, companies must demonstrate that they have an adequate and accessible network of providers. Role of the schools: Schools serve as the central institution within communities, fostering relationships between the local project, community leaders, and area business groups. Schools also verify student enrollment, distribute marketing materials and applications, provide parent outreach, enhance health education opportunities, and provide interpreters and translators for program activities and materials. Financing: Premiums are covered by a combination of state and local/community funds, as well as family contributions based on a sliding scale. In Florida, the state contributes 25 percent, local/community funds comprise 40 percent, and families contribute approximately 35 percent of the premium. The state's initial contribution is higher, allowing communities to implement the program with minimal start-up contributions (approximately five percent). The state portion declines over time as the local match and program enrollment increases. Administration: In Florida, the Healthy Kids Corporation facilitates the efforts of all the parties in each site. This state-funded, 501(c)(3) corporate entity, manages the contractual arrangements for billing and administration of the product, and manages the bidding process with insurers at each site. A private third party administrator (TPA) helps with initial eligibility determinations, and handles the enrollment functions by processing applications and collecting monthly premiums paid by the families. In addition, the TPA verifies continuing eligibility by checking monthly to see that program participants are not receiving any services through the state Medicaid program.

Mr. STARK

Mr. STARK. Mr. Speaker, today I am introducing the National Mental Health Improvement Act of 1997. This bill will provide parity in insurance coverage of mental illness and improve mental health services available to Medicare beneficiaries. It represents an urgently needed change in coverage to end discrimination against those with mental illness and to reflect the contemporary methods of providing mental health care and preventing unnecessary hospitalizations. My bill prohibits health plans from improving treatment limitations or financial requirements on coverage of mental illness, if similar limitations or requirements are not imposed on coverage of services for other health conditions. The bill also expands Medicare part A and part B mental health and substance abuse benefits to include a wider array of settings in which services may be delivered. It eliminates the current bias in the law toward delivering services in general hospitals by permitting services to be delivered in a variety of residential and community-based settings. Through use of residential and community- based services, costly inpatient hospitalizations can be avoided. Services can instead be delivered in settings which are most appropriate to an individual's needs. In 1993, as a nation, we spent approximately $67 billion for the treatment of mental illness and another $21 billion for substance abuse disorders. Medicare expenditures in these areas for 1993 were estimated at $3.6 billion or 2.7 percent of Medicare's total spending. Over 80 percent of that cost was for inpatient hospitalization. In addition to the direct medical costs associated with the treatment of mental illness, there are significant social costs resulting from these disorders. Treatable mental and addictive disorders exact enormous human, social, and economic costs--individual suffering, breakup of families, suicide, crime, violence, homelessness, impaired performance at work, and partial or total disability. It is estimated that mental and addictive disorders cost the economy well over $300 billion annually. This includes productivity losses of $150 billion, health care costs of $70 billion, and other costs, e.g. criminal justice, of $80 billion. Two to three percent of the population experience severe mental illness disorders. Many more suffer from milder forms of mental illness. Roughly 1 out of 10 Americans suffer from alcoholism or alcohol abuse and 1 out of 30, from drug abuse. This population is very diverse. With appropriate treatment, the mental health problems of some people can be resolved. Others have chronic problems that can persist for decades. Indeed, there are those who battle mental illness their entire lives. Mental illness and substance abuse disorders come in many forms and include many different diagnoses as well as ranges in levels and duration of disability. Still, these disorders do not have full parity in coverage by insurance plans. In the last congressional session, parity in the treatment of mental illness was a widely and hotly debated issue. The final version of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 included Title VII-- Parity in the Application of Certain Limits to Mental Health Benefits. This represents a start in creating solutions to address a problem that has been ignored far too long. But it's not enough. The act essentially states that if a health insurance plan or coverage does not include an aggregate lifetime limit on substantially all medical and surgical benefits, the plan or coverage may not impose any aggregate annual or lifetime limit on mental health benefits. Additionally, in the act, ``mental health benefits'' refers to benefits with respect to mental health services, as defined under the terms of the plan or coverage, but does not include benefits with respect to treatment of substance abuse or chemical dependency. Furthermore, the Act included exemptions in coverage requirements for small employers. If an employer has at least 2 but not more than 50 employees, they can be exempt from the new coverage requirement. Finally, if a group health plan experiences an increase in costs of at least 1 percent, they can be exempted in subsequent years. The inclusion of title VII into the VA--HUD bill is important because it represents a starting place. But now we must do more. My bill today addresses two fundamental problems in both public, as well as private, health care coverage of mental illness today. First, despite the prevalence and cost of untreated mental illness, we still lack full parity for treatment. The availability of treatment, as well as the limits imposed, are now linked to coverage for all medical and surgical benefits. Whatever limitations exist for those benefits will also apply to mental health benefits. Let's not forget the small employers either. If a company qualifies for the small employer exemption, the insurance companies will be able to set different, lower limits on the scope and duration of care for mental illness compared to other illness. This means that people suffering from depression may get less care and coverage than those suffering a heart attack. Yet, both illnesses are real. Additionally, access problems to mental health benefits can result from these restrictions. In general, about 50 percent of all health plans limit mental illness coverage in some form. Approximately 88 percent limit hospitalization to 30 to 60 days. Outpatient benefits are limited by visit or dollar amounts in 85.5 percent of medium to large plans and 70 percent of small plans. About 80 percent of all plans limit inpatient care in some form and 99 percent of plans limit outpatient coverage. Access to equitable mental health treatment is essential. It can be done at a reasonable price. The increased costs in insurance premiums in the private sector is in the range of 3.2 to 4.0 percent. It is estimated that about $2.50 per month is the cost of fully offsetting the premium increase by an increase in the deductible. Two dollars and fifty cents is a small price to pay for ending health care discrimination. Second, the diagnoses and treatment of mental illness and substance abuse has changed dramatically since the Medicare benefit was designed. Treatment options are no longer limited to large public psychiatric hospitals. The great majority of people can be treated on an outpatient basis, recover quickly, and return to productive lives. Even those who once would have been banished to the back wards of large institutions can now live successfully in the community. But the Medicare benefit package of today does not reflect the many changes that have occurred in mental health care. This bill would permit Medicare to pay for a number of intensive community-based services. In addition to outpatient psychotherapy and partial hospitalization that are already covered, beneficiaries would also have access to psychiatric rehabilitation, ambulatory detoxification, in-home services, day treatment for substance abuse, and day treatment for children under age 19. In these programs, people can remain in their own homes while receiving services. These programs provide the structure and assistance that people need to function on a daily basis and return to productive lives. They do so at a cost that is much less than inpatient hospitalization. For example, the National Institute of Mental Health in 1993 estimated that the cost of inpatient treatment for schizophrenia can run as high as $700 per day, including medication. The average daily cost of partial hospitalization in a community mental health center is only about $90 per day. When community-based services are provided, inpatient hospitalizations will be less frequent and stays will be shorter. In many cases, hospitalizations will be prevented altogether. This bill will also make case management available for those with severe mental illness or substance abuse disorders. People with severe disorders often need help managing many aspects of their lives. Case management assists people with severe disorders by making referrals to appropriate providers and monitoring the services received to make sure they are coordinated and meeting the beneficiaries' needs. Case managers can also help beneficiaries in areas such as obtaining a job, housing, or legal assistance. When services are coordinated through a case manager, the chances of successful treatment are improved. For those who cannot be treated while living in their own homes, this bill will make several residential treatment alternatives available. These alternatives include residential detoxification centers, crisis residential programs, therapeutic family or group treatment homes, and residential centers for substance abuse. Clinicians will no longer be limited to sending their patients to inpatient hospitals. Treatment can be provided in the specialized setting best suited to addressing the person's specific problem. Right now in psychiatric hospitals, benefits may be paid for 190 days in a person's lifetime. This limit was originally established primarily in order to contain Federal costs. In fact, CBO estimates that under modern treatment methods, only about 1.6 percent of Medicare enrollees hospitalized for mental disorders or substance abuse used more than 190 days of service over a 5-year period. Under the provisions of this bill, beneficiaries who need inpatient hospitalization can be admitted to the type of hospital that can best provide treatment for his or her needs. Inpatient hospitalization would be covered for up to 60 days per year. The average length of hospital stay for mental illness in 1995 for all populations was 11.5 days. Adolescents averaged 12.2 days; 14.6 for children; 16.6 days for older adolescents; 8.6 days for the aged and disabled; 9.9 days for adults. A stay of 30 days or fewer is found in 93.5 percent of the cases. The 60- day limit, therefore, would adequately cover inpatient hospitalization for the vast majority of Medicare beneficiaries, while still providing some modest cost containment. Restructuring the benefit in this manner will level the playing field for psychiatric and general hospitals. The bill I am introducing today is an important step toward providing comprehensive coverage for mental health. Further leveling the health care coverage playing field to include mental illness and timely treatment in appropriate settings will lessen health care costs in the long run. These provisions will also lessen the social costs of crime, welfare, and lost productivity to society. This bill will assure that the mental health needs of all Americans are no longer ignored. I urge my colleagues to join me in support of this bill. A summary of the bill follows: title i provisions The bill prohibits health plans from imposing treatment limitations or financial requirements on coverage of mental illness if similar limitations or requirements are not imposed on coverage of services for other conditions. The bill amends the tax code to impose a tax equal to 25 percent of the health plan's premiums if health plans do not comply. The tax applies only to those plans who are willfully negligent. title ii provisions The bill permits benefits to be paid for 60 days per year for inpatient hospital services furnished primarily for the diagnosis or treatment of mental illness or substance abuse. The benefit is the same in both psychiatric and general hospitals. The following ``intensive residential services'' are covered for up to 120 days per year: residential detoxification centers; crisis residential or mental illness treatment programs; therapeutic family or group treatment home; and residential centers for substance abuse. Additional days to complete treatment in an intensive residential setting may be used from inpatient hospital days, as long as 15 days are retained for inpatient hospitalization. The cost of providing the additional days of service, however, could not exceed the actuarial value of days of inpatient services. A facility must be legally authorized under State law to provide intensive residential services or be accredited by an accreditation organization approved by the Secretary in consultation with the State. A facility must meet other requirements the Secretary may impose to assure quality of services. Services must be furnished in accordance with standards established by the Secretary for management of the services. Inpatient hospitalization and intensive residential services would be subject to the same deductibles and copayment as inpatient hospital services for physical disorders. Part B Provisions Outpatient psychotherapy for children and the initial 5 outpatient visits for treatment of mental illness or substance abuse of an individual over age 18 have a 20% copayment. Subsequent therapy for adults would remain subject to the 50% copayment. The following intensive community-based services are available for 90 days per year with a 20% copayment (except as noted below): partial hospitalization; psychiatric rehabilitation; day treatment for substance abuse; day treatment under age 19; in home services; case management; and ambulatory detoxification. Case management would be available with no copayment and for unlimited duration for ``an adult with serious mental illness, a child with a serious emotional disturbance, or an adult or child with a serious substance abuse disorder (as determined in accordance with criteria established by the Secretary).'' Day treatment for children under age 19 would be available for up to 180 days per year. Additional days of service to complete treatment can be used from intensive residential days. The cost of providing the additional days of service, however, could not exceed the actuarial value of days of intensive residential services. A non-physician mental health or substance abuse professional is permitted to supervise the individualized plan of treatment to the extent permitted under State law. A physician remains responsible for the establishment and periodic review of the plan of treatment. Any program furnishing these services (whether facility- based or freestanding) must be legally authorized under State law or accredited by an accreditation organization approved by the Secretary in consultation with the State. They must meet standards established by the Secretary for the management of such services.

Mr. STARK

Mr. STARK. Mr. Speaker, I am introducing today a bill to help low- income working families buy health insurance for their uninsured children. Families who buy an individual children's health insurance policy will be given a 95 percent refundable tax credit against the cost of the policy. Health insurance equals access to health care. Access to health care equals better health and a better quality of life. It is that simple. Health insurance can mean the difference between life and death--and between a good quality life and a stunted life. A recent GAO report provides a concise summary of why the lack of insurance is so important. Studies have shown that uninsured children are less likely than insured children to get needed health and preventive care. The lack of such care can adversely affect children's health status throughout their lives. Without health insurance, many families face difficulties getting preventive and basic care for their children. Children without health insurance or with gaps in coverage are less likely to have routine doctor visits or have a regular source of medical care. . . . They are also less likely to get care for injuries, see a physician if chronically ill, or get dental care. They are less likely to be appropriately immunized to prevent childhood illness--which is considered by health experts to be one of the most basic elements of preventive care. Numerous studies have underscored the importance of access to health insurance. Despite the widespread recognition of the problem, there are 10 million children in the United States without health insurance. Said differently, 14.2 percent of all children are uninsured, according to the latest analysis of the Bureau of Census' March 1995 current population survey by the General Accounting Office (GAO). Many analysts predict that this figure will continue to grow, mainly because private health insurance continues to decrease. Private coverage--employer-based and individually-purchased insurance--for children declined steadily between 1987 and 1993, from 73.6 percent down to 67.4 percent of all children. Currently 40 percent of children are not covered under their parents' employment based health insurance. According to experts at the Center for Health Policy Research at George Washington University, one child loses private coverage approximately every minute. Health insurance for children in America is getting worse--not better. With the recent attack on welfare, and therefore Medicaid, it may get disastrously worse--fast. We desperately need to reverse the trend of rising uninsured rates for children. The General Accounting Office recently issued a report to Senator Christopher Dodd, dated June 17, 1996, entitled ``Health Insurance for Children: Private Insurance Coverage Continues to Deteriorate,'' The report states The number of children without health insurance coverage was greater in 1994 than at any time in the last 8 years. In 1994, the percentage of children under 18 years old without any health insurance coverage reached its highest level since 1987--14.2 percent or 10 million children who were uninsured. In addition, the percentage of children with private coverage has decreased every year since 1987, and in 1994 reached its lowest level in the past 8 years--65.6 percent * * *. Several States have built on existing programs to expand health insurance coverage for uninsured children. At the State level, the current strategy to cover the uninsured is to fill in the gaps in insurance coverage. In July of 1996, Massachusetts adopted coverage expansions for children in Medicaid in the State's Children's Medical Security Plan; in New York and Florida as well funds were appropriated to extend children's health insurance programs to additional children. Although a few States have moved forward to expand health insurance coverage for children, it is not enough. We need to do more. The bill I am introducing today is not a mandate; it does not require any individual to buy health insurance. It does, however, provide incentives for the sale and purchase of individual children's health insurance policies, and it does help families, especially very low income families, buy a policy of their choice. The bill would create a refundable tax credit of 95 percent of the cost of the premium to buy health insurance for a child. The credit is available to families based on a computation of adjusted gross income plus an additional $5,000 amount for each child covered. This bill is a small, incremental step forward. It is by no means everything I would like. If I could waive a magic wand, I would make sure that everyone in America had high quality health insurance tomorrow morning. That isn't going to happen--but this small step, starting with children, could help millions of children grow up to be healthier, more productive citizens. Like my amendment which started the COBRA Health Continuation program which has been used by 40 million Americans, this bill could make a world of difference to millions of Americans in the years ahead. We spend long hours debating whether there should be prayer in school, but no time discussing how much parents pray that their children don't get sick because the parents can't pay the bills. We spend days debating obscenity on the Internet, but little time debating how obscene it is for a society as rich as ours to have so many children and parents unable to seek adequate medical care. It's time to debate a critical issue--the health of our children. To repeat, the bill is not a mandate, but a chance for the 99.99 percent of parents who care to have affordable health insurance for their children. It uses the private market exclusively. It is a first step. I welcome cosponsors for the bill, and comments and suggestions from the public on ways to improve the bill. The following is a summary of the bill: Children's Health Insurance Act of 1997 Summary i. offering of policy Group health plans must make available qualifying coverage for eligible children whose parent(s) has group health coverage under the plan. Group health plans must offer coverage at least annually. Each insurer that offers health insurance coverage must have available for purchase health insurance for eligible recipients under the age of 21. A health insurance policy must be reasonably priced (it is reasonably priced if the premium or other charge for the coverage does not exceed 150 percent of the average price for similar coverage offered in the same state). ii. benefit package The benefit package must include benefits provided under Medicare (parts A and B) plus well child care benefits including newborn and well baby care, routine office visits, immunizations, routine lab tests, preventive dental care, and EPSDT services. A prescription drug benefit for catastrophic costs is also included. There is no cost sharing for preventive services. iii. qualifying dependent A qualifying young dependent is defined as an individual who is under 21 years of age, and is claimed as a dependent for tax purposes. It does not include an individual who has applied for and who has been determined eligible for Medicaid. IV. Tax Credit Each taxpayer who purchases a health insurance policy for their dependent receives a tax credit in an amount up to 95 percent of the cost of the premium to buy health insurance for a qualifying dependent. The credit is available to taxpayers based on a computation of adjusted gross income plus an additional $5,000 amount for each child covered. There is full tax credit provided at the adjusted gross income of up to $15,000 plus $5,000 per child covered by the health insurance policy. The ``$15,000'' figure represents approximately 200 percent of poverty for an individual under the age of 65. For example, a family with adjusted gross income of $25,000 and two qualifying children would receive a refundable tax credit of 95 percent of total premium paid for coverage of the two children. As a family's income rises and the need for a subsidy is less critical, the credit phases out. The credit is available only to subsidize traditional health insurance coverage for children. The bill provides for an advanced payment structure for 60 percent of the tax credit similar to the earned income tax credit advanced payment system. A return relating to premiums received for health insurance coverage for children would be required. V. Excise Tax The bill provides for an excise tax on any group health plan (25 percent of each premium received by the group health plan for the plan year in which the failure occurs) or insurer that offers individual health insurance policies (25 percent of the total amount of the premiums paid to the insurer for such coverage for the plan year in which the failure occurs) who fails to offer an individual children's health insurance policy for sale. The tax would not apply where the failure to offer a children's health insurance policy was due to reasonable cause and not willful neglect. The tax would also not occur if the failure to offer the plan was corrected within a 30 day period. VI. Other Provisions Medicaid cost-sharing assistance for qualifying children with family income below 150 percent of the poverty line would be financed 100 percent by the Federal Government. There is coordination with other tax provisions subsidizing health costs to disallow the credit in instances where the taxpayer also claims a medical expense for the same premium cost or claims a deduction for health insurance costs of self-employed individuals. Grants to states for health insurance outreach and information programs would be established.

Mr. STARK

Mr. STARK. Mr. Speaker, today, I am introducing a variation of a bill proposed in the last Congress by our colleague, Representative Sam Gibbons of Florida, to provide universal health insurance for all American children and their mothers during pregnancy. The bill, entitled the Healthy Start Act of 1997, will end the national disgrace of 10 million uninsured children under age 18 and American women going through pregnancy without health insurance and without adequate prenatal care. The bill is an investment in the future: healthier mothers and their children will mean a better American work force and economy. This bill has a price tag--but it has a pay-out that is beyond calculation in dollars and in a better quality of life. The bill would ensure that every child in America up to age 18 and every pregnant woman would have health insurance roughly equivalent to the Medicare package of benefits, enhanced with pregnancy, well-baby, well-child and EPSDT benefits. The bill is very, very simple: If a family does not have this package of insurance through the private market or the workplace, they would be required to buy it. If they are below the poverty level, they would owe nothing. Above the poverty level, they would buy it on a sliding scale basis, with premiums paid through the tax system. The bill is a form of individual mandate: each parent is responsible for doing the right thing by their kids--and the Government's role is to make it affordable. We have business alone. We allow people to buy private policies as an alternative. We maintain freedom of choice. We don't disrupt families who already have insurance and are happy with their policies. The need for this type of legislation is eloquently described in Representative Gibbons introductory remarks, and I refer readers to page E1252 of the July 11, 1996, Congressional Record. The only difference between this bill and the original Gibbons bill is that my bill covers all children up to age 18, rather than age 13, and adds the EPSDT benefits as part of the required coverage for children. I am also introducing today a bill for a refundable, phased-out tax credit to help parents buy a kids'-only health insurance policy. Frankly, I think the universal insurance bill that I've described in this speech is the ideal approach. It is a model of what a civilized nation ought to provide for its people. It is the platonic ideal of a bill--and it is also unlikely to pass in this Congress. The perfect should not be the enemy of the good, and therefore I am also proposing the tax credit legislation as a way to help children which is passable in the 105th Congress. I remain firm in the faith that when our Nation's social conscious reawakes, the type of social insurance universal coverage bill I've described in this speech will become the law of the land.

Mr. STARK

Mr. STARK. Mr. Speaker, today Representative William Coyne and I introduced a bill to correct a glaring failure in the Medicare Program--the massive overcharging of beneficiaries in hospital outpatient departments [HOPDs]. This bill will save Medicare disabled and senior beneficiaries about $35.7 billion between 1999 and 2003. It will stop the steady, upward climb in the percentage of HOPD costs that beneficiaries have to pay. The problem is difficult to describe and the legislative solution is also complicated. But what is not complicated is understanding the impact on Medicare beneficiaries. I would like to include in the Record at this point an article from the June 30 New York Times and the AARP Bulletin of August, 1996 that does an excellent job of explaining why our bill is needed--ASAP. I also include some prospective payment assessment commission analysis of data from the Health Care Financing Administration on how beneficiary copayments in HOPDs can far exceed a patient's 20 percent share at an ambulatory surgical center. Clearly, these HOPD payments are grossly excessive, and patient advocacy groups should help spread the word about cheaper sources of safe and effective medical care. [From the New York Times, June 30, 1996] Quirk in Medicare Law Yields Bigger Bills for Outpatient Care; Officials Say Burden on the Elderly Is Increasing (By Robert Pear) Washington, June 30--Because of a quirk in the Federal Medicare law, elderly people are being required to pay more than their normal share of the bill for hospital outpatient services. It is far more than Congress originally intended and the burden is rising rapidly as such services account for a larger portion of all health care in the United States. Beneficiaries are ordinarily responsible for 20 percent of the cost of services under Part B of the Medicare program. But because of the law, they are now responsible, on average, for 37 percent of the total payments to hospitals for outpatient services, one of the most important benefits under Part B, according to a recent report to Congress by a Federal advisory panel. For many such services, the patients' share is even larger. Donna E. Shalala, the Secretary of Health and Human Services, said beneficiaries were paying more than 49 percent of the total Medicare payment to hospitals for outpatient surgery, radiology and other diagnostic services. And Dr. Shalala said, ``We expect that the beneficiary share of total hospital payments for these services will continue to increase rapidly,'' to 68 percent in 2000. Since 1983, the Government has paid a flat amount for each Medicare patient admitted to a hospital, depending on the diagnosis. But there are no such limits on outpatient services. A hospital can often increase its Medicare revenue ``by simply increasing its charges'' for outpatient services, the Department of Health and Human Services told Congress. When the hospital increases its charges, the beneficiary pays more. The Clinton Administration acknowledges that the costs are already causing hardship for many Medicare beneficiaries. But Administration officials say they lack the authority to limit what hospitals charge for outpatient services under Medicare, and they are fighting a lawsuit by Medicare patients who insist that the Government is supposed to set such limits. The new Medicare handbook, sent to all beneficiaries in May, explains the situation this way: ``When you use your Part B benefits, you are responsible for paying the first $100 each year of the charges approved by Medicare. This is called the Part B annual deductible. After the deductible is met, Medicare pays 80 percent of the Medicare-approved amount for most services. You are responsible for the remaining 20 percent.'' But, it states, there is one big exception: ``If you receive outpatient services at a hospital, you are responsible for paying 20 percent of whatever the hospital charges, not 20 percent of a Medicare-approved amount.'' In March, the Federal advisory panel, the Prospective Payment Assessment Commission, urged congress to correct this problem. ``The growing financial burden for Medicare enrollees who receive services in hospital outpatient departments should be alleviated immediately,'' the panel said. ``Beneficiary coinsurance for these services should be limited to 20 percent of the Medicare-allowed payment.'' But neither Congress nor the Clinton Administration is pushing for a quick solution, partly because of the complexity of the problem and partly because of disagreement over who would foot the bill. If beneficiaries paid less, then the Federal Government would have to pay more or hospitals would have to accept less overall? Any solution would increase Federal Medicare costs, reduce hospital revenue or both. For example, a 74-year-old woman named Marie Lohse had outpatient cataract surgery on one eye at a Los Angeles hospital. The hospital charged $6,277. She was responsible for 20 percent of that amount, or $1,255. But, she later learned, Medicare paid the hospital only $1,280. So the hospital received a total of $2,535, and Ms. Lohse paid 49.5 percent of the total reimbursement. If she had paid 20 percent of the Medicare-approved amount, as required for many other Part B services, she would have paid only $507. Robert J. Myers, who was chief actuary of the Social Security Administration for 23 years, said of the current formula, ``It's a raw deal, a gross injustice to beneficiaries that ought to be remedied.'' Mr. Myers said it had always been ``the general philosophy, the general principle of the Medicare program, that the beneficiary should be responsible for 20 percent of what Medicare recognizes as the reasonable and appropriate amount for a service.'' And in most cases that is true. But hospital outpatient services are different: the patient is responsible for 20 percent of whatever the hospital charges. Originally, what hospitals charged and what Medicare recognized as reasonable were about the same. But in recent years, hospitals have charged far more than Medicare pays for outpatient services. So in paying 20 percent of the hospital charges, beneficiaries end up paying much more than 20 percent of what the hospitals ultimately receive for such services. Earlier versions of the Medicare handbook, in 1991 and 1992, said inaccurately that beneficiaries were responsible for only 20 percent of the approved amount.'' The handbook now says ``20 percent of whatever the hospital charges.'' The financial burden on patients has been increasing because outpatient care accounts for a rapidly growing share of all medical care. New surgical technology and advances in anesthesia have reduced the need for overnight hospital stays. Common outpatient services include colonoscopy, breast biopsy and hernia repair. But complex procedures like hysterectomies and reconstructive knee surgery can also be done in hospital outpatient departments. The demand for such services increases as the procedures become safer and easier to perform. In addition, said Dr. Richard B. Reiling, chairman of the ambulatory surgical committee of the American College of Surgeons, ``Managed care and financial considerations have given us incentives to do more procedures on an outpatient basis.'' Carol S. Jimenez, a lawyer at the Center for Health Care Rights in Los Angeles, said, ``Medicare beneficiaries expecting to pay a 20 percent copayment should not be paying 49 percent or more of the amount paid to the hospital.'' But in a legal brief recently filed with the United States Court of Appeals for the Ninth Circuit, in San Francisco, the Clinton Administration said such charges were ``entirely permissible'' under current law. Congress has never instructed Medicare officials to ``limit what hospitals could charge to beneficiaries for outpatient services,'' the Clinton Administration said. And in a letter to a Medicare beneficiary in Florida, the Federal Government said that ``there are no restrictions on the amount that a hospital charges'' for outpatient services. While expressing sympathy for Medicare beneficiaries ``burdened by ever-rising medical costs,'' the appeals court has so far refused to step into the dispute. Outpatient services can be a major source of revenue because hospital admissions have fallen over the last decade and Medicare has sharply restricted payments to hospitals for inpatient services. Spending for outpatient hospital services, by Medicare and other insurers, has grown twice as fast as outlays for inpatient hospital care, rising 15.7 percent a year since 1980, to $86.7 billion in 1994, while inpatient spending rose 7.8 percent a year, to $212.4 billion. Many elderly people have supplementary insurance, known as Medigap policies, to help pay costs not covered by Medicare, but as they pay more for outpatient services, their Medigap premiums tend to increase. In December, when the American Association of Retired Persons announced premium increases averaging more than 25 percent for 1996, it cited the increased use of outpatient services as a major reason. Under instructions from Congress, the Department of Health and Human Services is developing a proposal to pay hospitals a fixed amount, set in advance, for each outpatient service. Medicare could then follow its general policy of requiring beneficiaries to pay 20 percent of the approved amounts. Such a system would be complex and would need approval from Congress.

Mr. STARK

Mr. STARK. Mr. Speaker, I am today introducing with Representative William Coyne a bill to correct a glaring failure in the Medicare program--the massive over-charging of beneficiaries in hospital outpatient departments [HOPD's]. This bill will save Medicare disabled and senior beneficiaries about $35.7 billion between 1999 and 2003. It will stop the steady, upward climb in the percentage of HOPD costs that beneficiaries have to pay. Usually beneficiaries pay 20 percent of a set fee schedule for part B services. The way the HOPD law was drafted, however, has caused the beneficiary share of HOPD costs to climb to about 45 percent of outpatient department revenues. If the law is not corrected, seniors will pay an ever-increasing percentage. Our bill will stop the rise in the beneficiaries' effective percentage payment and return it to the 20 percent that Medicare beneficiaries were promised. There are reports that the President's Medicare budget proposal will include a correction of the HOPD problem, but over a 10-year period. The President is to be congratulated for finally addressing this issue. We believe it should be done more quickly, and would like to work with interested parties to find the best way to pay for this program improvement at the same time we are making other savings to extend the life of the Medicare part A trust fund. The HOPD problem is a serious one, with no easy solutions. In 1995, the Secretary of HHS presented a lengthy report to Congress that discussed a number of possible solutions--see attachment No. 1. We have adopted the basic ideas from that report and establish an HOPD prospective payment system and a correction of what is known as the formula-driven overpayment [FDO]. How did this problem arise? Hospital outpatient departments do all kinds of things like tests, x rays, and surgeries that the Secretary of HHS has determined can be safely done in an outpatient setting. HOPD services are paid under Part B. The key to the problem lies in the fact that Medicare pays HOPD's on a reasonable cost basis and not based on a prospective payment system [PPS] or fee system. Since costs are determined retroactively, the hospitals get paid retroactively by Medicare, but bill the patient at the time of service. At the time the patient gets the service and leaves the HOPD, we are unable to say for sure what the patient's 20 percent copayment is, since there is no set schedule of fees. As a result, the system was established in such a way that coinsurance is calculated based on charges at time of service. The charges, of course, may have little or no relation to costs and have crept up over time relative to what Medicare ends up actually paying for the cost of the service. So instead of paying 20 percent of a set and known fee, the seniors and disabled are paying 20 percent of charges. In 1996, this has become the equivalent of about 45 percent of the total payment to the hospital, Medicare plus coinsurance. There is often a complication in the payment system I've just described for certain types of services provided in HOPD's, which results in what is called a formula-driven overpayment. If the surgery done in the HOPD is one that could have been done in an ambulatory surgery center and ASC's do about 2,700 different kinds of procedures, so there is a lot of overlap, then the amount of the Medicare payment is calculated differently. The payment calculation is also determined differently for radiology and diagnostic services performed in hospital OPD's compared to other services. For these services, the payment is either the lower of: One, reasonable cost as I've described in the previous paragraph, or two; a blended amount that is based partially on the reasonable cost in No. 1 and partially on either the ASC payment rate, for surgical services, or the physician fee schedule, for diagnostic and radiology services. Because of a drafting error in the payment formula, however, Medicare payments for the services paid on the basis of the blended amount are higher than they should be. This is because the computation of the Medicare payment is done in such a way that it is not reduced by the full amount of the actual coinsurance paid by the beneficiary. In contrast, for OPD services other than surgery, radiology, and diagnostic, every dollar a beneficiary pays in coinsurance results in a decrease of $1 in what Medicare pays. As a result of this erroneous payment formula, Medicare payments are higher than intended. Furthermore, hospitals have an incentive to increase their charges because they will receive more from Medicare. This bill would correct this formula-driven overpayment. Attachment No. 2 explains the math in a specific example that makes the problem clearer than my words can describe. We will be submitting a detailed explanation of how this bill will work to restore the proper balance between hospital billings and the obligations of beneficiaries. We hope that this legislation can be enacted soon, before the burden on seniors and the disabled becomes even more unfair. The Secretary of Health and Human Services, Washington, DC, March 17, 1995. Hon. Albert Gore, Jr., President of the Senate, Washington DC. Dear Mr. President: I am respectfully submitting the report on Medicare hospital outpatient prospective payment as required by section 4151(b)(2) of the Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508). This section requires the Secretary of Health and Human Services to develop a proposal to replace the current Medicare payment system for hospital outpatient services with a prospective payment system. The report presents a phased approach to the establishment of a hospital outpatient prospective payment system. For the first phase, a prospective payment system would be for hospital outpatient surgery, radiology, and other diagnostic procedures. As further research is completed, the payment system could be expanded to cover all hospital outpatient services. The report discusses an issue with the amount of coinsurance that Medicare beneficiaries pay for outpatient surgery, radiology and other diagnostic procedures. Current law requires that beneficiaries pay 20 percent of submitted charges. However, in the recent past, hospitals' submitted charges have substantially exceeded Medicare's payment for these services, so that most of the time beneficiary coinsurance payments substantially exceed 20 percent of Medicare's payment. If Congress chose to set beneficiary coinsurance at 20 percent of Medicare allowed payments, this act would require a substantial increase in program expenditures and also could affect payments to providers. Even incremental modifications in the coinsurance percentage can have substantial impacts on Medicare program expenditures. Should Congress decide to modify current coinsurance arrangements, the report presents a number of alternatives and displays their costs to the Medicare program. In addition, the report discusses a related problem with the current payment formula that results in an unintended increase in Medicare payments--the so-called ``formula driven overpayment.'' We believe this result was not intended by Congress. If Congress chooses to address this issue, the correction can be made separately or as part of the implementation of a prospective payment system. I am also sending a copy of this report to the Speaker of the House of Representatives. Sincerely, Donna E. Shalala. Enclosure. Formula-Driven Overpayment to Hospitals As mentioned in previous sections, there is an anomaly that occurs with Medicare's payment when payment is made under the blended rate for hospital outpatient services. Beneficiaries pay 20 percent of hospital charges as coinsurance on most hospital outpatient services. Generally, every dollar a beneficiary pays in coinsurance results in a corresponding decrease of $1 in Medicare payment. To illustrate, assume a beneficiary receives a hospital outpatient service for which the Medicare payment is based on the lower of the hospital's reasonable costs or its customary charges. The hospital charges $1,000 and its costs are $750. Payment is determined as follows: Total payment to the hospital................................. $750 Beneficiary payment ($1,000 20%).............................. -(200)

Mr. STARK

Mr. STARK. Mr. Speaker, today, Representative Bill Coyne and I have introduced legislation to close the Medicare Hospital Outpatient Department [HOPD] loophole that is costing retirees and the disabled billions and billions of dollars a year in improper charges. On June 25, the U.S. Ninth Circuit Court of Appeals denied a class action motion to require hospitals to charge no more than a reasonable amount for services rendered in HOPD's under Medicare part B. To quote from the Bureau of National Affairs' description of the case: At the center of this case is a fight over cost sharing, and in particular, how much of the cost beneficiaries should be responsible for,'' the appeals court wrote. It explained that under the basic formula for Part B services, a beneficiary must pay 20 percent of the reasonable charges for the items and services rendered and the federal government pays a lesser of the reasonable cost of such services or the customary charges, but in no case may the payment exceed 80 percent of the reasonable cost. [emphasis added] The court explained that the cost-sharing arrangement is known as the ``80-20 split,'' but the label is misleading because of the total amount paid to the provider, the beneficiary's share typically exceeds 20 percent. That share rises because the Health Care Financing Administration reimburses on the basis of the hospital's costs, while the beneficiary owes a percentage of hospital charges. Because providers normally charge above cost, the beneficiary's share represents something more than 20 percent of the total payment to the hospital. Carol Jimenez, an attorney for the Los Angeles-based Center for Health Care Rights and the appellants' lead attorney, said the ruling ``will result in both beneficiaries and the Medicare program paying more for hospital outpatient services.'' In an announcement following the decision, Jimenez cited a General Accounting Office report finding that Medicare patients' cost sharing, as well as Medicare's costs, vary dramatically for the same service depending on where it is received. For example, cataract surgery that cost a patient $1,200 in a hospital [plus additional amounts paid by Medicare] would cost a patient only $250 and the Medicare program only $1,000 if performed in an independent surgical center. * * * the Ninth Circuit * * * concluded, ``While we are sympathetic to the plight of Medicare beneficiaries who are burdened by ever rising medical costs, we conclude that ``none of [the existing laws] compels HHS to limit the charges. The court wrote that Congress is aware of both the cost- shifting problems and HHS' failure to ``correct'' it. ``* * * Congress is aware of the issue--indeed Congress may have caused the problem by introducing prospective payment for some services but not others--and that Congress has deliberatively declined to address it. The court also noted that Congress is studying the feasibility of a prospective payment system for hospital outpatient services which could address the beneficiaries concerns. ``Thus, we decline the beneficiaries' invitation to preempt congressional action in this very delicate area of public policy,'' the court wrote. Mr. Speaker, it is way past time that Congress acted to correct this multi-billion dollar cost shift onto retirees and the disabled and to fulfill Medicare's promise of an 80-20 copay system.

Mr. STARK

Mr. STARK. Mr. Speaker, this Congress must stop the rise in poverty among the Nation's children and--a related issue--stop the rise in the number of children who are uninsured. Two reports in December point to the magnitude of the problem--and to some of the solutions. On December 11, the Center on Budget and Policy Priorities reported that nearly 2.7 million low-income children were eligible for Medicaid, but went without health insurance for all of 1994. In addition, 2.1 million children who qualified for Medicaid, but were not enrolled, had some form of private insurance at some point in the year, but either were uninsured for part of the year or had inadequate private coverage that could have been supplemented by Medicaid. Mr. Speaker, surely this Congress can find ways to make the Medicaid program more usable and more automatic for the families of needy children. If Medicaid eligible children could be brought into the program, the rolls of the Nation's 10 million uninsured children could be easily and quickly reduced by 27 percent. In a second report, Columbia University's National Center for Children in Poverty found that nearly half--45 percent--of young children--those under 6--were in poverty or near poverty. Poverty among children = bad health and a lifetime of social and personal problems. As the report said: ``Young children in poverty are more likely to: be born at a low birthweight; be hospitalized during childhood; die in infancy or early childhood; receive lower quality medical care;'' along with numerous other problems. The list of problems facing our Nation's children of poverty could be addressed in some part if their parents had decent health insurance and could at least ensure that their children were not disadvantaged for life by an unhealthy start. We need health insurance for kids, so that their parents can ensure a better life for them--and for our Nation's future citizens.

Mr. STARK

Mr. STARK. Mr. Speaker, today along with Mr. Lewis of Georgia, Mr. McDermott, Mr. Waxman, Mr. Filner, Mr. Kennedy of Rhode Island, and Mr. Brown of Ohio, I am pleased to introduce the Medicare Non-profit Hospital Protection Act of 1997 in response to the fast-growing number of hospital conversions. Conversion refers to the process by which a nonprofit entity opts to change its nonprofit status and forgo its tax exemption. In a conversion, investor-owned, for-profit companies buy community, nonprofit hospitals in deals that usually are secret, with costs and details not disclosed. Proceeds of the sales are suppose to establish charitable foundations. health care is a service, it is not a commodity to be bought and sold Some how we've reached the point where our society thinks of the medical system not in terms of keeping patients well or helping them get better but instead as a fiercely competitive business in which survivors concentrate on making tremendous amounts of money. The late Cardinal Bernadin, Archbishop of Chicago, had it right in his speech to The Harvard Business School Club of Chicago, He said: Health care . . . is special. It is fundamentally different from most other goods because it is essential to human dignity and the character of our communities. It is . . . one of those goods which by their nature are not and cannot be mere commodities. Given this special status, the primary end or essential purpose of medical care delivery should be a cured patient, a comforted patient, and a healthier community, not to earn a profit or a return on capital for shareholders. The goal isn't health care anymore--the goal has become the care of the stockholder interest. the problem Historically, the nonprofit hospital has, in general, assured that necessary services are available, that all populations are cared for, and that there is always a place to go for care. The goal of a for- profit hospital is just that--profit. The for-profits allegiance is to their shareholder, not the community--and certainly not the uninsured or poor. The for-profit hospital chains have the minds of piranha fish and the hearts of Doberman pinschers. Whereas for-profit hospitals are accountable to their shareholders, nonprofit hospitals have another kind of accountability--to patients, to providers of care, to payers and to the communities in which they operate. Instead of producing a return on investments to shareholders, nonprofit hospitals have the inherent motivation and deep obligation to produce a different kind of return--that of quality care to their patients and overall good for the community. The need to show a profit focuses the for-profit hospital on cost structure rather than on the structure of care. Their decisionmaking cannot help but he skewed toward shareholders rather than patients. Whereas nonprofit hospitals manage care because doing so improves health outcomes, for-profit hospitals manage the cost of care because it is the cheapest, most profitable thing to do. Their primary legal and fiduciary duty--to return a profit to the shareholders--puts patients and public welfare in second place. In 1993, there were 18 conversions of nonprofit hospitals and health care plans. In 1995, there were 347. In the past 18 months, for example, Columbia HCA, the largest of the for-profit hospital chains, has completed, has pending, or is in the process of negotiating more that 100 acquisitions or joint ventures with nonprofit hospitals. I have many concerns about the sale of nonprofit hospitals to for- profit corporations: too often the terms of the sale are secret; there are often conflicts of interest among the parties; the mission of the nonprofit foundation that results from the conversion may not be consistent with the original mission of the hospital--the funds in the resulting foundation are sometimes used for things like sports training facilities, flying lessons, or foreign language programs in schools; and the valuation price is often much less than it should be. Perhaps most important, quality and access to health care in the community is often significantly diminished.

Mr. STARK

Mr. STARK. Mr. Speaker, just a word of warning to seniors: The law protecting against the sale of worthless, duplicative insurance policies which do not pay out benefits was weakened last year in the Kassebaum-Kennedy bill. The following memo from the Institute on Law and Rights of Older Adults makes the deception clear. Congress legislated that 2 + 2 = 3 in saying that policies which ``coordinate'' with Medicare and don't have to pay out benefits are not ``duplicate'' policies. Protections Against Sale of Duplicate Policies Weakened The Health Insurance Portability and Accountability Act of 1996 contains a provision that further weakens protections against selling health insurance policies to Medicare beneficiaries which provide benefits that duplicate their existing coverage. The new law changes the disclosure statement given to Medicare beneficiaries which was developed to warn them against purchasing a health insurance policy that duplicates Medicare coverage. The current statement: ``Important Notice to Persons on Medicare--This Insurance Duplicates Some Medicare Benefits,'' has been changed to: ``Some health care services paid for by Medicare may also trigger the payment of benefits under this policy.'' This change, along with federal legislation passed in 1994 which allows insurance companies to offer policies containing benefits which duplicate private health benefits held by a Medicare beneficiary as long as the policy pays without regard to the other health benefits, may result in beneficiaries' being sold policies that duplicate Medicare and their private coverage and thus are of little value. Note that selling a new Medigap policy to someone who already has a Medigap policy is still against the law unless the person plans to drop the previously held Medigap policy. While the practice of insurance companies' selling policies (other than Medigap) to Medicare beneficiaries which pay benefits without regard to their other health coverage is allowed, the policies must include the following, ``This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.'' The new law clarifies that a policy providing long-term care benefits (defined as nursing home and non-institutional coverage, nursing home only or home care only) which coordinates benefits with Medicare or other private health insurance policies (coordinates means that the long-term care policy pays secondary benefits or does not pay benefits for services covered under Medicare or other health insurance coverage) is not considered duplicate coverage. Additionally, long-term care policies must now include the statement, ``Federal law requires us to inform you that in certain situations this insurance may pay for some benefits also covered by Medicare.''

Mr. STARK

Mr. STARK. Mr. Speaker, in the 104th Congress, I introduced legislation to provide assistance in obtaining health insurance to those 55 and older. Today, I rise again to introduce the same legislation to make the COBRA health continuation program available to anyone between age 55 and the time they become eligible for Medicare. The 1990's have confronted us with many difficult issues, both foreign and domestic. One issue in particular impacts an everincreasing segment of our population. According to statistics from the Department of Labor, in 1988, there were 13.1 million private sector retirees and 4.9 million had health insurance coverage. In 1994, the number of private sector retirees had risen to 17.4 million but the number of individuals covered by health insurance had declined to 4.7 million. In other words, the proportion of private sector retirees covered by health insurance from a former employer dropped from 37 percent in 1988 to 27 percent in 1994. As the level of employer-provided insurance declines and as hundreds of thousands of older workers face early retirement because of corporate down-fixing, layoffs, and restructuring, the problem of health insurance for those not-yet-eligible for Medicare is becoming more and more serious. As Corporate America continues to focus on profit levels, often at the expense of providing health insurance benefits to workers, these individuals face an uncertain and frightening future in the health care arena. The steady decline in coverage among active workers translates into lower likelihold of retiree health benefits being available. The frightening reality of this situation will only get worse. In 1994, almost 24 percent of retirees--4.1 million, were between the ages of 55 and 64. The pressure on retiree health plans will only increase as the number of persons over the age of 55 nearly doubles--from 55 million today to nearly 100 million--by the year 2020. There exist numerous examples that help demonstrate the significance of the situation to the older workers. In October 1996, Philips Consumer Electronic Co. gave about 2,000 employees layoff warning notices. Union leaders involved contend that companies make these moves in part to get rid of older workers who cost more in wages and pension and health benefits and replace them with lower-wage, younger workers. In October 1996, the Massachusetts State Department of Employment and Training confirmed that 36.1 percent of people claiming unemployment checks in August of the same year were 45 or older--usually considered the most productive, reliable group of workers. In November 1995, Sunbeam Corp. announced that nearly 6,300 employees, half of its total work force would be let go. At AT&T, 34,000 jobs had to be cut. Workers were to receive a lump- sum payment based on years of service, up to 1 year of paid health benefits and cash to cover tuition costs or to start a new business-- but what happens to health coverage after 1 year? Two giant New York City banks, Chase Manhattan and Chemical recently combined and 12,000 jobs from the combined banks were subsequently cut. Since 1990, United Technologies has cut 33,000 jobs. In 1994, Scott Paper cut 11,000 jobs or 35 percent of their work force. A 1994 Nationwide study of 2,395 employers by A. Foster Higgins & Co., a New York-based benefits consulting firm, showed that among large companies--those with 500 or more employees--46 percent provide some form of coverage for early retirees, while only 39 percent provide insurance for Medicare-eligible retirees. Fewer than one in five large employers are willing to pay the entire cost of health care for their retirees, while 40 percent of the companies that do offer some form of health care coverage require the retiree to pay all of the costs. Those companies that do provide health care coverage for their retirees are increasingly requiring them to pay a share of the cost, especially for dependents. Group health insurance is, of course, much less expensive than individual policy insurance, and that is why the COBRA benefit is so vital and useful. The difference in cost for obtaining group versus individual health insurance can easily be several thousand dollars. Receiving help with the cost of this insurance is particularly important for those in their 50's and 60's because most insurance premiums rise sharply with age. For example, in the Los Angeles market, Blue Cross of California offers a basic, barebones in-hospital $2,000 deductible plan. This plan is a PPO which restricts options for hospital usage. For a couple under age 29, the cost is $64 a month. For a couple between age 60 and 64, the cost soars to $229 a month. In order to ensure that the cost of COBRA continuation is not an excessive burden to business, my bill calls for age-55+enrollees to pay 110 percent of the group rate policy--compared to 102 percent for most current COBRA eligible individuals and 150 percent for disabled COBRA enrollees. I realize that the cost of paying one's share of a group insurance policy will still be too much of a burden for many Americans. Many of them will be forced into the uncertain mercies of State Medicaid policies. But for many others, this bill will provide an important bridge to age 65 when they will be eligible for Medicare. I wish we could do more, but in the current climate, this bill is our best hope. We cannot allow the everincreasing ranks of early retirees to be without options in addressing necessary health insurance needs. The following November 3, 1996 Washington Post article provides further data on why we need to pass this bill. Retiring? Don't Assume Health Benefits Are Forever (By Albert B. Crenshaw) For 14 years, James Murdock worked as a brewing supervisor at Pabst Brewing Co., putting in long hours at the big Milwaukee-based beer producer. But two years ago, when his wife developed multiple sclerosis, he decided to take early retirement to be with her. He checked the company's employee manual, which he said ``guaranteed'' health care coverage until age 65, including early retirees and their dependents. But after giving Pabst notice and even selling his home, Murdock got a computer printout describing his benefits. ``Near the bottom was a sentence that said in essence that they had the right to modify, rescind, cancel and so on'' his and his wife's health insurance, he recalled last week. ``It was the first I knew about it. By then it was too late'' to halt his retirement. ``My replacement was there and trained,'' he said. Company officials were reassuring. ``They said they never canceled anybody's benefits before,'' Murdock said. But this time they did. Less than two years after his retirement, Murdock is working part-time as a clerk in a hardware store to pay the premiums on a policy for himself. His wife, Carol, is uninsurable and has no coverage. The couple is praying her health holds up until next May, when she becomes eligible for Medicare because of her disability. ``That's going to be our oasis in the desert. I just hope we can get there before there's any major problems,'' he said. Murdock's is not an isolated case. Rising medical costs and pressure for profits are driving more and more large employers to end or sharply curtail health care coverage for retirees. Others are boosting the share of the costs retirees are expected to pick up. As recently as 1988, about 37 percent of retirees were covered by health insurance from a former employer; by 1994 that share had dropped to 27 percent. And those who still have coverage are paying more: In the same 1988-94 period, the proportion of retirees with coverage whose entire premium was paid by the companies declined to 42 percent from 50 percent. In thousands of cases, workers and retirees are being caught by surprise, either because they assumed that the benefits always would be there, or because materials given to them by employers indicated that they would, but didn't really promise. The courts are full of cases that turn on the question of what was a binding promise and what was not. The Labor Department is involved in lawsuits on behalf of about 87,000 retirees--including 800 from Pabst--whose benefits have been eliminated or reduced. ``Employees very often are premising their entire financial planning for retirement on the basis of the promises that are made to them by their employers,'' Labor Secretary Robert B. Reich said last week. ``Promises are made or assumed to be made and employees rely on them and then suddenly discover that they are not there. Retirees can be left holding the bag, can be in severe difficulty,'' he said. Retirees aged 65 and older can fall back on the federal Medicare program, but in most cases that covers only the individual. Retirees with younger spouses or children will have to find other coverage for them. Reich said the problem is growing as the number of retirees rises. He said the department is considering seeking legislation next year, assuming President Clinton is reelected, that would at a minimum require ``clearer disclosure so that workers know exactly what they are being promised.'' At the other end of the option range, Reich said, might be legislation that would ensure that these promises ``are treated like any other contracts. . . . If you have a reliance interest then they are enforceable.'' He said the 1974 Employee Retirement Income Security Act sweeps these issues into the federal courts as pension issues rather than contract disputes that would be handled under state contract law. The federal courts have been ``all over the place'' on the issue, he said, making it very difficult for workers and retirees to determine whether their benefits are guaranteed. In a number of cases, the company has seemed to guarantee the benefits in one place in their benefit plan documents, but has backed away from it somewhere else. In a case involving former salaried workers at General Motors Corp. whose benefits were cut, a federal appellate court has allowed legal claims to proceed. At Pabst, though, a federal district court ruled against retirees who lost coverage. Both cases are still in litigation. Reich acknowledged that employers are not required to provide health insurance for workers or retirees, and any regulatory or legislative changes must strike a balance-- protecting workers without discouraging companies from offering the benefits in the first place. The Labor Department's Pension and Welfare Benefits Administration has issued a brief advisory bulletin that outlines steps you can take to assess your situation and to try to protect yourself. The key step is to review your company's plan documents, which describe the benefits offered, spell out eligibility and give other details. First, look at your Summary Plan Description. This gives the major features of the plan. It can be changed from year to year or contract to contract, so make sure you get a current one. The one in effect on the date you retire is the controlling document--get a copy and keep it. There may be other documents as well, such as a collective bargaining agreement or an insurance contract. Look at them as well. In the documents, look for language that looks like a clear promise to continue benefits or provide them for a certain period. But also look for language reserving the right to change or eliminate them. This ``reservation clause'' typically will say something like: ``The company reserves the right to modify, revoke, suspend, terminate or change the program, in whole or in part, at any time.'' It's likely to be there. Companies want to avoid open-ended promises to workers and retirees. When both a promise and a reservation are there, it's not clear what your rights will be. Some courts have refused to enforce what seemed to be a clear promise if there was a reservation clause; others have enforced a promise contained in the summary even though there was a reservation clause elsewhere in the plan documents. Hang on to any other communications your company or supervisors give you. Courts sometimes take into account informal communications in deciding rights. If you are taking early retirement, check out the documents concerning its terms. Special promises made in such deals can override other plan documents. And don't be shy about protecting yourself. If you can negotiate a personal promise of health insurance for yourself and/or dependents in retirement, do it. If your company is anxious to see you go, it may well agree. Talk to experts as well. If you're in a union, officials there can be helpful. Or you may want to run the material by a labor lawyer. There's a lot of money at stake. Free copies of the Labor Department bulletin are available from the Pension and Welfare Benefits Administration's publication hotline at 202-219-9247. It's also on the World Wide Web, at http://www.dol.gov/dol/pwba/.

Mr. STARK

Mr. STARK. Mr. Speaker, today I wish to pay tribute to an educator, activist, and my longtime personal friend, Hubert A. Anderson, who passed away recently in Hopkins, MN, at the age of 68. I was privileged to know Hubert Anderson at a special time in our lives and in our Nation's history. As a grass roots activist, Mr. Anderson took special interest in civil rights issues and the anti- Vietnam war movement. In 1970, a group of 31 Americans, including Hubert Anderson and myself, traveled to Paris with the People's Commission of Inquiry to discuss solutions to the war. Anderson, along with our group, participated in a week of talks in France with North Vietnamese and South Vietnamese delegations and the American ambassador. During our stay he encouraged an open discussion in which he questioned, challenged and explored solutions to this problem of international scope. Hubert Anderson was born and raised in Dwight, ND. He attended high school in Wahpeton, ND, and in Minneapolis, dropping out during his senior year to join the Navy. He was stationed in Bermuda for part of his tour and was chosen to run the admiral's launch that took President Truman deep sea fishing. An avid sportsman, he played offense and defense and was captain of the Navy football team. He contracted rheumatic fever during his service and suffered from its effects for the rest of his life. Hubert finished his high school equivalency degree in the military. He went on to the University of Minnesota, the Wahpeton State School of Science, and graduated magna cum laude from Moorhead State University. He later earned a master's degree and completed doctoral work at the University of Minnesota. During his early college career, he played AAA baseball with the Minot, ND, Mallards and pitched against such notables as Satchel Paige and Roger Maris. As an English, drama and debate teacher at Hopkins High School for 30 years, Hubert Anderson was a mentor to students in and out of the classroom. He led several debate teams to State championships, served on the faculty senate, and supported the American Field Service Program. Hubert Anderson will be remembered as an avid reader, a lover of language, and a remarkable individual whose ideas reached far and wide. His genuine enthusiasm for American politics prompted people of all ages to become interested in government and civil service. Because I experienced Hubert Anderson's vitality and wisdom firsthand, I've no doubt that this tireless role model made Hopkins, MN, a richer place to live. As friends and family reflect on his lifetime of achievement and scholarship, it is only fitting that we also pay tribute to this great man and good friend.

Mr. STARK

Mr. STARK. Mr. Speaker, on Tuesday, January 7, I introduced legislation to provide a comprehensive set of consumer protections for people in managed care plans. One of my proposals is that Medicare and Medicaid should not start monthly payments--which can amount to somewhere between $300 and $700 a month--for a new HMO enrollee until that HMO actually meets with the enrollee, shows them how to use the system, and establishes a basic health profile on the individual. Today, an HMO can receive thousands of dollars in payments before it ever sees a patient or tries to maintain their health. How can an HMO truly be a health maintenance organization, if it doesn't know what the health of the person is, whether the person is overweight, smokes, needs innoculations, has high blood pressure or diabetes, et cetera, et cetera? Last August, the Public Policy Institute, part of the Division of Legislation and Public Policy of the American Association of Retired Persons, issued an excellent paper entitled, ``Managed Care and Medicare.'' The paper--which does not necessarily represent formal policies of the association--recommended: Health plans should be required to conduct a comprehensive health assessment of new patients upon enrollment, followed by specific provisions for improved access to primary and specialty care on a routine basis. This is precisely the idea in my legislation, and I hope other senior and patient advocacy groups will consider this proposal and how it would help eliminate many of the abuses in the current enrollment of Medicare and Medicaid beneficiaries.

Mr. STARK

Mr. STARK. Mr. Speaker, along with Mr. John Lewis, Mr. Gejdenson, Mr. Serrano, Mr. Sanders, and Mr. Filner, I am pleased to introduce ``The Managed Care Consumer Protection Act of 1997,'' a bill that will provide critically needed consumer protections to millions of Americans in managed care health plans. Health care consumers who entrust their lives to managed care plans have consistently found that many plans are more interested in profits than in providing appropriate care. In the process of containing costs patients are often harmed. My constituent mail has been full of horror stories explaining the abuses that occur at the hands of HMOs and other forms of managed care. For example, David Ching of Fremont, California had a positive experience in a Kaiser Permanente plan and then joined an employer sponsored HMO expecting similar service. He soon learned that some plans would rather let patients die than authorize appropriate treatment. His wife developed colon cancer, but went undiagnosed for 3 months after the first symptoms. Her physician refused to make the appropriate specialist referral because of financial incentives and could not discuss proper treatment because of the health plan's policy. Mrs. Ching is now dead. In a similar case, Jennifer Pruitt of Oakland wrote to me about her father who also had cancer. He went to his gatekeeper primary care physician numerous times with pain in his jaw. The doctor, who later admitted that she had never treated a cancer patient, refused to refer Mr. Pruitt to a specialist. Eventually, after months of pain, a dentist sent Mr. Pruitt to a specialist outside of the HMO network. The cancer was finally diagnosed, but it had spread too rapidly during the months that the health plan delayed. Mr. Pruitt died from a cancer that is very treatable if detected early. These tragedies and others like them might have been avoided if the patients had known about the financial incentives not to treat, or if the physicians had not been gagged from discussing treatment options, or if there had been legislation forcing health plans to provide timely grievance procedures and timely access to care. It's too late for these victims, but it is not too late to provide these protections for the millions of people in managed care today. Consumer protections in managed care must be developed. Such unfavorable outcomes are not isolated events. They are widespread enough for industry studies to have noted a trend. Empirical evidence shows that restrictive practices pose special risks for people with chronic illnesses and poor health, and that primary care physicians in HMOs are less likely to diagnose or treat patients with depressive disorders appropriately. Another study concluded that the successes of prepaid care in relatively healthy populations are unlikely to be replicated among sicker patients. All this evidence indicates that managed care is not doing its job as well as it should. Those who are ill and most need health care are not getting it. A few years ago, Congress recognized a crisis in the health care industry. Expenditures were soaring and overutilization was the rule. At that time, I chose to address this problem with laws that prohibited physicians from making unnecessary referrals to health organizations or services that they owned. Others responded by pushing Americans into new managed care plans that switched the financial incentives from a system that overserves to a system that underserves. They got what they asked for. The current system rewards the most irresponsible plans with huge profits, outrageous executive salaries, and a license to escape accountability. Unfortunately, patients are dying unnecessarily in the wake of this health care delivery revolution. It must stop. Several states have already addressed the managed care crisis. In 1996, more than 1,000 pieces of managed care legislation flooded state legislatures. As a result, HMO regulations were passed in 33 states addressing issues like coverage of emergency services, utilization review, post-delivery care and information disclosure. Unfortunately, many states did not pass these needed safeguards resulting in a piecemeal web of protections that lacks continuity. The states have spoken; now it's time for federal legislation to finish the job and provide consumer protections to all Americans in managed care. The bill I offer today is a revision of earlier bills, H.R. 1707 and H.R. 4220, the Medicare Consumer Protection Act of 1995 and 1996 respectively. This legislation includes a comprehensive set of protections that will force managed care plans to be accountable to all of their patients and to provide the standard of care they deserve. This legislation includes measures to protect patients from the abuses of managed care on several fronts. My bill will put an end to pre-authorization of emergency medical care. Patients will not be denied coverage for care provided in emergency rooms. Current denials create obstacles for HMO patients and leave them with thousands of dollars in medical bills. According to HCFA, 40% of claim disputes between Medicare beneficiaries and participating Medicare HMOs involve emergency services. This bill establishes the prudent layperson definition of an emergency, so a reasonable layperson can anticipate claims that would be covered versus those that would be denied. It also prohibits plans from denying coverage for 911 emergencies. My bill includes provisions which will bring utilization review back to its intended function, ensuring that patients receive all medically necessary and appropriate care without overusing services. Utilization review boards will be standardized through accreditation by the Secretary of Health and Human Services. These review programs must update policies to ensure consistency and compliance with medical standards and treatment protocols. This legislation also establishes, for the first time, an ``Office of Medicare Advocacy'' whose sole function is to act on behalf of Medicare beneficiaries. The bill establishes a ``1-800'' number to facilitate better communication between the Health Care Financing Administration and the beneficiary. The office would develop a number of outreach programs to help inform Medicare beneficiaries concerning the Medicare program. Additionally, the office would have the authority to hear appeals in cases of an emergency or a life threatening event. Recent testimony by the ``Physician Payment Review Commission (PPRC)'' emphasized the need for increased information and appeals processes. Describing a recent survey of Medicare beneficiaries done by PPRC, the testimony reported: A significant percentage of these (Medicare) enrollees who sought additional information about their plan had problems getting their questions answered. Also, a third of enrollees said they did not know they had the right to appeal a plan's decision not to provide or pay for a service. Our study suggests that plans may need to take additional steps to inform consumers in these areas. The Office of Medicare Advocacy will do much to better inform Medicare beneficiaries, to advise beneficiaries of their rights and to facilitate comparative information concerning Medicare Managed Care plans. In the United States Congress, we have the ability to put an end to abuse in managed care and guarantee that Americans who choose managed care get the care for which they pay. We also have a responsibility to ensure that Americans are protected from companies who place more emphasis on their own financial interests than on patients' needs. It is irresponsible to do anything less. Following is a summary of the consumer protections provided for in this bill. ``Managed Care Consumer Protection Act of 1997'' summary