Pete Stark

Mr. STARK

Mr. STARK. Mr. Speaker, Representative Nancy Pelosi was cited in a recent New York Times article for her work as a tireless advocate on behalf of human rights in China. She has been the persistent voice reminding this Congress and the administration that we cannot ignore the atrocities in China. They are too awful, too numerous for us not to recognize. A large market like China can be seductive for those who see commercial gain to be made. They do not want to see the pain wrought by the Chinese Government operating in its normal course whether it be false imprisonment, loss of freedom of religion, speech and association, proliferation of nuclear weapons or even the illegal shipping and sale of AK-47s to our own streets. Representative Pelosi is the voice that reminds us that there is no such thing as business as usual with China. She is to be commended for her tireless efforts. I commend to you the enclosed article by A.M. Rosenthal: Clinton's China Wriggle (By A.M. Rosenthal) President Clinton, his supporting cast of bureaucrats and even most of his political opponents are so twisting the essence of the visit to the White House of Communist China's top weapons dealer that the deeply important meaning is wrung right out of it. And that is no accident. Mr. Clinton is doing what comes naturally at times of political embarrassment, the old Washington dance. Wriggle, two, three, four, wriggle, two three, gliiide, everybody sing out together: ``Doin' the White House wriggle!'' ``It was inappropriate,'' the President says with a fine show of chin. Screening must be tightened! Republicans and Democrats un-in-love with Mr. Clinton say no, the problem is political money. Wang Jun, the Chinese Army's chief arms broker, missile salesman and weapons smuggler, was brought to a White House reception by an Arkansas businessman who became a hotshot Democratic fund-raiser. Taking some of the stink out of fund-raising would be real nice. But it won't get at the why and how come of Mr. Wang, whose job is to make money and build power for the Chinese armed forces by peddling weapons worldwide, and whose name is known to every China expert, spook and high military officer in the world, getting to a White House do with the President. Nor will it deal with the hypocrisy of the Administration now clucking about this fellow's visit in February when the man he reports to was the official guest of the United States Government just a couple of weeks ago. This one got to the White House not for a handshake but for a real sit-down meeting with none other than the old screening-tightener- upper, Mr. Clinton himself. He is Gen. Chi Haotian, who gave the order to kill dissidents in and around Tiananmen Square in 1989 and was promoted to Defense Minister by a grateful Politburo. No, the answer to how these characters got to the White House is not political money or screening. It is Mr. Clinton's decision to base America's policy about Communist China on trade. For Beijing, the principal purpose of trade is to build up its police and military power. The biggest owner of Chinese industry and commerce is the military establishment. It uses the profit to build more weapons to sell, particularly missiles amusingly forbidden under U.S. regulation, and to modernize its armies, including the police army operating the Chinese gulag. There is no hiding place, not for Mr. Clinton, not for America's allies, not for American C.E.O.'s, not for the American consumer or stockholder: doing business with China means providing money for the Chinese armed forces. So let's not get all wriggly when China's killers and arms-selling chiefs show up at our parties. Most of Mr. Clinton's political opponents are trapped by and with him. They went along with him in sacrificing democracy and American security to the Trade Gods. So, like him, they have to do something when a killer-salesman comes to Washington. Watch them dance. How did a nice young fellow from Arkansas, who preached human rights when he ran for President the first time, sell them out a year later? Why did that nice Assistant Secretary of State for China affairs go along, after attacking the early Bush clone of the Clinton policy? Why did Bob Dole, and his party, wipe out any difference of principle between them and Mr. Clinton on providing China with the huge trade profits to build its military power? Oh, who cares why; they did. Well, it is holiday time. Here's a fine present: three names among those Washingtonians who fight for Chinese human rights and American democratic honor. In government, Nancy Pelosi, San Francisco's Representative, and in this cause truly all America's. Among the experts: William C. Triplett 2d, former chief Republican counsel to the Senate Foreign Relations Committee; indispensable to the struggle. In journalism, the conservative Washington journal The Weekly Standard--may its editorials against the sellout of China reach the conservative movement and awaken the liberal. And to all readers who have written that they will not support the suppression of Chinese freedom by purchasing China-made goods, this column goes with respect and thanks. These people, they just do not know how to wriggle.

Mr. STARK

Mr. STARK. Mr. Speaker, I thank the Members for this opportunity to address the House on the important issue of Medicare. In our attempt to cut Federal spending, we must consider the implications of those policy decisions on our Nation's most vulnerable citizens. Much has been said of the economical benefits of raising Medicare copayments and deductibles, but not enough has been said of the detrimental effects those cuts will have on Medicare beneficiaries with low incomes. Many of my conclusions on the negative effects of higher cost-sharing on the poor are taken from the RAND health insurance experiment. The RAND experiment studied the rate of use of health services by assigning people to different levels of cost-sharing insurance programs. The results of that experiment should encourage us to take a good look at the effect our decisions will have on the health of the people we represent. Mr. Chairman, the RAND experiment clearly showed that with increased out-of-pocket costs to the beneficiary; physician visits, hospital admissions, prescriptions, dental and vision visits, and mental health services use fell. While adverse health effects on the average person were shown to be minimal, statistics on the poor were rather disturbing. The study found that those with lower income levels suffered adverse health effects in many categories under the cost- sharing plan. The poor will forgo necessary medical attention as out- of-pocket costs of those services rise. This is a fact that undermines the original intent of this program. Health areas most affected by a higher rate of cost sharing for the poor are hypertension, rate of mortality, dental and vision care. As an example of these findings, those with lower incomes who entered the experiment with high blood pressure benefited more under the free program than under the cost-sharing plan. Low-income groups have 46 percent more dental visits on the lower cost-sharing plan than on the higher. The higher income groups use dental services 26 percent more under the lower cost plan. Near and far vision statistics also improved in the lower cost plan and predicted mortality rates fell approximately 10 percent among the poor. In fact, Mr. Chairman, overall serious symptoms among the poor declined when the costs of care went down. The determination made by this study and others is that those with higher needs and lower incomes are not more likely to spend money on necessary medical services. Higher cost-sharing in the attempt to reduce necessary treatment will also cause a reduction in the use of highly effective care. Furthermore, the experiment found significant decreases in highly effective care seeking poor beneficiaries. Mr. Chairman, raising the cost of Medicare will raise even higher the rate of emergency room visits by the poor. Already, those in the lower third of the income distribution have emergency department expenses 66 percent higher than those of persons in the upper third of the income distribution. Raising Medicare costs will only make it more difficult for those with lower incomes to see a primary care, office- based physician and force those patients to seek attention in our country's overcrowded emergency rooms. All of these facts lead us to the conclusion that if we raise the beneficiaries' obligation in the cost of Medicare, those with lower income levels will be unable to afford and will not seek out needed health services. We have an obligation to fiscally get these entitlement programs under control without putting the Nation's most needy in harms way. I urge all of my colleagues to consider these findings as we work to improve Medicare.

Mr. STARK

Mr. STARK. Mr. Speaker, I rise today to recognize the achievements of Mr. George E. Cobbs, Jr., president of the International Employee Assistance Professional Association [IEAPA] and a member of the San Francisco Bay Area Chapter of the Employee Assistance Professional Association [EAPA]. On October 12, 1996, the San Francisco Bay Area Chapter of the EAPA will celebrate its 25th anniversary at the IAMW Union Hall in Burlingame, CA, where Mr. Cobbs will be honored for his many years of dedicated service to the association. The San Francisco Bay Area Chapter of the Employee Assistance Professional Association is recognizing Mr. Cobbs for his distinguished leadership in the IEAPA and for his 30 years of service in the International Longshoremen's and Warehousemen's Union. As president of the IEAPA, Mr. Cobbs has tried to foster a work ethic that promotes the idea that, recovery in the workplace is good business. The many programs offered through the Employee Assistance Program provide assistance to employees with alcohol and drug related programs as well as with issues dealing with grief, divorce, parental matters, and emotional distress. The Employee Assistance Program provide confidential assessments and referrals, management consulting, and many other services to our country's work force. Mr. Speaker, I would like to ask that you and my colleagues join me in recognizing Mr. George E. Cobbs, Jr., for his distinguished service to the Employee Assistance Program and for making the Employee Assistance Program such an exceptional program that benefits so many in today's work force.

Mr. STARK

Mr. STARK. Mr. Speaker, health insurance for everyone isn't just a nice idea, it is a matter of life and death. The data is clear. In 1982, the State of California terminated Medi-Cal benefits for the State's 270,00 medically indigent adults. Some 186 of these adults were then enrolled in a study to examine the effects of this action on the health of these individuals. A comparison group was also established. Within 6 months of termination of health coverage, five individuals died compared to zero deaths for the comparison group. After 1 year of the study, seven individuals from the group whose Medi-Cal benefits had been terminated had died compared to one death in the comparison group. Investigation of the circumstances of death suggest that lack of access to care played a part in at least four of the deaths in the medically indigent group. At least four deaths that could have been prevented if these individuals had health insurance. And now this Congress is preparing to adjourn without having adequately addressed one of the greatest problems facing our Nation: the lack of health insurance for everyone. How many more people will have to die before we decide to commit ourselves to this problem and find a solution? Another study used data from 17 hospitals to examine outcomes for patients admitted with pneumonia. Self-pay patients were six times more likely to die with in the hospital compared to those with insurance. A national study determined that the probability of an in-hospital death for uninsured patients was 1.08 to 1.32 times higher than for privately insured patients in 15 of 16 age-sex-rate cohorts. In another study, a representative cohort of the U.S. population was followed for up to 16 years. The study hypothesis in this case was that a lack of health insurance is causally related to a higher mortality rate, because of decreased access and lower quality of care. Not only is this hypothesis in accordance with the results of previous studies, but it also agrees with the conclusions of our own former Office of Technology Assessment in a report issued in 1992. Furthermore, the study found that lacking insurance is associated with subsequent higher mortality independent of our risk factors. independent of other risk factors In one of the same studies mentioned above, fully 68 percent of the study's participants in the medically indigent group reported a specific episode in which they had not obtained care that they believed they needed; of those patients, 78 percent listed the cost as a reason for not obtaining care. We cannot let this problem escalate into a national tragedy of even greater proportions. The numbers are alarming. The evidence is clear. As members of a civilized society, I would hope that the next Congress has the courage to deal with this issue. For those who share my concerns, I invite you to reference the following sources: (1) Lurie, N., Ward, N.B., Shapiro, M.F., Brook, R.H., ``Termination from Medi-Cal: does it affect health?'' N Engl J Med. 1984; 311: 480- 484. (2) Lurie, N., Ward, N.B., Shapiro, M.F., Gallego, C., Vaghaiwalla, R., Brook, R.H., ``Termination of medical benefits: a follow-up study one year later.'' N Engl J Med. 1986; 314: 1266-1268. (3) Weissman, J.S., Epstein, A.M., ``Falling Through the Safety Net: The Impact of Insurance on Access to Care.'' Baltimore, Md: Johns Hopkins University Press; 1994. (4) Franks, P., Clancy, C.M., Gold, M.R., ``Health insurance and mortality: evidence from a national cohort,'' JAMA. 1993; 270: 737-741.

Mr. STARK

Mr. STARK. Mr. Speaker, I've just received a particularly moving letter about the problems facing American families in the era of managed care. Today, I introduced legislation which will address some of the problems mentioned in the letter--in this case, timely appeals of coverage decisions and provision of specialty care locally. But there is clearly much, much more to do. Managed care companies--by making the kind of heartless decisions described in this letter--are sowing the wind. They should not be surprised if they reap the whirlwind. Dr. Courntey's letter follows: Child Neurology, Inc., NeuroDiagnostic Laboratory Mishawaka, IN, August 21, 1996. Hon. Fortney Pete Stark, House of Representatives, Cannon Office Building, Washington,

Mr. STARK

Mr. STARK. Mr. Speaker, I am pleased to introduce the Managed Care Consumer Protection Act of 1996, 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 profit than in providing appropriate care. My constituent mail has been full of horror stories explaining the abuses that occur at the hands of HMO's and other forms of managed care. For example, David Ching of Fremont, CA 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. 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. The bill I offer today is a revision of an earlier bill, H.R. 1707, the Medicare Consumer Protection Act of 1995. 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. In the U.S. Congress, we have the power to put an end to abuse in managed care and guarantee that Americans who choose managed care get the care for which they pay. 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 1996 summary I. Managed Care Enrollee Protections A. Utilization Review 1. Any utilization review program that attempts to regulate coverage or payment for services must first be accredited by the Secretary of Health and Human Services or an independent, non-profit accreditation entity; 2. Plans would be required to provide enrollees and physicians with a written description of utilization review policies, clinical review criteria, information sources, and the process used to review medical services under the program; 3. Organizations must periodically review utilization review policies to guarantees consistency and compliance with current medical standards and protocols; 4. Individuals performing utilization review could not receive financial compensation based upon the number of certification denials made; 5. Negative determinations about the medical necessity or appropriateness of services or the site of services would be required to be made by clinically-qualified personnel of the same branch of medicine or specialty as the recommending physician; B. Assurance of Access 1. Plans must have a sufficient number, distribution and variety of qualified health care providers to ensure that all enrollees may receive all covered services, including specialty services, on a timely basis (even in rural areas); 2. Patients with chronic health conditions must be provided with a continuity of care and access to appropriate specialists; 3. Plans would be prohibited from requiring enrollees to obtain a physician referral for obstetric and gynecological services. 4. Plans would demonstrate that enrollees with chronic diseases or who otherwise require specialized services would have access to designated Centers of Excellence; C. Access to Emergency Care Services 1. Plans would be required to cover emergency services provided by designated trauma centers; 2. Plans could not require pre-authorization for emergency medical care; 3. A definition of emergency medical condition based upon a prudent layperson definition would be established to protect enrollees from retrospective denials of legitimate claims for payment for out-or-plan services; 4. Plans could not deny any claim for an enrollee using the ``911'' system to summon emergency care. D. Due Process Protections for Providers 1. Descriptive information regarding the plan standards for contracting with participating providers would be required to be disclosed; 2. Notification of a participating provider of a decision to terminate or not to renew a contract would be required to include reasons for termination or non-renewal. Such notification would be required not later than 45 days before the decision would take effect, unless the failure to terminate the contract would adversely affect the health or safety of a patient; 3. Plans would have to provide a mechanism for appeals to review termination or non-renewal decisions. E. Grievance procedures and deadlines for responding to requests for coverage of services 1. Plans would have to establish written procedures for responding to complaints and grievances in a timely manner; 2. Patients will have a right to a review by a grievance panel and a second review by an independent panel in cases where the plan decision negatively impacts their health services; 3. Plans must have expedited processes for review in emergency cases. F. Non-discrimination and service area requirements 1. In general, the service area of a plan serving an urban area would be an entire Metropolitan Statistical Area (MSA). This requirement could be waived only if the plans' proposed service area boundaries do not result in favorable risk selection. 2. The Secretary could require some plans to contract with Federally-qualified health centers (FQHCs), rural health clinics, migrant health centers, or other essential community providers located in the service area if the Secretary determined that such contracts are needed in order to provide reasonable access to enrollees throughout the service area. 3. Plans could not discriminate in any activity (including enrollment) against an individual on the basis of race, national origin, gender, language, socioeconomic status, age, disability, health status, or anticipated need for health services. G. Disclosure of plan information 1. Plans would provide to both prospective and current enrollees information concerning: Credentials of health service providers Coverage provisions and benefits including premiums, deductibles, and copayments Loss ratios explaining the percentage of premiums spent on health services Prior authorization requirements and other service review procedures Covered individual satisfaction statistics Advance directives and organ donation information Descriptions of financial arrangements and contractual provisions with hospitals, utilization review organizations, physicians, or any other health care service providers Quality indicators including immunization rates and health outcomes statistics adjusted for case mix An explanation of the appeals process Salaries and other compensation of key executives in the organization Physician ownership and investment structure of the plan A description of lawsuits filed against the organization 2. Information would be disclosed in a standardized format specified by the Secretary so that enrollees could compare the attributes of all plans within a coverage area. H. Protection of physician--patient communications 1. Plans could not use any contractual agreements, written statements, or oral communication to prohibit, restrict or interfere with any medical communication between physicians, patients, plans or state or federal authorities. I. Patient access to clinical studies 1. Plans may not deny or limit coverage of services furnished to an enrollee because the enrollee is participating in an approved clinical study if the services would otherwise have been covered outside of the study. J. Minimum Childbirth benefits 1. Insurers or plans that cover childbirth benefits must provide for a minimum inpatient stay of 48 hours following vaginal delivery and 96 hours following a cesarean section. 2. The mother and child could be discharged earlier than the proposed limits if the attending provider, in consultation with the mother, orders the discharge and arrangements are made for follow-up post delivery care. II. Amendments to the Medicare Program, Medicare Select and Medicare Supplemental Insurance Regulations. A. Orientation and Medical Profile Requirements 1. When a Medicare beneficiary enrolls in a Medicare HMO, the HMO must provide an orientation to their managed care system before Medicare payment to the HMO may begin; 2. Medicare HMOs must perform an introductory medical profile as defined by the Secretary on every new enrollee before payment to the HMO may begin. B. Requirements for Medicare Supplemental policies (MediGap) 1. All MediGap policies would be required to be community rated; 2. MediGap plans would be required to participate in coordinated open enrollment; 3. The loss ratio requirement for all plans would be increased to 85 percent. C. Standards for Medicare Select policies 1. Secretary would establish standards for Medicare Select in regulations. To the extent practical, the standards would be the same as the standards developed by the NAIC for Medicare Select Plans. Any additional standards would be developed in consultation with the NAIC. 2. Medicare Select Plans would generally be required to meet the same requirements in effect for Medicare risk contractors under section 1876. Community Rating Prior approval of marketing materials Intermediate sanctions and civil money penalties 3. If the Secretary has determined that a State has an effective program to enforce the standards for Medicare Select plans established by the Secretary, the State would certify Medicare Select plans. 4. Fee-for-service Medicare Select plans would offer either the MediGap ``E'' plan with payment for extra billing added or the MediGap ``J'' plan. 5. If an HMO or competitive medical plan (CMP) as defined under section 1876 offers Medicare Select, then the benefits would be required to be offered under the same rules as set forth in the MediGap provisions above. Such plans would therefore have different benefits than traditional MediGap plans. D. Arrangements with out of area dialysis services. E. Coordinated open enrollment 1. The Secretary would conduct an annual open enrollment period during which Medicare beneficiaries could enroll in any MediGap plan, Medicare Select, or an HMO contracting with Medicare. Each plan would be required to participate. III. Amendments to the Medicaid Program A. Orientation and Immunization Requirements 1. When a Medicaid beneficiary enrolls in a Medicaid HMO, the HMO must provide an orientation to their managed care system before Medicaid payment to the HMO may begin; 2. Medicaid HMOs must perform an introductory medical profile as defined by the Secretary on every new enrollee before payment to the HMO may begin. 3. When children under the age of 18 are enrolled in a Medicaid HMO, the immunization status of the child must be determined and the proper immunization schedule begun before payment to the HMO is made.

Mr. STARK

Mr. STARK. Mr. Speaker, today I am introducing the Medicare and Medicaid Recovery Act of 1996. Providers and suppliers are using the Bankruptcy Code as a vehicle to defeat the Secretary's effort to recoup overpayments from the Medicare trust funds. Specifically, providers and suppliers, who owe financial obligations to Medicare, are seeking relief from bankruptcy courts to have their outstanding overpayments, which are unsecured, discharge or greatly reduced. The Medicare Program has been unsuccessful in efforts to halt such action. Federal bankruptcy legislation is designed to provide equality to all creditors in the distribution of a debtor's assets. However, there are three main exceptions to the equal distribution principle that allow some creditors to receive more than others. The three main devices for some creditors getting more are, first, liens, second, exceptions to discharge, and third, priorities. With the third main exception--priority--creditors have a demand to first payment from any assets the debtors have available for payment to unsecured creditors. Creditors with priorities get paid before other unsecured creditors. The Federal Government has long had a priority for taxes, duties, and related penalties. However, it does not have a priority for nontax claims, such as Medicare and Medicaid overpayments to providers. The Government's priority for nontax claims was abolished in 1979. A 1992 report issued by the Office of Inspector General, entitled ``Federal Recovery of Overpayments from Bankrupt Providers,'' found that as of March 1991, the Medicare trust funds lost $109 million due to the ability of providers and suppliers to discharge their outstanding overpayments. While the report recommends giving Medicare claims a priority status in bankruptcy, better cost savings would be achieved by excepting these claims from discharge. This bill would correct this situation by prohibiting providers and suppliers from using a bankruptcy forum to avoid these outstanding obligations. This bill addresses a second problem--individuals who owe financial obligations to the United States, or who have had a program exclusion imposed against them for other reasons, are seeking relief from the bankruptcy courts to have their exclusion subject to the automatic stay. Currently, the Secretary of HHS is required to exclude from participation in the Medicare and State health care programs health care professionals who have defaulted on their student loan or scholarship obligations owed to the United States. There are also a number of other bases for exclusion, such as criminal convictions related to the delivery of a health care item or service, or patient abuse. The purpose of the Secretary's exclusion authority is to protect the public, as well as the beneficiaries of the Medicare and State health care programs, from individuals and entities who have demonstrated by their past conduct that they are untrustworthy. This bill makes clear that the Bankruptcy Code should not be used to defeat this congressional purpose.

Mr. STARK

Mr. STARK. Mr. Speaker, Medicare's limited outpatient pharmaceutical coverage is inhibiting the implementation of cost-effective outpatient treatments that could benefit patients. Over the past decades, a shift of healthcare from the inpatient to the outpatient setting has occurred. The implementation of Medicare's Prospective Payment System in 1983 provided a strong incentive for hospitals to decrease patients' lengths of stay. Outpatient treatment, when appropriate, is generally much more cost effective than inpatient treatment. Although further shifts in inpatient to outpatient treatment for some conditions may be medically appropriate, the lack of Medicare coverage for the necessary outpatient treatment seems to be inhibitory. Medicare policy needs to facilitate medically appropriate, cost-effective treatments in order to keep pace with the 1990's and set the course for the next century. For this reason, I am introducing a bill which directs a review of Medicare payments in order to identify conditions for which provision of an outpatient pharmaceutical benefit would facilitate outpatient rather than inpatient treatment and be cost effective. An example of Medicare's limited pharmaceutical coverage having an inhibitory effect on cost-effective care is the lack of general coverage for home intravenous antibiotic therapy. Numerous studies have shown that patients with certain diseases requiring prolonged antibiotic therapy can start their treatment in the hospital and then safely and effectively continue it at home. A hospital in Danbury, CT, recently published a cost-benefit analysis of a home intravenous antibiotic therapy program established for Medicare patients but paid for by the hospital itself; the savings to the hospital was found to be $6,111 per patient on average. If the hospital had not taken the initiative to start the home therapy program, these patients would have had to remain in the hospital, resulting in substantially increased costs. Although Medicare generally reimburses hospitals on the basis of fixed diagnosis-related group [DRG] payments, it also reimburses an extra amount for patients who stay in the hospital much longer than average and qualify as outliers. Thus for certain patients, some costs due to prolonged hospitalization are shifted to Medicare. Alternatively, the hospital could cut its costs by transferring the patient to another inpatient facility such as a skilled nursing facility to finish treatment. In this case, Medicare still pays extra because it reimburses both the hospitals's DRG payment and the receiving facility's expenses for the patient's post-hospitalization extended care. Many hospitals need an incentive to take the kind of initiative shown by the Danbury Hospital. The effort and startup costs involved in organizing certain outpatient programs may provide a disincentive. Also, the transfer of patients to extended care facilities may already provide a cost-saving option for the hospital, leaving Medicare to bear the loss. Although not all patients with a particular condition are medically appropriate candidates for outpatient therapy in place of continued inpatient therapy, many patients are probably lingering in inpatient facilities who could more cost-effectively be treated as outpatients. Medicare policy needs to be modified to address this problem by providing incentives for inpatient facilities to initiate cost-effective alternatives. One such incentive is the coverage of pharmaceuticals that facilitate the treatment of patients in the outpatient rather than inpatient setting. Currently for most home intravenous antibiotic therapy the hospital or beneficiary must shoulder the cost. This policy contains a built-in disincentive because the beneficiary may not have the means to pay for it, and the hospital may find it more cost-saving to use one of the strategies I outlined earlier resulting in a significant loss to Medicare. Adding a pharmaceutical benefit with appropriate payment safeguards could facilitate outpatient treatment and result in a gain to Medicare, the hospital, and the patient. Are there other diseases besides infections for which an outpatient pharmaceutical benefit would provide an incentive for cost-effective outpatient therapy? I suspect there are. Some strategies may be implementable now; in addition, as new drugs and technologies are developed, more outpatient therapies might be possible in the future. I welcome a thoughtful evaluation of this issue by health experts. We need to develop a policy that is flexible enough to accommodate future cost-saving strategies as they are developed. The bill I am introducing today provides the groundwork for determining how Medicare policy may be modified to facilitate shifts in health care from the inpatient to the outpatient setting, when medically appropriate. Inherent in the bill is a strategy to ensure that Medicare, not just the hospital, captures the savings. The bill directs the Secretary of Health and Human Services to review and report to Congress within 6 months, all disease categories for which inpatient payments might be able to be reduced if an outpatient pharmaceutical benefit is provided. Coverage for pharmaceuticals will include appropriate payment safeguards. The bill acknowledges that reimbursement not only for the drug, but also for supplies, appliances, equipment, laboratory tests, and professional services needed for appropriate outpatient treatment will need to be factored into the cost-effectiveness analysis. Specifically, the bill directs the Secretary to report which DRG payments can be reduced by refining the DRG or adjusting the DRG weighting factor, if an outpatient pharmaceutical benefit is provided. Implementation of this strategy could take a variety of forms. For example, reductions in DRG payments could be accomplished by using a formula to discount the payment for an individual patient, and providing only the individual patient with the outpatient benefit. In this strategy, the hospital could request a discounted DRG payment for a particular patient via a billing code. Potentially, the hospital could also specify the number of days of outpatient treatment it wishes to substitute for inpatient treatment. This substitution would ensure that Medicare's costs in providing the outpatient benefit do not exceed its savings in reducing the DRG payment. A financial incentive for the hospital can be built into the formula used for discounting the DRG payment. Another strategy is to split certain DRG categories into one payment for patients who continue treatment in the hospital and a reduced payment for patients who continue treatment as an outpatient. Alternatively, the DRG payments for all patients in a specific disease category could be reduced, even though some patients will remain hospitalized throughout their treatment while others will have a shortened hospital stay and continue treatment as outpatients. Post-hospitalization outpatient therapies and home services are sometimes provided by the hospitals themselves, but may also be provided by independent agencies. When the inpatient and outpatient providers are the same, it will be easy to ensure that Medicare payments are contained. Outpatient reimbursement could be conditional on inpatient payment reductions, and a financial incentive for hospitals to chose the more cost-effective treatment could be built into the reimbursement. However, when the inpatient and outpatient providers are unrelated, it will be more difficult to ensure that Medicare payments will be less than they would have been if the patient had remained in the hospital. This is not, however, an insurmountable problem. One possible strategy that has been suggested is the use of lump sum payments per patient for the outpatient treatment of certain conditions. Certain DRG payments could be split into an inpatient component and a lump sum outpatient component; as long as the sum is less than the original inpatient payments, Medicare saves money. Medicare's inpatient payments for a disease category include the DRG payment, and any applicable outlier or extended care facility payments. Decisions about the percentage that should go to each provider, and incentives that lead to cost-effective care are difficult but potentially resolvable. The bill also directs the Secretary to determine which outlier payments can be reduced in number, and the disease categories for which these outlier payments are made, if an outpatient pharmaceutical benefit is provided. Similarly, the Secretary is directed to determine whether patient transfers to post-hospitalization extended care facilities can be avoided, thereby reducing payments, if an outpatient pharmaceutical benefit is provided. Strategies similar to the ones I described for reducing DRG payments could potentially be applied to these payment areas. By reviewing these types of payments, disease categories which have potential for Medicare cost-savings will be identified. As I described previously when I introduced a bill addressing outpatient parenteral antimicrobial therapy, certain infections are likely candidates. However, there may be a number of other areas of medicine, where cost- saving outpatient treatment could appropriately be substituted for inpatient treatment, now or in the future. The bill directs the Secretary to determine the savings that can be obtained by reducing inpatient payments while providing coverage for beneficiaries' outpatient drugs and services. In addition to potential savings from reduced DRG, outlier, or extended care payments, savings may accrue from the decreased risk of hospital-acquired infections. This is because the longer patients remain in an inpatient setting, the more at risk they are for a nosocomial infection which generally lengthen hospital stay, increase costs, and result in increased morbidity and mortality. Modernizing Medicare to provide incentives for cost-effective medically appropriate care holds promise for benefiting patients, providers, and Medicare.

Mr. STARK

Mr. STARK. Mr. Speaker, Medicare could save money and benefit patients by facilitating certain cost-effective outpatient treatments in place of inpatient treatment. As the body of medical knowledge grows about what diseases can be safely and effectively treated at home, Medicare's policies need to be updated to capture the cost savings. A crucial area where Medicare policy lags relates to infections and treatment. After years of study by health experts, it is well- established that outpatient intravenous antibiotic therapy for certain infectious can be a cost-effective alternative to prolonged hospitalization. Although only a subset of patients are medically appropriate candidates for outpatient therapy, significant cost savings may accrue. The bill I am introducing today provides a benefit for outpatient parenteral antimicrobial therapy while ensuring that Medicare capture the savings from use of this outpatient rather than inpatient rather than inpatient treatment. Certain infections require prolonged antimicrobial therapy. These include endocarditis, an infection of the heart valves, osteomyelitis, an infection of bones, infections involving certain prosthetic devices such as prosthetic joints, and certain abscesses such as those of liver, lung, or brain. Patients with these diseases often require intravenous antibiotic therapy for 4 to 6 weeks and sometimes longer. Intravenous therapy can produce much higher and more constant blood levels of an antibiotic than oral therapy and is used for serious infections. Certain viral and fungal infections also require prolonged antimicrobial therapy. After initial hospitalization and stabilization of their condition, many patients would be well enough to be discharged from the hospital except for the need for continued intravenous therapy. For these patients, outpatient antibiotic therapy would be beneficial and cost- effective. Unfortunately, many patients must currently remain in the hospital because Medicare does not cover the outpatient treatment. Medicare loses because it may have to pay the hospital an outlier payment in addition to the usual diagnosis-related group [DRG] payment; the outlier payment is an extra amount to help cover the patient's longer than average stay. Alternatively, the hospital may try to save costs by transferring the patient to an extended care facility to complete treatment. Again Medicare loses, because it pays for the treatment at the receiving facility in addition to the DRG payment it makes to the hospital. If Medicare covered the outpatient treatment, it could avoid these extra inpatient payments. In addition, Medicare's DRG payments for these diseases could potentially be reduced as the average inpatient cost for the conditions decreases. Not all patients are medically appropriate candidates for outpatient antimicrobial therapy. However, for those that are, outpatient therapy avoids the restrictive environment of a hospital and decreases the patient's risk for hospital- acquired infections. Studies have documented that the longer a patient remains in the hospital the greater the chance of developing a new infection due to an organism acquired in the hospital; this results in increased morbidity and mortality, longer hospital stays, and additional costs. Another benefit of outpatient therapy is that patients who are ambulatory and active can often resume work or other regular activities during the period of their treatment. Several models are used for the administration of outpatient parenteral antimicrobial therapy. These include, first, the therapy can be administered in a physician's office or hospital treatment room to a patient who commutes to the site daily. This type of outpatient treatment is already covered by Medicare because the drugs are administered incident to a physician's services. Second, the therapy can be administered in a patient's home by a health professional who visits daily. Third, the therapy can be self-administered by the patient after appropriate training and with appropriate backup and support services. Fourth, the therapy can be administered via a programmable infusion pump in a patient's home or other location since some pumps are small and portable. Pumps can be set up to run for a few days by a health professional and require little manipulation by patients. They can be used with a variety of antimicrobials, including ones with frequent dosing schedules which otherwise could not be feasibly administered in the outpatient setting. Some infectious disease specialists treat a variety of infections with outpatient intravenous antimicrobial therapy in addition to the ones I mentioned earlier. These include certain skin and soft tissue infections, kidney infections, and pneumonia. I invite medical experts to help us define the optimal list of diseases for which outpatient parenteral therapy is a safe, effective, and cost-effective alternative to inpatient treatment. Because Medicare savings may be more readily identified with some disease categories than others, I encourage development of a list for which the savings are clear. The bill I am introducing today establishes a benefit for outpatient parenteral antimicrobial drugs, when the outpatient treatment is used in place of continued inpatient treatment. Reimbursement for drugs will be on the basis of actual costs plus an appropriate administration fee. The bill recognizes that certain supplies, equipment, and professional services are a necessary part of appropriate outpatient treatment. It directs the Secretary of Health and Human Services to determine the savings that can be obtained by providing this outpatient benefit which facilitates reduced inpatient payments. The diseases for which inpatient payments can be reduced if outpatient benefits are provided will be determined by reviewing all infectious disease DRG's. The bill also calls for repeal of coverage for antimicrobial drugs under the durable medical equipment [DME] clause, and provision of the coverage under the new outpatient parenteral therapy benefit. The DME benefit currently covers three antiviral drugs, one antifungal drug, and one anti-bacterial drug called vancomycin. As I have described previously in introducing another bill addressing vancomycin policy, Medicare's coverage of this single anti-bacterial drug among more than 50 available antibacterials is causing inappropriate overuse of this drug. This is contributing to a public health problem of vancomycin resistant bacteria. Incorporating these five antimicrobials into the new outpatient parenteral therapy benefit will provide a more rational policy that can avoid the pitfalls of the current system. Coverage for infusion pumps used to administer these and other antimicrobials covered by the outpatient parenteral therapy benefit will be provided under the DME benefit. This bill focuses on disease categories rather than specific antimicrobials. As evident from the vancomycin issue, the naming of specific antimicrobials can cause changes in physicians' prescribing practices resulting in overuse of the named drugs. The naming of antimicrobials poses a different risk than for other classes of drugs and should be avoided; if we guess wrong about which antimicrobials should be named in a law, the result is not merely lack of coverage for the unnamed drugs, but also a potential public health problem of increased drug resistance. The legislative process cannot respond fast enough to change the list of drugs each time a problem occurs. Focusing on disease categories, rather than naming specific drugs, avoids this special risk. Also, this strategy helps to ensure Medicare savings by clearly identifying the DRG's, outliers, and extended care categories for which reduced inpatient payments may be feasible. This bill provides the mechanism to update Medicare's policies and capture cost- savings as healthcare shifts from the inpatient to the outpatient arena.

Mr. STARK

Mr. STARK. Mr. Speaker, when a group pays too much for a product and thereby provides windfall profits for the provider of that product, there is an overwhelming temptation by that provider to oversell and overuse the product. That's what has happened in Medicare, where we pay grossly too much for a product called intradialytic parenteral nutrition [IDPN]. As a result, kidney dialysis providers are sorely tempted to overprescribe and overuse this product. To stop the questionable use of this product, I am today introducing legislation to reform how Medicare pays for this nutritional treatment needed by a very small number of end stage renal disease patients. The current Medicare coverage of intradialytic parenteral nutrition [IDPN] has raised concerns involving the efficacy of this procedure as well as the possibility of gross overutilization. IDPN is the provision of parenteral nutrition that is administered during dialysis for end stage renal disease [ESRD] patients. IDPN is used to deliver nutrition, including amino acids, carbohydrates, and at times vitamins, trace elements, and lipids during dialysis. Although IDPN is provided in conjunction with dialysis, the coverage and reimbursement for IDPN are separate from the ESRD benefit. Specifically, coverage of IDPN is included under the prosthetic device benefit and reimbursed under the durable medical equipment benefit. Parenteral nutrition is covered for those patients who have a functional impairment of the gastrointestinal tract, which prevents sufficient absorption of nutrients to maintain an appropriate level of strength and weight. Enteral feeding, additional nutrition administered orally or through a tube and absorbed through a functioning gastrointestinal tract, must first be proven ineffective before parenteral nutrition will be reimbursed. Parenteral nutrition is prohibited when it merely serves to supplement regular feeding. There is concern within the medical field that IDPN is being unnecessarily utilized. Admittedly, there exist patients for whom IDPN is appropriate. According to a May 1993 Health and Human Service Office of Inspector General [OIG] report, an average of 2.4 percent of patients in dialysis facilities receive IDPN, in all cases only three times a week through their dialysis shunt. For-profit dialysis facilities had 2.9 percent of their ESRD patients using IDPN whereas only 1.5 percent of not-for-profit ESRD patients were on IDPN. This discrepancy between for- and not-for-profit hospitals should alert us to the possibility of abuse on the part of for-profit dialysis centers. Current billing practices for IDPN have resulted in enormous overcharging for IDPN supplies. Some claim that Medicare is paying nearly 800 to 1,000 percent more than the provider's acquisition cost for IDPN supplies. Medicare allows $250 for one combination of total parenteral nutrition solution, but the actual price of these supplies is no more than a couple of dollars. With such inflated prices, it is no surprise that this specific Medicare part B benefit has been overutilized. According to the U.S. Renal Data System's 1996 report, Medicare outlays for IDPN use rose from $51.6 million in 1991, $68.7 million in 1992, and to $78.1 million in 1993, but dropped off to $46.4 million in 1994. This treatment is considered by many in the medical field to be only appropriate for a very limited, constant number of end stage renal disease patients. It is no coincidence that the DMERC's new guidelines requiring more stringent documentation of the need for IDPN occurred just before this most recent decline in Medicare IDPN expenditures. Since ESRD patients are on a dialysis machine three times each week for a limited time, the total amount of intradialytic nutrition delivered is rather limited. It is estimated that only 10 to 20 percent of the recommended weekly calories for an ESRD patient are supplied using the IDPN delivery method. However, on average it cost $60,000 per year to administer these few calories. Only 70 percent of the amino acids administered through IDPN are retained within the body. This method of amino acid supplementation provides roughly 108 to 114 grams of protein per week. For comparison, an oral supplement given three times per day would provide 189 grams of protein per week. The cost of such enteral amino acid feeding is roughly $6.30 a week at the Portland VA Medical Center. With these kinds of gross windfall profits, there will be constant pressure to overutilize and abuse IDPN. It is up to us to legislate reimbursement reform. If the utilization rate and Medicare outlay increases were for a procedure that enjoyed definitive support from the medical community, I would not only justify but encourage widespread use of such treatment for our seniors and disabled. However, in the opinion of the HHS's own Office of Inspector General, ``the benefits of parenteral nutrition for ESRD patients are unproven, its use is associated with a high rate of complication, and the cost of care is disproportionate to the resources expended.'' Clinicians disagree as to the efficacy of this treatment method. Some cite increasing nutritional parameters as evidence that IDPN is indeed nourishing the patient, while others feel that the relatively few studies showing a positive correlation between IDPN use and increasing nutritional parameters contains shortcomings in the design of the study leading to unreliable conclusions. Still others claim that these studies simply fail to demonstrate a link between decreasing morbidity and increasing nutritional parameters. We must address the IDPN pricing issue immediately to prevent the incentives for overutilization and the further plundering of our already endangered Medicare. I propose that we begin by first changing the reimbursement of IDPN from a rate within the durable medical equipment benefit to an incremental add-on payment within the ESRD benefit that would reflect the marginal costs of providing the individual components of an IDPN solution. This new ESRD benefit would cover only the arms length acquisition costs of the IDPN supplies plus an appropriate administrative service fee. The Secretary must conduct a survey of the IDPN market to determine the estimated true acquisition cost. To eliminate the benefit altogether would deny those few patients the right to a treatment that is indeed warranted. However, by altering the reimbursement of this treatment we will reduce the financial incentive for overutilization. In addition, specific HCPCS codes for IDPN will be created so as to be able to accurately identify the content of the solutions that are being administered. IDPN coverage has created a complex, confusing system with tremendous opportunity for abuse. I urge my colleagues to support this measure designed to create a simpler, more cost-effective means of covering intradialytic parenteral nutrition in end stage renal disease patients.

Mr. STARK

Mr. STARK. Mr. Speaker, current Medicare pharmaceutical payment policy is creating distortions in the types of drugs prescribed in our society and contributing to a potential public health problem. This problem is the threat of increased drug resistance among bacteria that cause infections in thousands of people. The policy contributing to this public health threat is the unevenness of Medicare coverage for outpatient medications, and specifically, Medicare's coverage of a single antibacterial drug called vancomycin out of a multitude of possible antibacterials. This coverage provides an unintended incentive for physicians to preferentially choose vancomycin over other antibiotics. Inappropriate use of vancomycin will likely accelerate the emergence and spread of bacteria resistant to this drug, causing a major public health problem resulting in numerous deaths and increased morbidity. The bill I am introducing today counteracts the misdirected incentive for inappropriate use of vancomycin by insisting on certain criteria for the use of the drug in order for it to be reimbursed. Under current law, Medicare reimburses for outpatient medications in limited circumstances. Highly specific, unrelated categories of drugs are reimbursed. These include drugs administered in a physician's office or hospital, oral anticancer drugs, immunosuppressant drugs for organ transplant patients, a drug to treat anemia in end stage renal disease patients, drugs to treat osteoporosis in certain patients, and drugs that require durable medical equipment [DME] for their administration. Approximately 20 drugs are covered under the DME benefit, of which vancomycin is one. Vancomycin is covered because it is administered intravenously through an apparatus called an infusion pump. Medicare reimburses for the infusion pump and for the drug for which it is used. Thus, although more than 50 drugs are available to treat bacterial infections, Medicare singles out one drug for reimbursement simply because an infusion pump is used for administration. The DME benefit also includes four drugs used to treat infections caused by viruses or fungi, again because an infusion pump is used for administration, but vancomycin is the only drug used to treat infections caused by bacteria. Intravenous vancomycin is typically used in home therapy for infections requiring prolonged courses of antibiotics, such as endocarditis, an infection of the heart valves, or osteomyelitis, an infection of bones. Generally patients are hospitalized for an initial period, and once stable, can continue treatment at home. Only a subset of patients are medically appropriate candidates to receive home intravenous therapy. Home therapy is generally cost effective because the alternative is for patients to remain in the hospital or other inpatient facility to receive the therapy. Medicare's reimbursement system is causing overuse of vancomycin. The Health Care Financing Administration [HCFA] found a 64-percent increase in the home use of vancomycin, as measured by claims submitted for infusion pumps for vancomycin, from the fourth quarter of 1994 through the third quarter of 1995. Anecdotes from some hospitals and home care agencies indicate that vancomycin is preferentially used whenever the bacteria causing the infection are susceptible to it. This information suggests that the current Medicare policy is having the unintended effect of changing physicians prescribing practices. Overuse of antibiotics is a principal risk factor for the development of drug resistant bacteria. Antibiotics kill or inhibit bacteria that are susceptible to them, but the resistant bacteria survive. The Centers for Disease Control and Prevention [CDC] has documented a major increase in infections among hospitalized patients due to vancomycin resistant bacteria called vancomycin-resistant-enterococci [VRE], from 0.3 percent in 1989 to 7.9 percent in 1993. In addition to this increase, a major concern is the possibility that these bacteria will transfer their vancomycin resistance to other families of bacteria. This transfer has occurred in a laboratory setting but has not yet been documented in humans; when it does occur, a major public health problem will arise since some of the bacteria to which vancomycin resistance may be transferred, such as Staphylococcus aureus, are common causes of infection and may already be resistant to many other drugs. In a 1995 report about the impacts of antibiotic resistant bacteria, the Office of Technology Assessment concluded that steps should be taken to preserve the effectiveness of currently available antibiotics. It noted that Medicare's vancomycin policy runs counter to recommendations published by the CDC for judicious use of this drug. It also advised that a change in the Medicare policy may secondarily create positive influences on other insurers to consider whether their policies might also be creating unanticipated effects on antibiotic prescription patterns. Clearly, some patients need to be treated with vancomycin; it can be a lifesaving treatment in patients with serious infections caused by bacteria resistant to other drugs, or in patients who are allergic to certain other drugs. Unfortunately, HCFA's response to the problem of vancomycin overuse is to curtail coverage for vancomycin altogether. HCFA has announced that it is planning to curtail coverage of vancomycin under the DME benefit starting September 1, 1996. It has determined that vancomycin does not require an infusion pump for administration and thus will not be reimbursed. Surely, there must be a better way to address this problem than penalizing patients who truly need vancomycin. Instead of curtailing coverage, my bill addresses the public health threat by insisting that vancomycin use complies with certain criteria. The CDC's published recommendations for preventing the spread of vancomycin resistance include guidelines for prudent vancomycin use. The bill incorporates the two CDC recommendations that seem most applicable in the outpatient setting. Implementation would involve having physicians indicate on the request for vancomycin and DME reimbursement that the treatment meets at least one of the criteria delineated in the bill. Vancomycin is used to treat bacteria which are characterized as gram- positive; this property means that when the bacteria are applied to a microscope slide and subjected to a technique called the Gram stain, the bacteria pick up the color of the stain, which is a positive result. The ability of these bacteria to pick up the stain is related to their outer structure; the ability of certain antibiotics to harm these bacteria is related to the antibiotic's ability to penetrate or disrupt this structure. Another large family of antibiotics effective against gram-positive organisms is termed the beta-lactam antibiotics because they have in common a chemical structure called the beta-lactam ring. The prototype and most well-known of the beta-lactam antibiotics is penicillin. Penicillin is the first choice treatment for certain infections. However, penicillin has been widely used since the 1940's and many bacteria currently are resistant to penicillin; in this case, certain other beta-lactam drugs are usually effective. Since the 1980's, however, an increase in infections due to Staphylococcus aureus strains which are resistant to the whole family of beta-lactam drugs has been documented in hospitals; in these infections, vancomycin is often effective. Vancomycin is generally the last drug available to effectively treat these infections. Thus, today's bill reserves vancomycin use for when the bacteria are resistant to beta-lactam antibiotics. Although vancomycin could also be used against bacteria that are not resistant to the other drugs, it is more prudent to use the other drugs whenever possible and to save vancomycin as the last resort. Current law does not prevent physicians from prescribing vancomycin for infections that could be effectively treated with a beta-lactam antibiotic. In contrast, my bill provides for reimbursement of vancomycin and the equipment used for its administration if the physician indicates that treatment is for a serious infection caused by beta-lactam-resistant bacteria. Vancomycin is also used for patients who have serious allergies to penicillin and other beta-lactam antibiotics. Thus, the bill also provides for reimbursement of vancomycin and the equipment used for its administration if the patient has a serious allergy to beta-lactam antibiotics. The bill I am introducing is one attempt to address the public health threat of drug resistant bacteria while protecting the needs of beneficiaries. However, it may not be the only way to address the problem. The policy causing this problem is rooted in the haphazard way in which Medicare reimburses for outpatient pharmaceuticals. Perhaps a more sweeping change is needed rather than just an adjustment of the reimbursement for one drug. The Medicare outpatient drug benefit has been adjusted drug by drug over the years. However, this policy is causing distortions in the types of drugs prescribed, as evidenced by the vancomycin problem. I solicit ideas and suggestions from the medical and pharmaceutical community and others to help resolve this public health problem and to make Medicare drug payment policies more rational, cost effective, and less likely to lead to similar problems in the future.

Mr. STARK

Mr. STARK. Mr. Speaker, today I introduced a comprehensive bill to improve consumer and provider rights in managed care plans. I introduced the bill late in this Congress so that everyone has the opportunity to review the bill over the autumn and suggest changes and improvements, prior to its reintroduction in the 105th. One major section of the bill requires the timely consideration by managed care plans of patient appeals. The Medicare agency is very concerned about this area of consumer rights and is proposing a rule to better protect patients. Depending on the strength of the HCFA rule, the need for the appeals and grievance section of my legislation may be fully or partially addressed. The following news articles from the Bureau of National Affairs of September 18 and 19 describe why this is such an important issue. As Bruce Fried, head of the Office of Managed Care states so well: The appeal and grievance process is ``fundamentally the most important protection our beneficiaries have.'' Vladeck Urges Managed Care Groups To Improve Appeals Process Increasing numbers of health care consumers are feeling powerless in the face of decisions made by their managed care organizations, Health Care Financing Administration Administrator Bruce C. Vladeck said Sept. 17 in urging such groups to improve their beneficiary grievance and appeals process. Speaking at the annual meeting of the American Association of Health Plans, the nation's largest managed care group, Vladeck said Medicare managed care organizations should ensure Medicare enrollees are aware of their health care coverage appeals rights; should establish systems that do not deter, and even solicit coverage questions; and should employ staff that are well-versed in Medicare regulations. As managed care has grown, ``there is an increasing perception among consumers that they are voiceless and powerless in the system,'' even though they had little or no appeal rights in the fee-for-service system, Vladeck hold conference attendees. He urged AAHP members to voluntarily upgrade their appeals and grievance process to parallel HCFA's on-going review of what is requires managed care groups to provide enrollees in this area. ``If it doesn't happen spontaneously, we will make it happen.'' he warned.

Mr. STARK

Mr. STARK. Mr. Speaker, I am pleased to introduce ``The Managed Care Orientation and Medical Profile Act.'' For the past decade, the Medicare and Medicaid programs have been joining the national movement to managed care. Medicare enrollment in capitated Health Maintenance Organizations (HMOs) jumped from 441,000 members in 1985 to almost 3.5 million beneficiaries as of March 1996. Medicaid enrollment in managed care has been more dramatic as States have received Federal waivers to enroll almost all of their Medicaid recipients in HMOs. The growth in managed care is largely due to the aggressive marketing practices of managed care plans. HMOs place financial incentives on door-to-door agents to enroll as many new members as the plans can handle. Medicaid HMOs even stake out food stamp offices targeting would-be enrollees with free gifts and high pressure tactics. Unfortunately, these practices put some of our most vulnerable populations at severe risk. Consumer advocates have reported that Medicare and Medicaid beneficiaries are often enrolled without understanding what they are signing. Some unscrupulous health plans even prey on non-English speakers or the mentally handicapped. As a result, many new enrollees are left clueless as to how their health plan works or how to access care while the HMOs begin receiving payments from the government for care they are not providing. Once an individual is enrolled, Medicare sends the HMO somewhere between $300 and $700 per month (depending on the region of the nation) to maintain the health of that person and to treat them when they are sick. In many cases--perhaps most cases--Medicare can spend thousands and thousands of dollars on behalf of an enrollee before that person ever visits the HMO. In the meantime, the health of the enrollee can actually be deteriorating and more serious problems can be developing. The legislation I propose today address this problem by making HMOs more accountable for the lives they enroll. In order to enroll new patients, HMOs would have to fulfill the following requirements before payment begins: First, conduct an orientation meeting with the new enrollees introducing them to managed care and clarifying where to access care, which benefits are covered, and all payment structures including deductibles and copayments. Second, conduct a preventive screening as defined by the Secretary and an immunization assessment for children. Managed care claims to be effective because it works with the patient to ``manage'' health and prevent illness. When the government is paying the bill, we ought to demand that plans live up to this promise by mandating the orientation and medical profile before their payment begins. In the medical profiling encounter, the HMO can begin to work with the enrollee on issues such as diabetes, lack of immunization, obesity, smoking, alcoholism, pre-cancerous skin conditions, high blood pressure--the whole range of potential health problems that a good HMO should know about their enrollees and be working to improve. The August 1996 issue of New York's United Hospital Fund newsletter ``PolicyLine'' shows why the idea of requiring a meeting and work-up before we start paying HMOs makes a great deal of sense: Even if specifically required to assume certain public health responsibilities, however, managed care plans may not yet have the experience or systems to fulfill their responsibilities, as experienced in Wisconsin demonstrates. Five years into its managed care initiative, Milwaukee experienced a measles epidemic. According to Paul Nannis, Milwaukee Commissioner of Health, the city had 1,100 cases of measles in 1990, mostly among disadvantaged preschool-aged children. Eighty-three percent of these children were in HMOs; three of them died. Subsequent analysis revealed that of all the preschoolers enrolled in the HMOs, two-thirds were not appropriately immunized. In the wake of this crisis, the department of health provided 20,000 shots in a ten-week period, 55 percent of them to children enrolled in HMOs. In analyzing the events that led to the crisis, Mr. Nannis said that the independent practice associations that were operating as managed care organizations had not fundamentally altered the way they delivered primary care services. Simply renaming the existing system managed care and changing the reimbursement process for physicians who continue to practice medicine the same way they always have done does not magically manage anybody's care, said Mr. Nannis. While the Milwaukee example refers to a Medicaid managed care type program, I believe its lessons apply more broadly. As the article continues, Mr. Nannis is quoted as saying * * * public health agencies [read: HCFA] and HMOs need to be at the same table before initiatives start. Managed care plans should be expected to provide uniform data on enrollees including prevalence and cause of mortality, morbidity, and disability; timing and frequency of immunizations; and effectiveness of interventions. HMOs and managed care can be a wonderful thing for the health of the American people--but only if people know how to use their HMO and only if their HMO works with them to prevent the minor problems of today from becoming the medical catastrophes of tomorrow.

Mr. STARK

Mr. STARK. Mr. Speaker, this appropriations bill includes two important first steps toward improving health care in America-- protection for mothers and newborn babies from being forced out of hospitals prematurely and better mental health insurance benefits. Yet these are the first steps in what needs to be done. Both amendments have gaping loopholes in them that we will need to fix in the next Congress. The parity for mental health caps amendment has a potentially gutting amendment offered by the senior Senator from Texas [Mr. Gramm] which says that the parity in annual or lifetime limits between mental health and physical health need not apply if it causes the cost of the health insurance plan to rise by 1 percent or more. The Congressional Budget Office has estimated that the cap parity amendment should only affect health insurance premiums by about 0.4 percent. A recent Coopers & Lybrand analysis says that the premium impact should not only be about 0.12 percent. But thanks to the Gramm amendment, any employer or insurer who does not want to provide this equity treatment only has to say that it will increase costs by 1 percent or more. You can drive an armored division through that loophole--and I hope the next Congress will repeal the Senator's mischievous amendment. The mental health cap parity amendment also does not include treatment for drug or alcohol addictions--even though the airwaves are filled with political ads decrying the rising level of drug use. If we were serious about turning Americans away from drug use, we would certainly provide health care services for drug and alcohol addiction-- and this should be a priority for the next Congress. I would like to include in the Record at this point, a letter from the heads of several of the Nation's major addiction treatment centers--such as the Betty Ford Center--on this point. September 16, 1996. Hon. Fortney Pete Stark, House of Representatives, Cannon House Office Building, Washington, DC. Dear Congressman Stark: We are writing to express our grave concern over the mental health parity provision that was included as an amendment to the Senate's HUD-VA Appropriations bill, H.R. 3666. We are shocked that a provision that specifically excludes substance abuse treatment services is being recommended by the leadership in Congress at a time when Republicans and Democrats alike are engaged in a heated national dialogue about addressing our nation's escalating drug problem. At the Betty Ford Center, the Hazelden Foundation, and the Valley Hope Association, we see first hand the devastation that spiraling alcohol and drug use has on the lives of millions of Americans and their families. We also know the benefit that cost effective treatment has on reducing collateral health care costs, increasing workplace productivity, and reestablishing strong family ties. We urge you to insist that the leadership drop the language from the HUD-VA bill that excludes substance abuse services from the parity provision. The cost of providing these benefits is a nominal .7% increase in premiums according to an April 12, 1996 study prepared by Milliman and Robertson. At a time when Congress has pledged renewed efforts to address our nation's drug problem, you should not pass legislation that goes entirely in the wrong direction. Sincerely, John Schwarzlose, President, Betty Ford Center. Jerry Spicer, President, Hazelden Foundation. Dennis Gilhousen, President, Valley Hope Association. On the new mothers and babies bill, the 48 hours of protection is an important first step. But again, look at the details. The amendment includes language that says nothing in the new law will interfere with a managed care plan's cost-sharing provisions. In other words, a managed care plan could require a two day deductible for maternity stays, thus completely negating this provision. It could require a $1000 a day copayment for maternity stays, thus making a mockery of this provision for most middle income Americans. There are some plans that are so money-hungry they will probably adjust their cost-sharing arrangements so as to continue to force new mothers out of hospitals before they are ready. I call on the nation's consumer groups to form a database on what the current maternity co-pays and deductibles are in major managed care plans, and publicize any changes in those requirements that are designed to subvert this new law. The spotlight of publicity may be our only real protection against this loophole. The amendment also drops original language that requires that if a mother and her baby leave the hospital before 48 hours that there be follow-up, at home services. The U.S. General Accounting Office has just released a report entitled, ``Appropriate Follow-up Services Critical With Short Hospital Stays.'' This report clearly shows that we need to revisit this issue next year to provide the kind of care to new babies that a civilized society should provide. As the GAO says Although the public debate over maternity care has focused on the shortening of the hospital stay after childbirth, the critical issue is whether mothers and newborns are receiving all necessary services. . . .There is evidence that women and newborns are being discharged early without much follow-up care. Even when follow-up care is provided, it is not always delivered in a timely manner by properly trained professionals. Requiring insurers to either cover hospital stays of 48 hours for vaginal births or cover follow-up care within 72 hours of discharge may be giving the public a false sense of security. Extending hospital stays to 48 hours may provide for more medical surveillance, but it does not include the period when many neonatal problems usually occur--at 3 days of age. Follow-up care can be a safety net to protect mothers and newborns who are discharged early only if the appropriate services are actually provided.

Mr. STARK

Mr. STARK. Mr. Speaker, I am introducing today a bill to require insurers to offer health insurance policies for kids, coupled with a sliding scale 80 percent refundable tax credit to help families buy such insurance policies. There are 10 million children in the United States without health insurance. Health insurance equals access to health care. Access to health care equals better health and a better quality of life. It is that simple. As a recent article in the Journal of the American Medical Association (JAMA, August 14, 1996, p. 477) so well said: . . .access to health care is dramatically increased if one has health insurance, and this increased access has in turn been shown to improve outcomes, such as whether one lives or dies. The most significant action within the health system that we can take to preserve health and improve longevity is to provide health insurance to everyone. The bill I am introducing is about the life and death--and lifetime productivity--of our Nation's children. This bill is not a mandate; it does not require any individual to buy health insurance. It does, however, make sure that there is widespread competition in the offering of these health insurance policies and it does help families, even very low income families, buy a policy of their choice. Health insurance for children in America is getting worse--not better. With the cuts in Medicaid, it may get disastrously worse. We desperately need to reverse the trend of rising uninsured rates for children. The General Accounting Office recently issued report to Senator Christopher Dodd, dated June 17, 1996, entitled ``Health Insurance for Children: Private Insurance Coverage Continues to Deteriorate'' (GAO/HEHS-96-129). 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. To repeat, health insurance can mean the difference between life and death--and between a good quality life and a stunted life. The GAO's report I have just cited 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. My bill is a small, incremental step forward. If 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 is not 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. Under the bill, insurance companies would be subject to a tax penalty if they did not offer for sale--so-called guaranteed issue--a policy which provided a Medicare-type package of health benefits, with additions designed for well-baby and well-child care and with a 10 percent--but no more than $10 per Part B service--rather than Medicare's 20 percent copay. By requiring insurers to offer such a benefit package, consumers will be able to shop widely for a policy they can afford. The competition in this sector should help make affordable policies available. The key problem is to make this policy affordable to the families of the 10 million uninsured. The basic reason so many children are uninsured is that they are in working families which are not eligible for Medicaid, but the families do not have health insurance offered through the workplace and cannot afford the $500 to $700 per child these policies will probably cost. Therefore, I propose a refundable tax credit to make the policies affordable. The tax credit/payment will be phased out at the rate of 50 cents per dollar of tax liability of the purchaser. In the past, refundable tax credits have had integrity problems. I propose to avoid this abuse of the program by requiring that the taxpayer submit a 1099 type form with their tax form, in which the insurance company will certify that a tax-qualified kid's insurance policy has been purchased. The companies will, of course, also submit this documentation directly to the IRS so that a data match can be performed before refunds are issued. I do not spell out how the 80 percent credit is to be financed, but the money can be found as part of a future reconciliation bill. If additional funds can be found, the credit percentage can be phased out more slowly to help additional families. To repeat, the bill is not a mandate, but a chance for parents to have affordable private health insurance for their children. It uses the private market exclusively. It is a first step and as additional moneys become available, we can add a maternity and prenatal benefit for mothers-to-be and a slower phaseout of the credit. I welcome cosponsors of the bill, and comments and suggestions from the public on ways to improve the bill and to help finance the proposal. I am introducing the bill late in this Congress so that the public can review the bill before the start of the 105th Congress and suggest changes and improvements before its reintroduction in the next Congress.

Mr. STARK

Mr. STARK. Mr. Speaker, I am pleased to introduce the Hospital Self- Referral Act of 1996. 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, for-profit 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 posthospital 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 posthospital service entities to the Secretary of Health and Human Services. In addition, they must report to the Secretary the percentage of posthospital referrals that are made to their self-owned entities as well as to other eligible entities. 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. Attached is a letter that typifies the current problem in the home health services market. Idaho Home Health Inc, Pocatello, ID, July 24, 1996. Re Medicare and Medicaid patient steering. D. McCarty Thorton, Esq., Chief Counsel, Office of the Inspector General, Washington,

Mr. STARK

Mr. STARK. Mr. Speaker, today, I am introducing the Essential Health Facilities Investment Act of 1996. This legislation will provide a financial helping hand to those hospitals and health centers that are in the frontlines 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 a number of us introduced in the 103d Congress and which was included in the national health reform legislation that was approved by the Ways and Means Committee. I am introducing this bill now so that groups may focus on it before the start of the 105th Congress to see what changes they would recommend and, if they agree with the goals of the legislation, begin to work for the passage of such legislation in the New Congress. In this time of continually shrinking budgets and fiscal austerity, it is more important than ever to appropriate Federal moneys in the most cost-effective manner available while reaping the most benefit for all of our citizens. In terms of health care, this means 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. Urban public hospitals averaged over 19,000 admissions, 242,000 outpatient visits, and nearly 4,000 live births per hospital in 1986. In comparison, urban private hospitals in the same areas registered just 7,000 admissions, 50,000 outpatients 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, giving 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. Gun violence in our metropolitan areas adds to the burden that our safety-net hospitals must bear. Roughly half of all urban safety-net hospitals are equipped with a trauma center and thus are the first in line to treat the victims of America's growing obession with guns. By the year 2003, according to the Federal Centers for Disease Control and Prevention, gunfire will have surpassed auto accidents as the leading cause of injury and heath in the United States. Unlike victims of car crashes, 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, leaving less than one-quarter of the Nation's population residing anywhere near a trauma center. Gunshot wounds account for fewer than 1 percent of injuries in hospitals nationwide but 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 are injured seriously enough to be hospitalized. Yet another assault on urban hospitals comes from the influence of managed care organizations. Managed care's ability to bring tougher competition to the health care sector has decreased the urban safety- net hospital's ability to cost-shift to offset some of the heavy losses incurred 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 forced many urban hospitals to cut their level of charity care. ProPAC found that uncompensated care fell by 4.5 percent during the same time period, clear evidence that more and more of the burden is being shifted to the public safety-net hospitals. outline of the essential health facilities investment act of 1996 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 this safety net are often antiquated. Without future reinvestment, the holes 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 26 years, compared to a national average for all hospitals of 7 years. The average capital expenditure for urban hospitals is $12,600 per bed compared to a national average expenditure for all hospitals of $23,500. A national survey of the Nation's safety-net hospitals found that a lack of available hospital beds is resulting in severe overcrowding. Hospital corridors surrounding emergency rooms have begun to resemble triage units at the height of a military campaign. A recent study showed that 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 in spite of the fact that the occupancy rates of all hospitals have steadily decreased 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, while private urban hospitals averaged just 67 percent. At any given time, approximately one-third of America's 924,000 staffed hospital beds are empty. Our national priorities have created an excess of beds in areas where the need doesn't exist and a severe shortage in areas where the demand is bulging at the seams. This bill attempts to relieve some of the pressure built up within the safety-net system. It is wise to remember that while the economic viability of these urban safety-net hospitals is crucial for the medically underserved of America, these same hospital systems often provide specialty care services used by everyone in the community. Burn, neonatal units, trauma care centers, and other highly specialized tertiary care services are located within safety-net hospitals. All members of a community benefit from both a well-maintained safety-net hospital and a broad network of community health centers. Health care institutions have historically found it difficult to secure financing for capital renovation and expansion products. The financing exists within the market, but the level of debt service required to often too burdensome for the public institution to manage. Even when revenue bonds may be supported by local means, oftentimes the bond ratings are too low and thus the interest rates are too high. Afterall, these safety-net hospitals treat a high proportion of low- income patients resulting in lower operating margins. These ratings often have little to do with the ability of hospital administrators to manage their facilities well. It is more often the case that market analysts consider the local appropriations that sustain these facilities to be too uncertain. Thus, the facility is simply prohibited from securing the needed capital. For the facilities with the greatest demand placed upon them in our inner-city and rural areas, the traditional method of financing, 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 moneys available to repair and rebuild these facilities combined with the strain on the resources of local governments, means 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 to fund this program, a 0.5 percent--one half of 1 percent--tax would be levied against the gross revenues of all hospitals. Hospital revenues received from Medicaid would not be subject to 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 be those designated as essential access community hospitals, rural primary care hospitals, large urban hospitals 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 cases 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 1997 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 tremendous 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 efficiently. 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, particularly those in rural and inner-city areas, lack the facilities and equipment to adequately meet the needs of their residents while other hospitals are experiencing a capital oversupply. This oversupply leads to inflationary price pressures. The Essential Health Facilities Investment Act of 1996 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. After adjusting for demographic differences, the numbers of hospital beds per thousand persons varied by a factor of 2.8 across the Nation. The numbers ranged from fewer than 2 beds per thousand residents to more than 5 beds per resident. Some of these hospitals with excess capacity can and need to be closed, or at the very least, denied additional public capital improvement funds. However, we must also make every effort to first ensure that every geographic and community area receives adequate hospital service. Safeguards and criteria for the allocation of Capital Financing Trust, EACH, and ECP funds must be satisfied in order to avoid exacerbating the oversupply of hospital beds. With 4.7 percent of the world's population, we have one-half of the world's CT scanners and about two-thirds of the world's magnetic resonance imagers [MRI's]. In 1987, the United States had 7.4 times as many radiation therapy units and 8 times as many MRI's per million people as did Canada. The United States has twice as many open heart surgical units per million persons as does Canada. The startup costs for each of these open heart surgery programs are between $6 and $13 million. Annual operating costs average between $7 and $10 million at each location. For each open heart surgery center that is not needed and not created, millions of dollars can be saved each year. Redundancies and inefficiencies of hospital facilities and services are well known. In 1991, a study in the Annals of Internal Medicine showed that although America had 10,000 mammography machines, we essentially only used 2,600 of them. This same study asserts that if every women in America had a mammogram 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 wasting 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 competence 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 operation . . . 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 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 to be considered for Medicare reimbursement. 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 Fund for improvements will be dependent upon demonstration of adequate quality performance measured by the HCFA's chosen 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, an 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 initiative 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 the seven participating States. In a recent assessment by the Alpha Center, the strengths of the EACH Program were clearly articulated. Their March 1993, report 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 February 1993, report by the General Accounting Office found that ``more than 40 percent of emergency department patients had 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 clients 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 undeserved 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 the 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 1996 because I believe this legislation is an important and necessary component of the effort to reform our Nations' 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, in the past week, I have introduced two bills to improve mental health coverage. On Monday, September 9, I introduced the National Mental Health Improvement Act of 1996 which provides parity in insurance coverage of mental illness and improves mental health services available to Medicare beneficiaries. On September 10, I introduced a second mental health bill identical to the bill passed by Senator Domenici and others in the Senate on September 5 by a vote of 82 to 15. Today, Representative Louis Stokes offered a motion to instruct the House conferees on the VA-HUD appropriations bill to recede to the Senate on several key amendments adopted by the Senate to the fiscal year 1997 VA-HUD appropriations bill. One key amendment on which the motion was based is the mental health amendment offered by Senator Domenici--the companion of which I introduced in the House on September 10. I applaud the efforts of Mr. Stokes and support his motion to instruct. It is a tragedy that mental health parity was abandoned in the Kennedy-Kassebaum health insurance bill, and is a primary reason why I voted against the bill. The bills I introduced this week represent an urgently needed change in coverage to end discrimination against those with mental illness. The denial of equal treatment for the mentally ill is not about money--it's only about discrimination. The mental health need of all Americans can no longer be ignored.

Mr. STARK

Mr. STARK. Mr. Speaker, the August 18, 1996 Los Angeles Times contained an excellent article on the massive amount of prescription drug fraud in our society and the deaths and illnesses it causes. Last year, I introduced a bill, H.R. 2839, to encourage a medication evaluation and dispensing system which would stop much of the abuse of the prescription drug market, save lives, and avoid billions of dollars in medical injuries and expense. Last week, I described how the General Accounting Office recommends this type of program for the Nation. Today, I am entering in the Record the L.A. Times story which documents the enormity of the problem and its cost to our society. I hope the passage of a bill like H.R. 2839 will be a priority of the next Congress. [From the Los Angeles Times, Aug. 18, 1996] Prescription Fraud: Abusing the System (By Dan Weikel) Millions of pills are being illegally resold on the streets. Some see a double standard in leniency toward doctors and the rich and powerful who overuse drugs. Along one massive front of the war on drugs, where fortunes are amassed and lives destroyed, barely a skirmish has been waged. Every year, hundreds of millions of prescription pills flow into the nation's illicit drug market, creating a giant cornucopia of painkillers, stimulants and tranquilizers. They are believed to be among the most abused substances in the country, even rivaling the estimated use of cocaine and crack. But in California and elsewhere, only a few agents, often equipped with the most lenient narcotics laws, investigate the illegal trafficking of powerful pharmaceutical by doctors and others. In this backwater of enforcement, recognition comes hard and frustrations abound. ``There is just no glory in it--no guns, no piles of coke, and no bundles of cash to stack up for the TV cameras.'' said Special Agent Walter Allen III of the state Bureau of Narcotic Enforcement, who supervises prescription fraud cases. It seems the only time prescription drug abuse gets serious attention is when a celebrity tumbles--be it Betty Ford, Elizabeth Taylor or superstar producer Don Simpson, who died of an overdose in January from a lethal mix of cocaine and 20 prescription drugs. In an extraordinary effort, authorities from local, state and federal law enforcement agencies are investigating more than a dozen doctors suspected of unlawfully supply prescription drugs to the producer of such hits as ``48 Hours,'' ``Top Gun'' and ``Beverly Hills Cop.'' On Friday, the offices of two of those doctors, both psychiatrists, were raided by investigators. The home of one also was searched. ``Abuse of prescription drugs is a serious problem in our society, but nobody pays attention until somebody big and powerful like Don Simpson drops dead,'' said Steve Simmons, the California Medical Board's senior investigator on the case. ``But this kind of thing happens all the time to lots of regular folks.'' Even when law enforcement resources are marshaled, the returns often are small. No more than two dozen doctors, dentists and pharmacists are prosecuted annually for prescription drug offenses, case records show. Most get probation and stay in practice, largely because it is harder to prosecute a professional in a white coat than a street- corner pusher. In California, about three of four physicians convicted of a prescription drug crime keep their licenses. Users often do more time in jail. ``There are two kinds of justice in this system,'' said former state narcotics agent Paul K. King, who worked on prescription fraud in Los Angeles County for 10 years. ``One for doctors, and one for everybody else.'' Take the case of Dr. Eric C. Tucker, whom state narcotics authorities suspected of illegal trafficking after scrutinizing prescription records. Before his arrest in 1991, court records show, Tucker issued more than 7,000 questionable prescriptions for the stimulant Preludin and another 7,600 for Dilaudid, so-called drugstore heroin, an addictive pain reliever that fetches up to $100 a pill on the street. More Dilaudid was coming out of Tucker's Montebello office every year than at County-USC Medical Center, the West Coast's largest public hospital. Tucker, than 59, pleaded guilty to two felony counts of prescription fraud and lost his medical license. Although responsible for flooding the illegal market with hundreds of thousands, if not millions, of dangerous pills, he was sentenced to eight days in jail. In contrast, Daniel G. Siemianowski, 38, of Los Angeles, a low-level street dealer and first-time offender, was prosecuted about the same time as Tucker. Police arrested him with about four ounces of crack and powder cocaine on the front seat of his car--a speck compared to the doctor's goods. Siemianowski's sentence: a year behind bars. About 2.6 million people in the United States use prescription painkillers, stimulants, tranquilizers and sedatives for ``nonmedical reasons''--more than the estimated use of heroin, crack and cocaine, according to surveys by the National Institute of Drug Abuse. Only marijuana is more popular. Users run the gamut from street addicts to senior citizens who mix afternoon cocktails of tranquilizers, and even teenagers who sell their doses of Ritalin to classmates. Some combine prescription drugs with illicit narcotics to enhance the high. Others use tranquilizers to soften the crash from cocaine and heroin, helping them sustain their habits. For many others, pharmaceuticals simply are their drugs of choice. Sandra K. Bauer, a member of the California Board of Pharmacy, knows how easy it is to fall to prescription drugs--and how complacent regulatory and law enforcement agencies sometimes can be in searching out the truth. In 1990, before Bauer joined the board, her 34-year-old sister collapsed after injecting three times the lethal amount of Demerol--synthetic morphine. Although the coroner found needle marks on her arms and thighs, police had accepted her husband's explanation that she had suffered from terminal cancer. ``I told him that was ridiculous,'' Bauer recalled of her conversation with the detective. ``There was no cancer.'' Bauer insisted that authorities take anotyher look because her sister was a drug addict. During a search of her sister's home, police discovered shelves full of syringes, tranquilizers and potent painkillers. ``It was classic middle-class drug abuse,'' Bauer said. ``You go to a doctor and get a bogus prescription. Then you get the pharmacy to fill it, and have your insurance company pay for it all. No one suspects anything.'' To ensure a thorough investigation of her sister's death, Bauer lobbied state legislators, high-ranking law enforcement officials, journalists and officials on the state pharmacy and medical boards. As a result, two doctors and two pharmacists lost their licenses. ``Had I not intervened, my sister simply would have been buried--end of story,'' she said. Even then, Bauer did not back off. Through a friend who was the appointments secretary for then-Assembly Speaker Willie Brown, she maneuvered her way onto the state pharmacy board in 1992. Bauer has been working ever since to improve professional discipline and the state's obsolete system of monitoring prescription drugs. enormous profits The U.S. Drug Enforcement Administration has estimated that about $25 billion in prescription drugs were sold on the illicit street market in 1993, compared to a government estimate of $31 billion spent that year on cocaine, including crack. What makes pills so attractive to abusers and purveyors are their purity, predictable effect and low cost compared to illicit drugs. For about $10, less than the price of a few rocks of crack, a user can combine two or three times the therapeutic dose of codeine with the sedative glutethimide to achieve a high similar to heroin. Although some of the drugs are smuggled into the country or stolen from distributors, a large portion comes from medical offices and pharmacies. State and federal law prohibits the dispensing of controlled substances unless good-faith medical exams are performed, accepted prescribing practices are followed, and there is adequate medical justification. It also is illegal for someone to fraudulently obtain prescription drugs, a practice known as doctor-shopping. By American Medical Assn. estimates, 1% to 1.5% of physicians dishonestly prescribe drugs, and another 5% are grossly negligent in their prescribing. In California, that represents 4,500 to 4,875 doctors. For the unscrupulous professional, the profits can be enormous. Doctors, dentists and pharmacists have made millions by turning their practices into lucrative pill mills, where fraudulent prescriptions--written in minutes-- have sold for $200 to $600 apiece, depending on the substance. Working at the other end of the spectrum are doctor- shoppers, who trick physicians and pharmacists with self- inflicted injuries, forged prescriptions and stories about back pain or old war wounds. During an eight-month period in 1990, Vicki J. Renaldo of Oceanside duped 42 San Diego area doctors and 26 pharmacies into giving her thousands of codeine tablets--all paid for by Medi-Cal. She was convicted and sentenced to two years in state prison. Another doctor-shopper in the Midwest managed to scam 134 physicians. ``It's so easy to do. The doctors don't really question you,'' said Barbara Curtis, 42, a member of Benzodiazepines Anonymous, a Los Angeles-based support group for prescription drug addicts. For almost 20 years, Curtis went to three or four doctors to secure supplies of two painkillers--Vicoden and Fiorinal with codeine. ``Migraine headaches was all I had to say.'' ``There seems to be a constant supply of these drugs on the black market,'' said Dr. Greg N. Haynor of the Haight Ashbury Free Clinic in San Francisco, one of the nation's leading drug treatment centers. ``The fact is, a lot of pills are floating around out there that can pack quite a wallop.'' Depending on the year, a quarter to a half of emergency room admissions related to drug abuse involve a prescription drug either taken by itself or in combination with alcohol or other controlled substances, according to the national Drug Abuse Warning Network. The network surveys emergency rooms in 43 metropolitan areas to measure the consequences of drug use. It does not determine whether the prescription drugs were obtained illegally. Of the top 20 drugs mentioned in the emergency room episodes, about 75% were prescription painkillers, sedatives, stimulants and tranquilizers. Despite the enormity of the problem, prescription drug abuse remains a low priority for law enforcement, which has had its hands full fighting illicit drugs at home and abroad. Building a prescription prosecution can take months, sometimes years, of tedious work. Pharmacy records must be scrutinized, and undercover buys must show conclusively that drugs were prescribed without good-faith exams or medical justification. Because of the lengthy investigations and a shortage of agents, no more than 20 doctors, dentists and pharmacists a year are prosecuted criminally in California for prescription drug offenses. Federal authorities, on average, convict 240 people a year for federal drug-diversion offenses, or about five per state. Even when charges are filed, however, juries balk at returning convictions. When they do, the sentences often are short. lenient laws Part of the reason, according to law enforcement officials, is that medical practitioners usually are charged under laws that can be filed either as a misdemeanor punishable by no more than a year in jail, or as a low-grade felony, which carries a penalty of 16 months to three years in prison. The way the laws are written, prosecutors say, health care professionals can escape more serious drug-trafficking charges if they have written a prescription, no matter how fraudulent. Assistant U.S. Atty. Alka Sagar said she has handled about 10 prescription fraud cases in federal court in Los Angeles since 1990. Of those, she said, one doctor received a short prison sentence; the rest pleaded guilty and were placed on probation. Although felony convictions for prescription fraud are considered easier to obtain in federal court than in state court, the penalties can be just as light because sentencing guidelines are geared almost exclusively toward street drugs. ``You could make a series of undercover buys for 60 pills each and the sentencing range would be zero to six months. Even if each buy was 100 times that amount, it would still be zero to six months,'' Sagar said. ``You'd have to raid a drug factory to get a tough sentence.'' In California, few police departments, even in major cities such as Los Angeles, have specialized officers or anyone with training in prescription drug abuse. The same holds true elsewhere in the nation. Responsibility for investigating pharmaceutical abuse in California usually rests with the state's Bureau of Narcotic Enforcement. But, of the agency's 300 officers, about seven are assigned the task, and they sometimes are burdened with other assignments. Prescription drugs also represent a fraction of investigations by state Medi-Cal fraud units and professional boards. Nationally, the federal government spends $13 billion to $14 billion annually on the war on drugs. But only $70 million goes to the DEA to investigate prescription drug offenses--a small fraction of the agency's billion-dollar budget--and part of that is earmarked to halt the illegal flow of chemicals to clandestine labs. Making enforcement even harder is that the state's computerized tracking system for the sale of controlled substances is obsolete. Because data has to be entered by hand, the unit can analyze only 10% to 15% of the 1.5 million controlled substance prescriptions forwarded annually. Former state narcotics officer Paul King, who recently retired, recalled a frustrating incident that he says reflects a prevailing attitude toward pill fraud. King said he learned in 1988 that federal officers in Ohio had arrested a drug runner as he got off a plane from Los Angeles International Airport with at least $600,000 worth of Dilaudid in a shoe box--12,000 pills. At the time, the heroin-like drug was pouring into the illicit market in Los Angeles and then to destinations nationwide. To King's dismay, federal agents wanted to use the courier as an informant for a standard cocaine case, torpedoing any investigation of the Dilaudid shipment, which was as valuable as 40 to 50 kilograms of wholesale cocaine. ``You couldn't put $600,000 of any other drug that I'm aware of in a shoe box, and this guy was carrying it in plain sight,'' King said. ``I later found out that the courier wasn't even prosecuted.''

Mr. STARK

Mr. STARK. Mr. Speaker, you, Mr. Speaker, like to talk about the withering away of Medicare. When questioned about your statement, you say you didn't really, really mean for Medicare to whither away, just the agency that administers it, the Health Care Financing Administration [HCFA]. You like to make fun of HCFA as a clunky, bureaucratic machine. I'm not sure what the difference is between destroying a program and destroying its administration, but I hope you will take the time to read the enclosed opening paragraphs from the American Medical Association's newspaper American Medical News of August 26, 1996. Medicare Shapes Up Claims Q: What well-known health insurer has the highest proportion of claims filed electronically, the lowest average cost per claim processed, and has cut the real cost per claim processed by 85% since 1975? A: It's not some hotshot entrepreneur or Wall Street wonder company. It's Medicare. You know, that federal program run by the Health Care Financing Administration and the gang of 34 (carriers). Medicare is the undisputed leader in electronic claims. The program now electronically processes 79% of all claims and nearly 71% of Part B claims. That compares with 66% of claims for the runner-up, the nation's Blue Cross and Blue Shield plans, and a paltry 20% for commercial carriers. Increasing electronic claims processing has been the major factor in driving down Medicare's processing cost per Part B claim from $8.03 (in today's dollars) in 1975 to 94 cents in 1995. But HCFA isn't resting on its laurels. Over the next six to 12 months, the agency will begin implementing several measures designed to increase claims processing efficiency and lower costs even further. A first step will be taken toward standardizing electronic claims formats. New universal provider identification numbers will be issued, and a uniform payer identification system will be developed. National uniform claims review standards will be expanded, and steps will be taken to shift routine claims processing from the local carriers to two giant processing centers. All of these initiatives could help physicians by streamlining medical review, coordination of benefits with non-Medicare payers and speeding payments.

Mr. STARK

Mr. STARK. Mr. Speaker, the raiders I am referring to do not wear football helmets and they do not throw a ball. They are profiteering health care entrepreneurs, and they are quickly moving into our community. The move toward investor-owned health care, particularly where doctors are sharing in the financial risk and have incentives to deny care, means that patients could be denied access to critical medical resources. Significant health care dollars are being siphoned off to pay shareholders, soaring executives salaries and exorbitant marketing costs. Meanwhile, the number of Americans who are uninsured and underinsured is growing. The explosion of profit-sharing health care companies is leading the current transformation of the U.S. health care market, and they have arrived in our district. Watch out. The move toward monopolistic, for- profit health care requires a legislative response to protect patients and consumers. the move to for-profit health care: columbia-hca The largest, most aggressive for-profit health care company is Columbia-HCA Healthcare Corporation [Columbia]. Columbia has aggressively pursued the acquisition of nonprofit hospitals. As a result, Columbia now owns 355 hospitals making it the wealthiest for- profit chain with $18 billion in annual revenue. Columbia owns the San Leandro Hospital; the San Leandro Surgery and Outpatient Center; Estudillo Surgery Center; and the San Jose Hospital as well as Diablo Valley Surgery Center in Concord. Elsewhere in the bay area, Columbia owns Healdsburg General Hospital and Palm Drive Hospital in Sebastopol; Columbia Los Gatos Surgical Center; Mammography Plus Medical Group; and Sereno Surgicenter in Los Gatos in addition to the four facilities in the south bay that comprise the Good Samaritan chain. They have reportedly offered to negotiate deals with almost every hospital in the bay area including Sequoia, Eden, and St. Rose. I have asked Medicare to investigate whether Columbia's merger mania is bad for the patients and for our community. Will quality patient care be provided? As a for-profit hospital, Columbia's primary obligation is to its out-of-town shareholders. Their focus is on the bottom line, not quality care. We will see a reduction in care provided to the poor in our community! Columbia offers physicians up to 20 percent ownership interest to encourage physicians to direct paying patients to their hospital, and charity cases away from the Columbia hospital. Study after study shows that for-profit hospitals provide a lower level of charity care than do nonprofit hospitals. Will services be eliminated that are vital to our community? It is likely that programs such as trauma centers and neonatal intensive care units will be eliminated. Will Columbia close local hospitals? It has a history of buying many local hospitals and closing them to increase bed occupancy and profits in other units. Will existing labor contracts be ignored? Columbia is reportedly reneging on labor contracts at Good Samaritan Hospital and has an antilabor record. Capitalism is great but should patients be put at risk? I do not believe health care is a commodity. Joseph Cardinal Bernadin said it best: Health care is fundamentally different from most other goods and services. It is about the most human and intimate needs of people, their families, and communities. It is because of this crucial difference that each of us should work to preserve the predominately non-profit character of our health care delivery system. The goal is not health care anymore--it is care of the stockholder interest. I am preparing legislation to make sure: First, for-profit do not skim off the healthiest patients and dump the sickest, money-losing patients in public hospitals; and second, the public's investment in nonprofit hospitals is not lost through phony sales prices. You can count on me to fight the takeover of our community's hospital system and keep the ``care'' in health care.

Mr. STARK

Mr. STARK. Mr. Speaker, the Association of Managed Healthcare Organizations has sent Members of Congress a letter opposing the anti- gag rule legislation proposed by our colleagues Ganske and Markey. They say, in short, ``it's not managed care companies' fault if they ask doctors to kill people.'' To be precise, the lobby group says: AMHO suggests that, if a physician believes that the terms of a contract force him to practice medicine in a manner he finds less than responsible or ethical, he should not sign such a contract. It is exactly such thoughts that are fueling the national anger and backlash against managed care. Their letter could be nominated for the Marie Antoinette ``let them eat cake'' memorial quote. As managed care grows to become the dominant form of care in more and more communities, doctors cannot survive financially without signing up with a number of plans. Some doctors will have the courage and independence not to sign bad contracts, but doctors are human and to feed their families, most of them will sign. The Congress, as representatives of the public interest, has the duty to protect the public against Godfather plans presenting doctors with offers they can't refuse.

Mr. STARK

Mr. STARK. Mr. Speaker, I am introducing today the identical bill the Senate passed on September 5 by 82-15, offered by Senator Domenici, Wellstone, and many others, to provide mental health lifetime and annual cap parity. I would like to see much more extensive mental health legislation passed. I would like to see an elimination of all caps, in both physical and mental health, but this bill is a step forward, has widespread support, and is the least we can and should do in this Congress. If the House can pass identical legislation this month, this incremental health reform could become law this year and begin to help innumerable families who face the crisis of paying for mental health needs.

Mr. STARK

Mr. STARK. Mr. Speaker, today, I am introducing the National Mental Health Improvement Act of 1996. 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. 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 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. It permits services to be delivered in a variety of residential and community-based settings. Through use of residential and community- based services, costly inpatient hospitalization can be avoided. Services can be delivered in the setting most appropriate to the individual's needs. In 1991, as a nation we spent approximately $58 billion for the treatment of mental illness and another $17 billion for substance abuse disorders. Medicare expenditures in these areas for 1993 were estimated at $3.6 billion of 2.7 percent of Medicare's total spending. Over 80 percent of that cost was for inpatient hospitalization. In addition to these direct medical costs there are also enormous social costs resulting from these disorders. It has been estimated that severe mental illness and substance abuse disorders cost $78 billion per year in lost productivity, lost earnings due to illness or premature death, and costs for criminal justice, welfare, and family care giving. Two to three percent of the population experience severe mental illness or substance abuse disorders. This population is very diverse. When given the appropriate treatment, some people's mental health problems never recur. Others have chronic problems that can persist for decades. And mental illness and substance abuse disorders include many different diagnoses, levels of disability, and duration of disability. This bill 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, many health insurance plans do not cover the expense of mental illness treatment as they do other illnesses. Insurance companies set different, lower limits on the scope and duration of care for mental illness as compared to other illnesses. This means that people suffering from depression get less care and less coverage than those suffering a heart attack. Yet, both illnesses are real. Access problems to mental health benefits are mainly the result of these restrictions. About half of all health care plans limit coverage for hospitalization cost from 30 to 60 days. Outpatient benefits are restricted by the number of visits or dollar limits in 70 percent of the plans. Plan participants with mental health disorders are subject to arbitrary limits that are unrelated to treatment needs. Patients rarely have the choice of alternative plans with greater coverage since more than 80 percent of all plans limit inpatient care and more than 98 percent of plans limit outpatient care. Access to equitable mental health treatment is essential. And it can be done at a reasonable price. By enacting this bill, we can reduce public sector spending by $16.6 billion, while only slightly increasing insurance premiums--just 4 percent or around $2.50 per person a month. The out-of-pocket expenses for individuals receiving care would be lowered by about $3.2 billion. Two dollars and fifty cents is a small price to pay for ending health care discrimination. Second, diagnosis and treatment of mental illness and substance abuse have changed dramatically since the Medicare benefit was designed. No longer are treatment options 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 today's Medicare benefits do not reflect this change 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 1992 for an adult was 16 days and for an adolescent was 24 days. 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. 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: in general The bill revises the current tax code to deter 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 also revises the current mental health benefits available under Medicare to deemphasize inpatient hospitalization and to include an array of intensive residential and intensive community-based services. title i provisions The bill prohibits health plans for 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-percent copayment. Subsequent therapy for adults would remain subject to the 50-percent copayment. The following intensive community-based services are available for 90 days per year with a 20-percent 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 nonphysician 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, we need national health insurance reform. I recently received a letter from a man in the Midwest which reported the following example of the need for reform. Three years ago, his wife's COBRA health insurance continuation policy expired. As required by law, the insurance company had to offer conversion to an individual policy--but the law does not specify at what price that policy has to be offered. The company made an offer almost every family in America would have to refuse--$25,600 per year. Why so much? The wife had been sick but not seriously so. She has been without health insurance for over 3 years now. It will be 2 more years before she will be eligible for Medicare. The husband is already on Medicare. Kennedy-Kassebaum will not help in this type of case. There is no guaranteed issue for individual policies. For those who have been out of the work force for a while, it offers no protection. The family's plea is not to raise the age of eligibility for Medicare: ``Now her only hope is to have reasonable access to Medicare by her 65th birthday in July 1998. If you take that away, a major medical occurrence would ruin this family.'' Mr. Speaker, Kennedy-Kassebaum was a small first step. Let's step forward and fill in the remaining gaps in health insurance. I've introduced legislation, H.R. 3342, which would make COBRA health continuation rights permanent after age 55. Anyone, for whatever reason, would be able to buy COBRA group rate insurance after age 55 and until they reach age 65 and Medicare eligibility. This type of legislation would provide some meaningful help to families who cannot afford the cost of individual policies.