Ron Wyden

Mr. WYDEN

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. WYDEN

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 President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. WYDEN

Mr. WYDEN. Mr. President, as I have said, I intend to come to the Senate floor each day this week part of an effort to help build bipartisan support in this body for Medicare reform. Not via an independent commission. Not in the next Congress. But now, and by us, the Members of the 105th Congress. I think we have an historic opportunity to transform Medicare from a 30-year-old, tin-Lizzie style social welfare program into a 21st century, comprehensive seniors health care system that is humane, cost- efficient and sustainable. The reformed Medicare Program I envision, and which I think is within our grasp, is a health plan that is about choice, quality and access, and also about the efficiencies that characterize much of the Nation's private health care marketplace. But changing Medicare will require tough decisions, tough votes and, as in turning a battleship in mid-ocean, a good deal of time and patience on the part of beneficiaries and health care providers. We must start by making the right moves, the right changes, today, before some 75 million baby boom generation retirees begin swamping the Medicare Program in 2013. In my private conversations with colleagues, I've been arguing that this is the classic pay-me-now, or pay-me-later situation. Structural changes enacted in the next year or two will not be easy. But in the face of what Congress would have to overcome beginning early in the next century, these changes will seem like child's play. Medicare's problems are a snowball rolling down hill, picking up speed and mass on almost a daily basis. Now is the time to slow-down that snowball, if not stop it because in a few more years the program will be crushed by its weight. Each year without structural reform makes the task that much harder, and the risk to balanced Federal budgets that much more significant. And assigning the task to a bipartisan commission without first doing our best to solve Medicare's problems is a retreat not just from our responsibility, but from opportunity as well. I think there's a fervent desire among my colleagues to try to fix Medicare in the current Congress. I think we gain little by assigning that job in the first instance to a bi-partisan committee, only to have to try to make tough votes on their recommendations in 1998, an election year for those who need to be reminded. The path to reform is not easy. Fortunately, however, there are sign posts and trail markers along the way, offering meaningful models for changes and reform. I think we see these possibilities for a 21st century Medicare program in systems as diverse as the Federal Employee Health Benefits Program, which serves many Members of this body, to the Medicaid Program which now operates in my home state of Oregon under a special Federal waiver. The Federal Employees Health Benefits Program offers its enrollees a portfolio of plans, each one with somewhat different services offerings. Consumers are helped to make appropriate, independent choices because the managers of FEHBP pay attention to the details, including the way plans develop written explanations presenting what individual policies will or won't do. Further, those policies are then inspected and reviewed on performance, and FEHBP beneficiaries are then given what amounts to report card grades on many of the important care provisions so that average consumers can sit down at their kitchen tables and make plan- against-plan comparisons when they choose their coverage. Finally, FEHBP smart-shopper managers negotiate high-quality service at competitive rates for enrollees. These government managers work with their plans on a continuous basis to upgrade the quality and range of services offered by the plans while keeping premium rates at lowest possible levels. At the same time, these managers work to diminish risk selection by the plans, so that older FEHBP members, or persons with disabilities or chronic conditions aren't eliminated from coverage when they want to enroll. In recent years, average FEHBP plan premium increases have stayed below 3 percent per year, per enrollee, while the Medicare Program has ballooned to average annual increases of almost 9 percent during the same period. Oregon's ground-breaking Medicaid plan also helps mark our way toward an improved national Medicare system. In Oregon, we've expanded the traditional Medicaid Program to cover not only the federally qualified participants but also tens of thousands of working poor Oregonians who can't afford private insurance, but whose incomes would disqualify them for traditional Medicaid. The result has been a tremendous reduction across the State in unreimbursed hospital charity care, more preventative medicine for youngsters and young mothers, and a per capita Medicaid cost rate that is 10 percent below the national average. More care. Less cost. Efficient, preventative services that keep children and adults out of the hospital. Managed care has played a dominant role in this success story, as it has in Oregon's Medicare experience. Oregon's Medicare-qualified seniors have the highest penetration rate in the Nation in coordinated care. In Portland, nearly 60 percent of the Medicare beneficiaries are in managed care. And in this, the State's highest reimbursed city for Medicare beneficiaries, the per capita rate is still 60 to 80 dollars below the national average for Medicare. I suggest that we may be doing some things right, out West and in the FEHBP program. And sad to say, these good things we see happening in Medicaid and Medicare are almost in spite of a Federal regulatory structure that hamstrings Medicare and Medicaid in terms of increasing both efficiency and quality, and expanding enrollment to the uninsured and under-insured. This is a problem that is recognized even within the bowels of the Medicare management structure. Mr. President, I was heartened to see the comments of my good friend Dr. Bruce Vladeck in the trade press last week. Specifically, Bruce acknowledged that there is a tremendous backlog of needed statutory changes required to bring Medicare up-to-date. Gail Wilensky of Project Hope, puts it even more succinctly: In sum, the present structure of Medicare hardly makes it surprising that it is facing financial problems. The elderly have limited options in the health care plans available to them. Medicare pays most of the costs for services it covers and almost all of the elderly have coverage that is supplemental to Medicare, either privately purchased Medigap or Medicaid. That means there is little reason for an elderly person to seek out cost-effective physicians or hospitals, or to use lower cost durable medical equipment, laboratories or outpatient hospitals. Dr. Wilensky goes on to say that there is little reason for practitioners to provide cost effective care ``if there is any medical gain to be had from providing services and some reason to fear legal repercussions if they do less than they might have done and the patient has an adverse outcome.'': And because payments to capitated plans now follow payments for local fee-for-service Medicare, Medicare HMO's in many high-cost counties are extravagantly over-paid, while in low-pay counties plans and HMO enrollment languish because of under-reimbursement. We throw money at fat health plans in big counties, while we starve the system of both choice and access--and I would argue quite probably quality as well--in counties where the payments are below the national average. This current state-of-affairs is precisely antagonistic to our goal. Let me postulate that it is nuts to reimburse Medicare HMO's in high- cost counties at the same level, more or less, of the highest-cost fee- for-service practitioners in those counties. That fact alone is one of the big reasons why, quite rightly, the administration has argued that we have a general HMO over-payment problem. But the administration's argument that every HMO should be cut, however, to cure that problem is like saying amputation is an appropriate treatment for bunions. Holy Dr. Kildare. In any other economic model or sector, a proposition like our current average adjusted per capita cost [AAPCC] formula would seem nuts. But that's the way it works in our creaking, inefficient and decidedly consumer unfriendly Medicare system. Clearly, we must provide incentives for beneficiaries to choose just the cost-effective health care they need, and to demand that physicians, hospitals and other providers limit practice to cost- effective medicine. This can be done while preserving the Medicare guarantee of a basic, good quality package of health services to every eligible senior, no matter what their health status or income level. Here are components of a new Medicare system that provides both choice and quality, with cost efficiency: First, radically reform the formula by which we determine how Medicare managed care programs are paid so that reimbursements are geared to the actual costs of managed care among elderly populations in a particular county, or region, rather than the local cost of fee-for- service medicine. At the same time, scale-back payment increases in our high- reimbursement counties, and accelerate payments in the low- reimbursement counties where, because payments have been too thin, beneficiaries have only fee-for-service Medicare to choose from. In other words, give millions of disenfranchised Medicare beneficiaries a real choice. Second, require Medicare managers organize open bidding between plans in high-pay counties where profit margins are exorbitantly high. Make the plans that are currently, hugely over-paid bid against one another, on price, for Medicare beneficiaries in those counties. I believe such competitions should take place in every county where the average adjusted per capita cost--the AAPCC--is 120 percent of the national average. In sum, make adjustments in the HMO payment formula that decrease reimbursements in counties that we know are substantially over- compensated; increase payments in counties that are so under- compensated as to discourage HMO entry and competition; and resist proposals to reduce all county payments, alike, from 95 percent to 90 percent of the local AAPCC rate--a crude tool that will hurt the cost- efficient counties much more than the ``fat'' counties. Mr. President, I believe that accelerating the growth of good quality managed care, such as we have in Oregon, can be a major factor in curing Medicare's financial ills. Changing this AAPCC formula in a way that makes sense--in a fashion that does not kill our efforts to bring Medicare into vast areas of this country where no choice but fee-for- service medicine exists for beneficiaries--must be a high priority piece of the solution. Third, put our two fastest growing portions of Medicare--home health care and skilled nursing facility care--on a financial management diet. That regimen is called prospective payment, and it means that in much the same way we control hospital costs we would create a schedule of daily maximum service costs for different aspects of care in each of these important areas. In my bill, S. 386, the Medicare Modernization and Patient Protection Act, prospective payment provisions for home health and skilled nursing facilities would, together, save approximately $20 billion over 5 years, according to the Congressional Budget Office. Eventually, but quickly, I think we ought to impose these kinds of financial management tools on other aspects of fee-for-service Medicare. I see no reason why, as a matter of global budgeting, that practitioners in this field ought not be held to the same kind of case management that HMO's require as part of their plans. One method might be to require all Medicare fee-for-service practitioners to join a Medicare-sponsored provider network, which has at its core a case management system that ensures all participating beneficiaries get the care and quality they need, but that practitioners and other providers don't over-bill or overprescribe. This kind of PPO management would bring case gate-keeping into fee- for-service Medicare, ultimately producing reasonable price and cost controls in the system. Fourth, require competitive bidding for durable medical equipment purchases and eliminate what Dr. Vladeck has termed the ``current silly inherent reasonableness'' process. I know many of my colleagues may not have looked hard at this bit of Medicare arcana. But let me say that this is all about getting medical equipment paid for by the program at the lowest possible cost as determined by the market. At the same time, we need to know more about what procedures and services work, and which don't, so that we can save money for the program and ensure that beneficiaries are getting optimum care. The Health Care Financing Administration must be required to collect, analyze, and act on more of the available data, in this regard, and that admonition needs to be part of comprehensive Medicare reform. Fifth, require HCFA to do local service-provider report cards for beneficiaries. This sort of qualitative analysis should extend both to HMO's and their practitioners, and to local fee-for-service doctors and other providers. This needed reform would include authorizing the program to demand and collect all relevant data from Medicare participants. Sixth, the program must move much more aggressively in establishing special plans and services for the sickest, frailest enrollees; these are the Medicare beneficiaries who are usually qualified for both health and income reasons to receive benefits from Medicaid as well. These enrollees are the fastest growing group of Medicare beneficiaries, and the most expensive with costs to both programs amounting to about $100 billion per year. Lack of systems to deal with the huge comprehensive care problems these folks face has resulted in the worst possible scenario; much money is wasted while many folks don't receive the type or quality of care they need. Fortunately, there are a number of highly specialized programs called social HMO's or PACE programs, that provide coordinated care--using both Medicare and Medicaid bucks--for populations of these beneficiaries in less than two dozen communities. One of those programs, ElderCare at Providence Hospital in Portland, is up and running in my hometown, and it is serving these frail elderly at well below the national average cost for the so-called dual-eligibles. Why don't we have more? HCFA currently requires each of these programs to apply on a waiver basis every time an individual community wants to start a social HMO or PACE program. This is expensive and time consuming, and it limits the reach of a very good, cost-effective system. And again, something that takes about 5 minutes to start up in the private sector, takes about 5 years through the Federal Government. For this group we must create greater access for highly specialized, dual-eligible programs by giving organizers clear and certain and uniform rules of entry through the Medicare Program; eliminate the so- called 50-50 rule, requiring 50 percent non-Medicare enrollment for any HMO serving Medicare beneficiaries, based on enhanced performance and quality standards; develop tougher restrictions on adverse risk selection making it harder for plans to deny enrollment to sicker, frailer beneficiaries; and set up a so-called outlier fund within Medicare, a special pool of cash fueled by reimbursement withholds from overpaid HMO's, to appropriately compensate plans that demonstrate they are serving sicker, more costly beneficiaries. Seventh, reform our Medicare supplemental insurance laws--the Medigap regulations--to guarantee that every Medicare beneficiary can enroll in a Medigap program at any time. I believe this change is crucial to encouraging more seniors to try HMO's, knowing that if they decide they must return to fee-for-service medicine they will be able to get back into Medigap coverage. About a dozen States, including my home State of Oregon, already require guaranteed-issue. The Medigap market has not been destroyed in those States. There must be a universal Federal standard protecting beneficiaries. Eighth, ensure better treatment and more appropriate treatment for Medicare beneficiaries by capturing the service and efficiency offered by telecommunications technology. An important aspect of this is expanding the terms and conditions under which Medicare will pay for services via the fiber-optic lifeline, and working with both the Federal Government and the States to knock down anticompetitive licensure practices and restrictions that hamper the ability of physicians and other practitioners to practice via this new technology. I can tell my colleagues that Oregon, like much of the west, is looking hard at telemedicine as a way of getting better quality medicine to folks who live way out in the country; and there are lots of places falling under that definition, west of the Mississippi. Medicare needs to help in that effort, not build walls against 21st- century medicine. Ninth, Medicare must unleash the quality and efficiency promised by a rapidly growing cadre of alternative health care providers. The program can save money and deliver to beneficiaries better, more targeted services by identifying and incorporating appropriate assignments for nurse practitioners, PA's, druggists, chiropractors, and other licensed professionals within the health care network. Mr. President, these nine items are not the whole solution to modernizing Medicare. But I do believe that together, they represent an appropriate jumping off position for real Medicare reform that can be accomplished in this Congress. I know colleagues from both sides of the aisle will be talking about their own ideas in the weeks and months to come. I urge them, I urge all of us, to move these issues through the congressional process beginning this year rather than expect a bipartisan commission to cure Medicare's problems for us. Mr. President, tomorrow, I will go on to talk about other fundamental principles of Medicare reform. I yield the floor. Mr. CONRAD addressed the Chair.

Mr. WYDEN. Mr. President, as I indicated yesterday, I intend to come to the Senate floor each day this week as part of an effort to build bipartisan support in the Senate for Medicare reform. It is very clear to me that there is a rare window of opportunity now for the Senate to act on this issue, a window, an opportunity I think would be a serious mistake to not exploit. We know that the Federal deficit is a bit lower than was anticipated this year, in the vicinity of $108 billion. We are seeing that there is a fairly benign economic environment. Certainly, there are still folks hurting in our country, but, overall, the economy has been positive. We know that we are a few years away from what I believe is sure to be a demographic earthquake, with many more older people in our country, and older people who need and deserve good quality health care. Yesterday, I tried to outline what I thought were the central principles of comprehensive Medicare reform. Beginning today, Mr. President, I intend to try to outline some of the specific aspects of what Medicare reform ought to consist of and how to get this program on track for the 21st century so that it operates in a fashion that is good for both older people and for taxpayers. Right now, in much of the United States, the Medicare Program is a 30-year-old, ``Tin Lizzy''-style operation that rewards waste and penalizes frugality. This is particularly unfortunate since the end result is that in communities like my own in Portland, OR, that hold down costs, the end result for all the heavy lifting is simply a smaller reimbursement check. I believe what we have today under the Medicare Program is a situation where because of the reimbursement of formula, a sleep-inducing, eye-glazing concept known as the average adjusted per capita cost, you have a situation where in much of the United States there are few, if any, choices for older people under Medicare because health plans are reluctant to come to those markets, or you have a situation where it is almost impossible for an older person to navigate the system simply because they cannot obtain understandable, coherent information about their Medicare choices. Mr. President, it would be impossible for you to be able to see this chart, but I intend in the days ahead to blow this up because it makes my point with respect to how Medicare has made it difficult to have true competition like the competition that exists in the private sector for health care. This chart, which obviously is going to be difficult for you, Mr. President, and those who may be watching to see, involves a wall that has been set up in Los Angeles with all of the information that an older person has to go through in Los Angeles to make choices about choosing a health plan. It clearly illustrates, in my view, what we have seen with the Medicare Program over the last few years. Because the reimbursement formula encourages waste and penalizes frugality, we will have, in many areas, few choices for Medicare, discouraging competition, or, as I have shown through this chart and picture developed by the General Accounting Office, you will have just a blizzard of information that older people find it very difficult to navigate and make sense out of, thereby making it hard for them to have real choice in their health system. The irony, of course, is that every Member of the U.S. Senate knows what a competitive health system could look like, and a competitive health system that avoids the kind of problems I have just demonstrated with this chart from the General Accounting Office. Mr. President, 21st century Medicare could really be modeled around the very program that Members of the U.S. Senate participate in, known as the Federal employee health benefits plan. The Federal employee health benefits plan offers enrollees a portfolio of plans, each one with somewhat different service offerings. Consumers are helped to make appropriate, independent choices because the managers of the Federal employee plan pay attention to the details, including the way plans develop written explanations presenting what individual policies will or will not do. So for Members of the U.S. Senate, it is possible to get understandable, coherent information about what is available for Senators and their families. But if you are an older person who wants to compare and shop for health care, you have to try to figure out how to make sense of this incomprehensible picture that I just showed, demonstrated by the General Accounting Office. In addition, in the Federal employee health system, policies are inspected and reviewed on performance, and Federal employee plan participants are then given what amounts to report card grades on many of the important care provisions so that average consumers can sit down at their kitchen table and make plan-against-plan comparisons when they choose their coverage. Again, the difference between what is available to older people in many parts of the United States for Medicare and what is available to those Federal employees and Members of the U.S. Senate is striking in its contrast. Members of the Senate and Federal employees are going to be in a position where they can make plan-against-plan comparisons so as to inject some competition in the system. Again, the General Accounting Office tells us that no such features exist in much of Medicare. Finally, the Federal employee benefits managers look for high-quality service at competitive rates for employees. They work on a competitive basis to upgrade the quality and prices for the plan, while keeping premium rates at the lowest possible level. At the same time, these managers work to diminish risk selection by the plans, so that the older individuals who are part of the Federal employee plan, or persons with disabilities or chronic conditions, will not be eliminated from coverage when they want to enroll. Again, we see an effort to deal with the central questions that face health care reform in America, making sure that people are in a position to compare their plans so that there is real competition, and to make sure that nobody is left behind just because they are older or they suffer from a chronic condition. So, in addition to these very positive features, in recent years, average Federal employee health plan premium increases have stayed below 3 percent per year per enrollee, while the Medicare Program has seen average annual increases of almost 9 percent during the same period. So, Mr. President, what we are seeing is that well-structured competition, like in the system that Members of the Senate belong to, can work. It can work for patients and consumers in making sure they have good quality care. It can work for taxpayers in that it holds costs down, and it, for all practical purposes, is very similar to the system that we have in my hometown of Portland, OR. In my hometown, Portland, we have the highest percentage of older people in the Nation now participating in managed care. It is about 60 percent. Certainly, while not perfect, it avoids much of the set of problems that we have seen in other parts of the country. You don't see the gag clauses, for example, in our plan. And, hopefully, the U.S. Senate will pass the legislation this session that Senators Kyl, Kennedy and myself have introduced to make sure that, as we go to the 21st century, all patients understand their options and all of them know about the various services that are available. But we don't have those gag clauses in Portland, and we do have high-quality managed care, and we are able to do it for substantially less than much of the rest of the Medicare system. The per capita rate in my hometown, the per person rate for Medicare participants, is still $60 to $80 below the national average for Medicare. One of the things that I hope the Senate will do, on a bipartisan basis, is lift these penalties against towns like my home community that have done the heavy lifting and have ended up being penalized for it. I think, on a bipartisan basis, the U.S. Senate should make changes in Medicare to lift the reimbursement for low-cost counties, particularly in rural communities, and by doing so, benefit both seniors and taxpayers. Seniors will benefit from having the opportunity to get good-quality health plans in their areas, and it will also bring real choice and real competition for the first time to those areas. The fact of the matter is, many of those communities haven't been able to unleash entrepreneurial and competitive forces into their health systems such as we have in the private sector, because Medicare isn't paying those low-cost communities a fair rate. I have made changes in that discriminatory reimbursement proposal in my Medicare reform plan, and I hope the U.S. Senate will accept that in this session. I was pleased to see that, in the last week or so, the head of the Health Care Financing Administration, Dr. Vladeck, has indicated that there is a significant backlog of needed changes required to bring Medicare up to date. I hope that we will see more discussion of that in the days ahead. I felt that it was positive news to see those comments from the head of the Health Care Financing Administration. Mr. President, finally, let me say that I think, in addition to promoting competition, using the model of the Federal employee health plan, it's time for Medicare to look to the Federal employee health plan and the private sector for ways to improve quality in our health system. Again, there is nothing partisan about the agenda to improve health care quality, but this is an area where Medicare has also lagged, both in relation to Federal employees and the private sector. In other parts of our health system, it's possible, for example, to get good statistics on disenrollment, people leaving because they are not satisfied with the plan. It is possible to get information about providers who leave a system because they, too, feel it doesn't adequately address the needs of patients in providing good-quality health care. In other parts of the health system, there are grievance procedures, and we know, for example, how long it takes people to get through a grievance procedure, or how long it takes to get a referral, or what happens when you are denied benefits. In each of these areas so central to providing quality health care in America, Medicare is lagging behind the Federal employee health system, and Medicare is lagging behind much of the private sector. In my legislation, we would change that. We would require that these critical measures of quality be made available through report cards and other measures. I emphasize that today, Mr. President, because I think that, as we look to the 21st century of Medicare, we have an opportunity over the next few years to redesign the system and try to get it on track for the next century when we will have many more older people depending on Medicare. So the alternative is very clear: A bipartisan effort to bring competition and choice and a new focus on quality in the Medicare Program, or to continue business as usual and face what the General Accounting Office has told us will be a program that has simply run out of money when we hit the next century. I believe that, after years of bickering and partisanship on this issue, there is an opportunity now to address Medicare reform in a bipartisan way. Democrats have been right in the Senate to call on making sure that benefits are defined, that older people have guaranteed, secure benefits. Republicans have been correct, in my view, in calling for more competition and more choice in the system. Today, I have tried to talk about how that competition and choice exists in the program that Members of the Senate belong to and is also available in much of the private sector. Mr. President, this issue is so important that in the next century I believe that the public is going to ask every Member of the U.S. Senate, ``What were you doing to try to get Medicare on track?'' This program isn't just an important part of the Federal budget. It is going to be the Federal budget for the next 15 or 20 years. So now is the time to act to get the program on track. I believe that this can be done in a bipartisan way.

Mr. WYDEN

Mr. WYDEN. Mr. President, the process of making public policy, like much of life, is about opportunity, risk, and reward. That proposition is clearly demonstrated when the Senate looks at the critical issue of Medicare reform. I take the floor today, as I plan to do every day this week, to talk about a tremendous opportunity that the Senate has before it, the opportunity to finally remake Medicare for the 21st century in a bipartisan way. The Senate ought to seize this opportunity to act now and act boldly so that Medicare can be preserved for future generations of Americans. As Senators return from visiting their respective States today, we begin a legislative period that I believe can be a critical few months in Medicare's history. There is an opportunity to engage this issue as serious debate begins on the fiscal year 1998 budget. I believe that there is now a unique window of opportunity for reforming Medicare that would come along in only rare instances. Three factors combine to make this a special opportunity to try to set Medicare on track for the next century. The first is that the Federal deficit is less than was anticipated for this year, just over $108 billion. Second, we have a fairly benign economy. Surely, there are too many folks still hurting, there are too many folks falling between the cracks, but overall the economy has been strong. Third, it is very clear that our country will face a demographic earthquake in the next century with so many more older people, and we have a window of opportunity now to act before those demographic trends are set in place. My view is that Medicare does not need to be reformed because it has failed but because it has been such a great success that it cannot be allowed to deteriorate. I argue that only enemies of this program would want it to stay exactly as it is, because the status quo, the Medicare status quo that encourages waste and discourages user-friendly innovation, in my view, consigns Medicare to very difficult times. The General Accounting Office, for example, has estimated that the gap between expected revenues for the program and the enormous service demands is going to produce a gap of almost a half trillion dollars at the end of the next decade. This program, which is a lifeline to 38 million senior citizens, faces very serious, if not calamitous, financial circumstances by the end of the decade. There are a variety of reasons for this, as I am going to outline this week. In much of the United States, Medicare is engaging in wasteful practices that the private sector consigned to the attic years and years ago. In much of the country, Medicare is inefficient, volume- driven, clunky health care, and it is one of the first things that needs to be changed. I believe that there are substantial opportunities for this Senate to move on Medicare reform, and I think there are some special areas that we should be careful to avoid. I say, Mr. President, and colleagues, that I think it would be a great mistake to appoint yet another bipartisan commission to study Medicare. A number of our colleagues have proposed that. I have great respect for them, but if there is another bipartisan committee that studies this issue, I believe we will see bipartisan inertia for Medicare for years and years to come. The first question a bipartisan commission would face is should they report before the 1998 election. Then there would be a question about whether they would report before the year 2000 election. I do not think that a commission can create a forum for avoiding the tough choices. That is why I come to the floor today, as I will this week, to outline first why it is so important to act and why I believe that finally, after a substantial period of sharp and acrimonious debate on Medicare, it ought to be possible to act in a bipartisan way. I have had a number of private conversations with my colleagues on this issue over the last few months. I believe that despite some of the political backbiting that has gone on on this issue, every Senator understands that this program has to be reformed. In some measure, the U.S. Senate and the Congress have become like a bunch of reluctant seventh graders at a junior high school sock hop, standing on the gym sidelines, all waiting for the first brave soul to hit the dance floor. In an effort to try to move the process forward, to jump-start the debate, I recently introduced S. 386, the Medicare Modernization and Patient Protection Act. I offered this legislation not as a be-all and end-all solution to all of the financial challenges we face with Medicare, but rather as a direction to build on some of the progress that has been made in areas of the country like my own in Oregon. Much of Oregon is already operating 21st century Medicare services, operating Medicare in a way that is good for seniors and good for taxpayers. So when people tell me it's not possible to get this program on track, I invite them to come to my own State, because in my own State we have been able to do it. Mr. President, I would like to outline briefly a few of the specific items in my Medicare legislation that I will go into further detail on throughout this week. The first initiative in any responsible Medicare reform effort has got to be to bring more choices and more competition to the program. We have to see Medicare reform in comparison to what the private sector has done. Members of the U.S. Senate should not have too much difficulty grasping this concept because a model, the Federal employee health benefits plan, exists. Members are part of it, and surely it can be a central plank for any bipartisan Medicare reform to look to the model of the Federal employees health benefits plan to produce more choices and more options. The second plank of any Medicare reform effort should be to eliminate the rewards that the program has for waste and eliminate the way it penalizes the frugal. As incredible as it sounds, that's exactly what happens in the Medicare Program as it relates to health plans. If a plan holds down their costs, they end up getting penalized, and very often it is tough for providers, particularly in rural areas, to make a go of it. If a plan or part of the country sits on its hands and does not make an effort to hold down costs, they get bigger reimbursement checks. That's not right. The private sector consigned that kind of approach to the attic years ago in eliminating the rewards for waste and penalties. Efficiency should be a central component of any Medicare reform. Third, Mr. President, it seems critical, in my view, to protect the rights of patients. I believe that when there is a modernized Medicare Program, there will be more managed care available under the program across this country. Many of our citizens, seniors and others, have had legitimate questions about managed care, and I believe it is important to put in place strong patient protections to safeguard the rights of older people. This would include provisions such as a ban on these gag clauses that keep older people from knowing their rights in managed care plans. It would include stronger appeals procedures, grievance procedures, and also the right of patients in managed care plans to get data through report cards about how their plan stacks up on key issues. I believe that part of the effort to reform Medicare ought to be to protect patients' rights, and this should be a central component of Medicare reform as the effort to promote more competition goes forward. Fourth, Mr. President, I would change the reimbursement system that is used in Medicare, known as the average adjusted per capita cost. This is a sleep-inducing, eye-glazing concept by any calculus, but it is the guts of Medicare reform. To reform this system, we ought to gradually increase the reimbursement levels for low-cost areas, many of them in rural areas, and we ought to inject more competition in high- cost areas. There have been a number of recent analyses indicating that some managed care plans have been overpaid, many of them in the high- cost areas. Introducing more competition in those high-cost areas through changes in this Medicare reimbursement formula is a sensible way to enact bipartisan reform. Then, Mr. President, it is critical that the Senate tighten up efforts to fight fraud in Medicare. The General Accounting Office recently indicated that about 10 percent of all of the costs of Medicare are lost due to fraud. In a $200 billion program, $20 billion lost to fraud and abuse has plagued the program. Stronger penalties ought to be imposed for defrauding Medicare. If someone engages in a flagrant, reprehensible fraud, they ought to be kicked out of the Medicare Program for all time, not just some sort of slap on the wrist in a resolving door situation. For flagrant frauds, there ought to be lifetime debarment. Next, Mr. President, in my legislation we would expand the role of alternative health care providers. Nurses, physician assistants, pharmacists, and chiropractors, among others, have shown an ability across this country to deliver good quality, affordable health care to older people. They ought to be allowed to play an expanded role in the Medicare of the 21st century, both because these alternative professions will help us to hold costs down through more competition and also because they offer good quality care. Next, Mr. President, I would unleash the power of new telecommunications technologies in the health care field. A number of Senators on both sides of the aisle have sought to expand the role of telemedicine, which is already delivering good quality, low-cost care, particularly in the preventive area. It is time for Medicare managers to employ these tools. But as we see in so many parts of Medicare, the Federal Government program, which is relied on by millions of seniors and their families, lags behind the private sector. The Federal Government hasn't even taken baby steps in terms of trying to set out a policy to utilize telemedicine. So my legislation tries to ensure that Internet access, which at least will help our rural communities, is available. And, Mr. President, Senators on both sides of the aisle have done good work that could be incorporated into a Medicare reform bill. Finally, Mr. President, I propose in my legislation to clear away the regulatory underbrush that needlessly and expensively fragments our system of care for the older folks who are eligible for both Medicare and Medicaid. These are folks on a low, fixed income. They are the so- called dual eligibles. Right now, they are a big factor in major cost increases in both Medicare and Medicaid. It is time for some more creative approaches for dealing with those older people who are eligible for both Medicare and Medicaid. My legislation proposes that, and I intend to outline that further in the week. Mr. President, the legislation that I have introduced can save about $100 billion in hard savings over the next 5 years to provide short- term financial stability for the program. I submit that our challenge now is to lay the foundation for the next century. My legislation doesn't, in any way, deal with all of the tough questions that the Senate is going to face on Medicare. Medicare is not just an important part of the Federal budget; Medicare is likely to be the Federal budget for the next 15 to 20 years. When we look at the technological explosion and the extraordinary technologies that are available, when we look at the demographic tsunami that is coming in the next century with so many older people, the challenge now is to lay a bipartisan foundation to build on in the years ahead. The program that I have described and the legislation I have introduced takes from the efforts of both political parties over the last few years on Medicare. For example, my legislation protects defined, secure, guaranteed benefits for older people under Medicare. A number of Senators, led by Senator Kennedy, have made this their priority, and I am of the view that they are absolutely right. I think it would be a great mistake to say that the future of Medicare ought to be to just involve handing a check to an older person and say, ``Well, ma'am, buy health care until your money runs out. If the cost of your care is greater than your check, well, so be it.'' I think it is important to have guaranteed, secure, defined benefits. Many Senators have stood for this principle. It is at the heart of my legislation. Let me also say that I believe that many Senators on the other side of the aisle have been absolutely right in saying that it is time to bring more competition and more choice to the Medicare Program. Many Senators on the other side of the aisle have made the case that competitive models--be it the Federal employee health plan or be it the private sector--ought to be the kind of approach that we look to for 21st century Medicare. I believe they are right. I believe, in addition, that it is now possible to forge a bipartisan coalition on Medicare between the two parties, where those who have advocated for guaranteeing secure, defined benefits can work with those who have called for more competition and more choice and the kinds of changes that have come to the private sector. What it comes down to, Mr. President, is, will the Senate have the political will to do it? Will the Senate have the vision to see beyond the next electoral ridge? I believe that there is an extraordinary opportunity now to set out a foundation for the next century. We know that in the next century we are going to have to be dealing with the question of whether, hypothetically, Lee Iaccoca ought to be paying more for his Medicare than should a woman who is 75 years old and on a low income who suffers from Alzheimer's. I didn't address it in my legislation, but I happen to think that ought to be done. Senators will have different views on that issue. Mr. President, I am not convinced that's the issue that has to be tackled right now. The issue that has to be tackled by the Senate right now is to come up with $100 billion of hard savings to deal with the budget resolution and the short-term financial challenge of Medicare and then to lay the foundation for the next century. The foundation for the next century can build on some very good work being done by Senators of both political parties. I have been meeting with those Senators privately. I will have more to say during this week, Mr. President, for I intend to go into further detail on my comprehensive Medicare reform legislation every day this week. I will close with one last point. This issue is so important to our country and so important to the Senate that I believe in the next century--2010, 2020, 2030--people are going to ask everyone in public life today: What did you do to try to get Medicare on track? I believe the legislation I have introduced opens up the opportunity for bipartisan discussions toward Medicare reform. I have had a number of those already with Chairman Domenici, Chairman Gramm on the other side of the aisle, and have been very gracious in that regard. I have had a chance to talk to the minority leader, Senator Daschle, and Senator Kennedy, who have done so much good work. Mr. President, I close by saying that my concern is to make sure that the Senate, after years of bitter and acrimonious discussions on Medicare, now tries to approach it in a different way, in a bipartisan way, in a way that will allow us to tap the revolution of private sector health care, in a way that is good for patients, and in a way that is good for seniors and for taxpayers. Mr. President, I yield the floor.

Mr. WYDEN

Mr. WYDEN. Mr. President, I ask unanimous consent to speak for 30 minutes as in morning business.

Mr. WYDEN. I thank the gentleman for his courtesy. Perhaps we might wait a few more minutes for the leader.

Mr. WYDEN

Mr. WYDEN. Mr. President, this week my colleagues, Senators Kyl, Kennedy and Hutchinson, and I have introduced S. 449, the Patient Right to Know Act of 1997. This legislation outlaws so-called gags in contracts between managed care companies and their licensed practitioners which have limited what doctors can tell patients about their medical condition and all treatment appropriate to their care. Plain and simple, such gags have been used to limit appropriate medical care. While this is a dollars-and-cents issue for health care organizations and insurers, for patients and their doctors such restrictions on the usual free flow of communication--held sacred since ancient times--literally may be a matter of life or death. I was pleased to join Mr. Kennedy in offering legislation on the floor last session which would have ended such restrictions. I also wish to thank Mr. Kyl for his support of our legislation last year, and for his diligent efforts in the intervening months to prepare this bill for re-introduction. I also wish to acknowledge support for this legislation from organizations including the Consumer's Union and the American Medical Association. We have this broad range of support because the need for this legislation is clear and documented. Three in four Americans now covered by private health insurance receive their care from managed care organizations. Increasingly, Medicaid enrollees and seniors in Medicare are covered by managed care plans through their respective Federal health insurance programs. Residents of my home State of Oregon boast the highest penetration of managed care in the Nation. The State's Medicaid Program for the most part is organized through private managed care companies. And in Portland, managed care plans service almost 60 percent of the Medicare population. In Oregon and elsewhere, the managed care presence has grown for reasons that are quite wholesome. Managed care helps enrollees stay healthy through illness prevention programs. They assure coordination of services for persons with multiple ailments. And through systematic, quality-conscious gate-keeping, they work to reduce unnecessary treatments which drive up health care costs. At the same time, however, some managed care providers have tried to enhance their profit margins by limiting what doctors may tell patients regarding all appropriate treatments, thereby reducing services patients may actually receive. These gags in my view are outrageous. The President through administrative order during the last few months has made such gags illegal in managed care plans operating under Medicare and Medicaid. He has pledged his support for legislation eliminating these restrictions in private health plans as well. Mr. President, while I am convinced that we need a single Federal standard on this matter to protect patients in managed care plans I am much encouraged by the voluntary efforts to end such gags recently announced by the managed care insurance industry. My long association with these companies has convinced me that coordinated care providers as a group often are on the cutting edge of developing both efficient and high-quality care for their enrollees. It is entirely appropriate for this provider group to try to police their members on the issue of gag provisions and the protection of doctor-patient communications. I ask that the text of the bill be printed in today's Record. The bill follows:

Mr. WYDEN

Mr. WYDEN. Mr. President, my home State of Oregon has long been known for being innovative in a variety of important public policy areas. The Oregon Health Plan, for example, is a pioneering effort. We were the first State to protect our beaches, to go forward with recycling, to look at innovative ways to protect our land, air and water, and we are clearly out in front in terms of welfare reform, a key issue to our citizens at this time. Today, I take the floor to talk about how Oregon would like to lead the country once more, this time in the critical area of juvenile justice. It is very appropriate that this matter be pursued at this time because, according to the National Center on Juvenile Justice, 47 out of 50 States have legislation in their State legislatures that would literally wipe out the State juvenile court system. It is not hard to be surprised about why these kinds of things are happening, because we know that our citizens are angry about the juvenile justice system in our country. For example, there are many who come to my townhall meetings and say, ``Ron, 20 years ago we left our car doors unlocked, we left our windows open, and we were safe. But today, it's not that way any longer. I'm an older person, and I'm concerned about going out after 4 o'clock in the afternoon. I'm frightened. I'm frightened by what the thugs in my neighborhood might do to me.'' These citizens are not going to sit around and have debates about diversion programs, which is one approach for juvenile justice, or probation programs. They just want to make sure that they are protected, that they and their families are secure in their homes, and that their right to be free, their civil right, if you will, to be free from crime in their neighborhood is protected. It is not hard to see why State legislatures around this country are proposing bills to get rid of the juvenile justice system altogether. So I come to the floor today to talk about an effort that is underway in Oregon to literally turn the juvenile justice system on its head and make it vibrant again. What we are seeking to do--and it is an effort that is being pioneered in central Oregon and Deschutes County, specifically--is to turn the juvenile justice system on its head and move from a model that was based on prevention and treatment to one that is based on accountability. We call this model community justice. It is community justice because we feel that when a crime is committed, our community loses something. A person is harmed economically, physically, or emotionally, but also the community is harmed. Our community loses a sense of security. It loses funds that are needed for police work, and funds that are involved in incarceration and in probation. All our community suffers. We believe it is first the responsibility of the system to avoid crimes being committed in the first place, but it also is critically important that if a crime is committed, the offender must be held accountable for making the community whole--the offender must earn their way back into the community. Prosecutors and police, and others, in Deschutes County, OR, have begun a new system built around accountability so that if, for example, you have a first-time offender, a nonviolent first-time offender, who has robbed the home of a senior citizen, what you are going to see is that this young offender is going to be required to pay back the community. My sense is that this notion of accountability, accountability for juvenile offenders so that there are consequences every time a juvenile offender commits a crime, is the direction that we ought to be going. In Deschutes County, we look at this as part of what we have come to call the Oregon option. The Oregon option has been an approach that we pioneered with the Federal Government which stipulates that when local government is freed from some of the bureaucratic redtape, in return, we will make sure there are actual results; in other words, that we can prove that in return for relief from some of the bureaucratic constraints, we can meet the requirements of a particular community service program. What we are saying in Oregon is that when there are dollars that are now earmarked for, say, prison beds for young offenders, we will commit, under the community justice kind of approach, to making sure those young offenders are held accountable and repay the community. And if, in fact, we can't do it, then the community is going to make sure, with community resources, that the goals of the juvenile justice system, and holding youthful offenders accountable, is met through buying back the prison beds. My view is that this model of community justice is the kind of approach that the Congress should look at this year when we consider the juvenile justice statute, which is up again for reauthorization. We ought to say, as part of that law, that any juvenile justice system should require young offenders to complete accountability contracts to ensure that they make amends for their offense. We ought to make sure that, as part of the reauthorization of the juvenile justice system, local programs receive high marks from victims--and here the Chair has done yeoman work, in my view--that victims become the central customer of the criminal justice system. I believe that using these kinds of principles, principles of accountability, principles of community involvement, principles of ensuring that victims become the customer of the system, we can build a new system. Not long ago, I went to Deschutes County to learn about their community justice program. What I saw was a coalition of police officers, district attorneys, those who work in the juvenile justice system, Democrats, Republicans, all at a table saying, ``We believe that this new approach for community justice is the kind of approach that the Federal Government should support as part of the Juvenile Justice and Delinquency Prevention Act reauthorization.'' Mr. President, I would say that if we can hold youthful offenders accountable, if we can ensure that there are consequences each time an offense is committed, if the Congress and local communities redesign these programs so as to work with families, we can have a new set of principles that would define juvenile justice for the 21st century--a set of principles that puts the community's needs first and makes the victim the principal customer. I submit, Mr. President, that as the Congress goes forward with hearings on the juvenile justice system and the consideration of the juvenile justice statute, eyes should focus on what is being done with community justice in Deschutes County, OR, because I believe those kinds of principles, the principles that represent our community values, is what we should build the juvenile justice system around for the 21st century. Mr. President, I yield the floor and suggest the absence of a quorum.

Mr. WYDEN

Mr. WYDEN. Mr. President, I yield myself 15 minutes of the time taken by the minority leader, Mr. Daschle.

Mr. WYDEN

Mr. WYDEN. Mr. President, I am pleased to join with Senator Boxer as a cosponsor of the Domestic Violence Identification and Referral Act. With the passage of the Violence Against Women Act in the 1994 crime bill, Congress addressed the need to educate law enforcement, judges, and prosecutors about how to deal with situations of domestic violence. However, in this important piece of legislation, Congress overlooked a major resource in the battle against domestic violence--our health care professionals. Doctors, nurses, and others in health professions are often the first to see the effects of battering and are often in the best position to stop the cycle of violence before it goes any further. While domestic violence is the leading cause of injury to women, many doctors, and nurses are unaware or unsure of the symptoms, treatment, and means of preventing domestic violence. In 1992, a Surgeon General's report cited a study showing 35 percent of the women who visit hospital emergency rooms were there because of ongoing abuse. Additionally, the study found that only 5 percent of the abused women were actually identified as such. A 1995 issue of the Journal of the American Medical Association [JAMA] determined that little had changed since the earlier study and that doctors still failed to identify women who were injured as a result of domestic violence. In a June 17, 1992, issue of the Journal of the American Medical Association Dr. Richard F. Jones III, the then-president of the American College of Obstetricians and Gynecologists [ACOG], related how for years he had missed the obvious signs of physical abuse in women patients. He had been asking the wrong questions and failed to elicit the true cause of their injuries. Only when he started asking these women directly if they were victims of physical abuse did the truth emerge. Similarly, according to an article in a November 1995 issue of American Medicine, 60 percent of those graduating from medical schools felt that an insufficient amount of attention within the medical school curriculum was given to the issue of family and domestic violence. Since Senator Boxer, Representative Morella, and I introduced the Domestic Violence Identification and Referral Act in 1992, the medical community has taken many steps to increase outreach and education on the issue of domestic violence. However, as these studies show, the fact is that when it comes to domestic violence, the bruises and abrasions get dressed, but the cause goes unaddressed. Doctors miss the signs of domestic violence early on and then often miss them again when they have become catastrophic. The Domestic Violence Identification and Referral Act provides incentives for medical schools to provide significant training in identifying, treating and referring victims of domestic violence. The legislation will give preference in awarding grants under the health professions education titles of the Public Health Services Act to schools that have incorporated training in domestic violence into their curriculum. The title VII and title VIII grant programs, singled out in the bill, are demonstration grants and makeup but a small part of the hundreds of millions of Federal dollars that go to medical schools for state-of- the-art medical education. It seems to me to be self-evident that if we give medical schools this sort of funding, they should at least give some time to addressing the No. 1 cause of injury to women. In drafting this legislation we worked closely with doctors, nurses, medical schools, and domestic violence groups. The Association of American Medical Colleges, American College of Obstetricians and Gynecologists, the American Medical Women's Association, the National Coalition Against Domestic Violence, AYUDA, NOW Legal Defense Fund, American Nurses Association, National League For Nursing, Association of Reproductive Health Professionals, and the Family Violence Prevention Fund, among others, have voiced their support for this legislation. I thank the many groups that assisted in drafting this legislation and Senator Boxer for her leadership in this matter. I urge the Congress to pass this important piece of legislation this year.

Mr. WYDEN

Mr. WYDEN. Mr. President, a few weeks ago, I met with a group of small business folks at an Internet cafe in Portland. We talked about the promise electronic commerce holds for businesses and consumers. The Internet can give a small businessperson in Astoria, OR access to the entire global marketplace. It can give consumers, especially in rural areas, entry to a supernational shopping mall. For governments, the Internet offers a different type of promise--the chance to be a new cash cow. As Federal funds decrease, States and local governments are looking to the Internet as a new source of revenue. Some have already begun building tollbooths on the information superhighway. For sales taxes alone, there are nearly 6,500 different taxing authorities in this country. One businessman at the Internet cafe told me he is wary of getting into electronic commerce because of the prospect of as many as 30,000 different pairs of hands reaching into his pockets to collect taxes. If current trends continue, State and local levies will transform the Internet from a bright and exciting new frontier for commerce into a dark jungle of foreboding taxes. Under today's mishmash of State and local Internet taxes, everyone is puzzled. Take a customer at his home computer who purchases an item from a virtual catalogue. With the click of his mouse, the purchase is logged, his account billed and payment made by wire transfer and the order sent. The vendor is in another State, or even another country. His bank is in a third State and the purchase is a gift being sent to a relative in another State. Where did this transaction take place? Where was there nexus for tax purposes--the vendor State? The customer's State? The bank's location? Or the State where the gift is being sent? Is the answer all of the above, some of the above, or none of the above? The enormity of the problem is underscored by the fact that the hottest selling software today is software to help entrepreneurs and companies figure out various State tax policies. When a consumer in Corvallis, OR uses an Internet search engine in California, is that search a taxable service? When a housewife in Houston uses Virginia-based America Online to make a virtual purchase from a furniture company in North Carolina, what gets taxed where? Is an Internet service provider a public utility, as one State has ruled? Even if a State has enacted an online tax law, collection and enforcement are often haphazard. This system rewards ignorance and punishes the boy scout businesses that play by the rules. The purpose of the bill I am introducing today with Congressman Chris Cox is to allow everyone to step back and take a deep breath. It says let's suspend this crazy tax quilting bee so that everyone can come together in a rational way to figure out what policy makes the most sense. The Internet Tax Freedom Act has three parts. First, it would impose an indefinite moratorium on subnational taxes on electronic commerce. Where States and local governments have already imposed taxes on electronic commerce, their taxes would be grand fathered to the extent that they are net income taxes, fairly apportioned business license taxes or where the tax is collected in an identical way for mail or telephone orders. This will assure uniformity and fairness, while targeting inequitable technology taxes. Our intent is that the new tax moratorium apply to all Internet and interactive computer services, regardless of the technology--such as cable systems and wireless networks--being used to deliver those services. It will give us a functionally equivalent and technologically equitable tax policy. It will assure equity and fairness among all business entities and across technologies. Second, the bill would call upon the administration to bring together State and local governments, businesses and consumers, and any others with a stake in the Internet and online commerce to develop policy recommendations on taxation of the Internet and use of the Internet to deliver products and services. The Executive would have 2 years in which to prepare policy recommendations on taxation of the Internet. Third, the bill directs the executive branch to seek an international agreement making the Internet a duty-free zone. Just as we seek a rational policy on electronic commerce taxation here in the United States, our businesses cannot be expected to compete overseas if they faced more than 160 different foreign tariff policies covering global electronic commerce. Although about 75 percent of Web users live in North America, most electronic commerce is between companies, rather than companies and consumers. Forrester Research of Massachusetts predicts business-to-business commerce will soon be worth $67 billion a year. Trying to find out exactly which States and local authorities are imposing taxes on electronic commerce and what types of taxes they are imposing is a daunting--if not outright impossible--task in itself. The Vice President for a good-sized Internet service provider in California said he would need a whole department to untangle the various Internet tax laws around the country, ``It's in my nightmare pile,'' he observed. If this has stumped some of the best accounting firms in the country, how in the world can a small business that wants to sell over the Internet figure out its various tax liabilities? The difference between States in electronic commerce tax policy is mind-numbing. Twenty States and the District of Columbia impose one or more taxes on electronic commerce. New York levies taxes on gross receipts on the ``furnishing of information,'' but not on personal or individual information. Ohio taxes electronic transmissions and real estate data bases because they provide objective data but exempts news services because they provide analysis. Texas taxes the transmission of electronic information and software in whatever form, but does not tax software sent out of State on a disk. Alabama's Revenue Department ruled last fall that a utility tax applies to Internet service providers, forcing them to pay a 4-percent public utilities tax. Last year in Florida a small Internet service provider asked the State's Department of Revenue whether he should add a sales tax to his customers' monthly bills. He was certain he wouldn't have to since all net surfers there already pay 10 percent or more in taxes for the telephone service they use to link to the Internet. To his surprise, the Revenue Department said his customers should have been paying a 7- percent service tax under a decade-old telecommunications law. Then, adding shock to surprise, the Department told him his company was subject to an additional 2.5-percent tax on its gross annual receipts. The uproar from users and providers led the Governor to suspend the taxes until a panel could study the implications. The legislation is constructed in such a way as to set up a dynamic and productive tension. It gives those that seek revenue from electronic commerce--the States and local governments--an incentive to work with the administration in developing policy recommendations on Internet taxation. Indeed, the National Conference of State Legislatures wrote me on February 21 that they have been ``working with a number of other State organizations as well as the impacted private sector industries to find the common ground which will lead to the coordination and uniformity of State tax structures which the draft legislation desires.'' And an official with the Federal of Tax Administrators observed last summer that ``States need to figure out how to tax it [the Internet] and to make it a level playing field with other services.'' I will also continue to work with the Multistate Tax Commission to assure their efforts move forward. But the question remains: Will the simple imperative for good public policy outweigh the desire of cash-strapped States to tap a new source of revenue? Without a moratorium, as proposed in this legislation, I fear those State and local governments hungry for new sources of revenue have little, if any, incentive to work for a fair and equitable Internet tax policy. I want to thank a number of groups that have helped us craft this legislation, and which have indicated their support for this bill: the American Electronics Association, the Software Publishers Association, the Association of Online Professionals, the Committee on State Taxation, the Direct Marketing Association, the Business Software Alliance, the Information Technology Association of America, the U.S. Telephone Association, the California State Board of Taxation, the Massachusetts High Tech Council, CommerceNet, the Silicon Valley Software Industry Coalition, IBM, AT&T, and other companies. I view the legislation being introduced today as the beginning of a process, not the end. It remains a work in progress and will hopefully continue to be refined throughout the congressional hearing process. There is a great deal to learn in these unchartered waters. All of us--Congress, State and local governments, businesses and consumers-- must educate each other about how this new electronic medium works. We must all work together to help it achieve its full potential as a marketplace of ideas, products, and services. I ask unanimous consent that the text of the bill and a section-by- section analysis be printed in the Record. Thee being no objection, the material was ordered to be printed in

Mr. WYDEN

Mr. WYDEN. Mr. President, a few weeks ago, I met with a group of small business folks at an Internet cafe in Portland. We talked about the promise electronic commerce holds for businesses and consumers. The Internet can give a small businessperson in Astoria, OR access to the entire global marketplace. It can give consumers, especially in rural areas, entry to a supernational shopping mall. For governments, the Internet offers a different type of promise--the chance to be a new cash cow. As Federal funds decrease, States and local governments are looking to the Internet as a new source of revenue. Some have already begun building tollbooths on the information superhighway. For sales taxes alone, there are nearly 6,500 different taxing authorities in this country. One businessman at the Internet cafe told me he is wary of getting into electronic commerce because of the prospect of as many as 30,000 different pairs of hands reaching into his pockets to collect taxes. If current trends continue, State and local levies will transform the Internet from a bright and exciting new frontier for commerce into a dark jungle of foreboding taxes. Under today's mishmash of State and local Internet taxes, everyone is puzzled. Take a customer at his home computer who purchases an item from a virtual catalogue. With the click of his mouse, the purchase is logged, his account billed and payment made by wire transfer and the order sent. The vendor is in another State, or even another country. His bank is in a third State and the purchase is a gift being sent to a relative in another State. Where did this transaction take place? Where was there nexus for tax purposes--the vendor State? The customer's State? The bank's location? Or the State where the gift is being sent? Is the answer all of the above, some of the above, or none of the above? The enormity of the problem is underscored by the fact that the hottest selling software today is software to help entrepreneurs and companies figure out various State tax policies. When a consumer in Corvallis, OR uses an Internet search engine in California, is that search a taxable service? When a housewife in Houston uses Virginia-based America Online to make a virtual purchase from a furniture company in North Carolina, what gets taxed where? Is an Internet service provider a public utility, as one State has ruled? Even if a State has enacted an online tax law, collection and enforcement are often haphazard. This system rewards ignorance and punishes the boy scout businesses that play by the rules. The purpose of the bill I am introducing today with Congressman Chris Cox is to allow everyone to step back and take a deep breath. It says let's suspend this crazy tax quilting bee so that everyone can come together in a rational way to figure out what policy makes the most sense. The Internet Tax Freedom Act has three parts. First, it would impose an indefinite moratorium on subnational taxes on electronic commerce. Where States and local governments have already imposed taxes on electronic commerce, their taxes would be grand fathered to the extent that they are net income taxes, fairly apportioned business license taxes or where the tax is collected in an identical way for mail or telephone orders. This will assure uniformity and fairness, while targeting inequitable technology taxes. Our intent is that the new tax moratorium apply to all Internet and interactive computer services, regardless of the technology--such as cable systems and wireless networks--being used to deliver those services. It will give us a functionally equivalent and technologically equitable tax policy. It will assure equity and fairness among all business entities and across technologies. Second, the bill would call upon the administration to bring together State and local governments, businesses and consumers, and any others with a stake in the Internet and online commerce to develop policy recommendations on taxation of the Internet and use of the Internet to deliver products and services. The Executive would have 2 years in which to prepare policy recommendations on taxation of the Internet. Third, the bill directs the executive branch to seek an international agreement making the Internet a duty-free zone. Just as we seek a rational policy on electronic commerce taxation here in the United States, our businesses cannot be expected to compete overseas if they faced more than 160 different foreign tariff policies covering global electronic commerce. Although about 75 percent of Web users live in North America, most electronic commerce is between companies, rather than companies and consumers. Forrester Research of Massachusetts predicts business-to-business commerce will soon be worth $67 billion a year. Trying to find out exactly which States and local authorities are imposing taxes on electronic commerce and what types of taxes they are imposing is a daunting--if not outright impossible--task in itself. The Vice President for a good-sized Internet service provider in California said he would need a whole department to untangle the various Internet tax laws around the country, ``It's in my nightmare pile,'' he observed. If this has stumped some of the best accounting firms in the country, how in the world can a small business that wants to sell over the Internet figure out its various tax liabilities? The difference between States in electronic commerce tax policy is mind-numbing. Twenty States and the District of Columbia impose one or more taxes on electronic commerce. New York levies taxes on gross receipts on the ``furnishing of information,'' but not on personal or individual information. Ohio taxes electronic transmissions and real estate data bases because they provide objective data but exempts news services because they provide analysis. Texas taxes the transmission of electronic information and software in whatever form, but does not tax software sent out of State on a disk. Alabama's Revenue Department ruled last fall that a utility tax applies to Internet service providers, forcing them to pay a 4-percent public utilities tax. Last year in Florida a small Internet service provider asked the State's Department of Revenue whether he should add a sales tax to his customers' monthly bills. He was certain he wouldn't have to since all net surfers there already pay 10 percent or more in taxes for the telephone service they use to link to the Internet. To his surprise, the Revenue Department said his customers should have been paying a 7- percent service tax under a decade-old telecommunications law. Then, adding shock to surprise, the Department told him his company was subject to an additional 2.5-percent tax on its gross annual receipts. The uproar from users and providers led the Governor to suspend the taxes until a panel could study the implications. The legislation is constructed in such a way as to set up a dynamic and productive tension. It gives those that seek revenue from electronic commerce--the States and local governments--an incentive to work with the administration in developing policy recommendations on Internet taxation. Indeed, the National Conference of State Legislatures wrote me on February 21 that they have been ``working with a number of other State organizations as well as the impacted private sector industries to find the common ground which will lead to the coordination and uniformity of State tax structures which the draft legislation desires.'' And an official with the Federal of Tax Administrators observed last summer that ``States need to figure out how to tax it [the Internet] and to make it a level playing field with other services.'' I will also continue to work with the Multistate Tax Commission to assure their efforts move forward. But the question remains: Will the simple imperative for good public policy outweigh the desire of cash-strapped States to tap a new source of revenue? Without a moratorium, as proposed in this legislation, I fear those State and local governments hungry for new sources of revenue have little, if any, incentive to work for a fair and equitable Internet tax policy. I want to thank a number of groups that have helped us craft this legislation, and which have indicated their support for this bill: the American Electronics Association, the Software Publishers Association, the Association of Online Professionals, the Committee on State Taxation, the Direct Marketing Association, the Business Software Alliance, the Information Technology Association of America, the U.S. Telephone Association, the California State Board of Taxation, the Massachusetts High Tech Council, CommerceNet, the Silicon Valley Software Industry Coalition, IBM, AT&T, and other companies. I view the legislation being introduced today as the beginning of a process, not the end. It remains a work in progress and will hopefully continue to be refined throughout the congressional hearing process. There is a great deal to learn in these unchartered waters. All of us--Congress, State and local governments, businesses and consumers-- must educate each other about how this new electronic medium works. We must all work together to help it achieve its full potential as a marketplace of ideas, products, and services. I ask unanimous consent that the text of the bill and a section-by- section analysis be printed in the Record. Thee being no objection, the material was ordered to be printed in

Mr. WYDEN

Mr. WYDEN. Mr. President, as this Congress moves forward to strengthen and secure the Medicare Program for future generations, three issues are crystal clear. First, we must have the political will to modernize Medicare to reflect both the quality and the efficiency of private health care plans now serving most working Americans, and in particular the Federal Employees Health Benefits Program which many Members of Congress, their staff and families, and other Federal employees enjoy. Second, we must maintain our commitment to current and future Medicare beneficiaries by preserving a basic, high-quality portfolio of health services for all enrollees, irrespective of their income, where they live, or their particular health circumstances. Third, we must begin the transformation of Medicare financial foundations in a way that is first fair to all beneficiaries, and second insures that Medicare will be there for our children and their children, and that it will not bust the Federal budget in the bargain. I believe that the legislation I introduce, today, The Medicare Modernization and Patient Protection Act of 1997, meets all three of these primary goals. While fully preserving traditional, fee-for- service Medicare, this legislation also will create an array of new, high-quality, cost-efficient health plans for Medicare beneficiaries, and offer those enrollees positive incentives to try them. It will provide new protections and consumer rights to Medicare beneficiaries in capitated health plans. It will mandate new penalties and enforcement mechanisms to eradicate fraud and abuse now stripping billions of dollars per year from the program. And it will create new support systems for some of Medicare's most desperately ill and poor beneficiaries, and their families. Finally, through new cost-conscious management systems and a firm fiscal control mechanism, this plan will reduce Medicare cost growth by approximately $100 billion over the next 5 years, and with financial constraints that will continue to control runaway spending growth after fiscal year 2002. The Medicare Modernization and Patient Protection Act will offer seniors more health plan choices by eliminating the huge variability in capitated payments to health plans in counties around the nation. At the same time, it will raise the minimum payment to 80 percent of the national average payment, leveraging higher reimbursements and I believe more plan offerings in up to 20 percent of our counties. This proposal also establishes an outlier fund, an account fueled by withholding up to five percent of payments to Medicare health maintenance organizations. Medicare managers would have discretion to withhold those payments from plans which are being over-compensated by the HMO payment formula, and disburse those funds in the form of extra payments to plans which have avoided risk selection in their beneficiary recruitment and as a result are providing services to sicker enrollees with above-average health care costs. Compared to the meat-cleaver approach of reducing all plan payments from the current 95 percent of local average health care costs, to 90 percent, this is a surgical solution to two significant Medicare managed care plan problems: (a) plan overpayments and (b) plans which avoid enrolling older, frailer beneficiaries because they cut profit margins. At the end of the year, any funds remaining in this account would be rolled back into the Medicare hospital insurance budget. At the same time, this bill reforms current rules for Medicare supplemental insurance, or Medigap policies, requiring that such policies must be issued to any eligible beneficiary at any time. This change will encourage more seniors to try capitated plans, because they know the Medigap safety net always will be available to them. Seniors would be protected from unfair denial of service decision and other health plan abuses through a strengthened and streamlined appeals process. Also, seniors would receive more informative and easily comparable information on health plans in their communities, and through the mail on a regular basis through annual enrollment fairs. The legislation also would require the collection of customer service and satisfaction data, and performance information to be used in qualitative analysis by Medicare to produce published report cards on plan performance, and help consumers make kitchen-table assessments of their plan options. By Federal statute, plans also would be barred from muzzling doctors and other health care practitioners in their conversations with patients about their medical condition and all treatments appropriate to their case. New criminal and civil penalties are created for practitioners and plans who rip off the system. Programs for hospice care, Alzheimer's respite care, and prospective payment for both home care and skilled nursing care are added to Medicare. The legislation requires Medicare to study and make recommendations on the more extensive and appropriate use of community pharmacy, telemedicine and so-called social health maintenance organization plans for dual eligibles in its portfolio of services to beneficiaries. The fiscal integrity portion of this bill would set overall part A and part B spending limits for each of the next 5 years. These overall spending limits would include target spending allotments for each of the several major areas of Medicare activity: doctors, hospitals, diagnostic services, nursing homes, and the like. Typically, Medicare has sought to control costs in these areas in the past by rolling back reimbursement rates for goods and services. Providers, however, have watered down Medicare's attempts at thrift by increasing volume in the face of lower per-service payments. Too often this has led to waste and inefficiency, with providers ordering procedures and services that beneficiaries really don't need, crippling Medicare with unnecessarily high costs. With $100 billion in cumulative savings expected in 5 years, my proposal would require that Medicare practitioners live within the budget's ceiling by mandating reduced reimbursements if cumulative billings otherwise would bust an individual service sector's annual spending plan. Despite these restraints, Medicare fee-for-service providers will enjoy generally healthy annual increases under this proposal. Beneficiaries should see no change in the level or quality of care they receive. Expensive, unnecessary care, however, could be sharply curtailed. Mr. President, I believe that this Congress should not as a first step relinquish Medicare restructuring to a special commission. I think most of us have an acute awareness of what is needed to fix the program for the long term. Some steps will be harder than others. But as the old Chinese proverb reminds us, a trip of a thousand miles begins with the first step. I hope my colleagues will agree with me that the Medicare Modernization and Patient Protection Act is that good first step, and join with me in co-sponsoring this legislation. Mr. President, I ask unanimous consent that additional material be printed in the Record. The Medicare Modernization and Patient Protection Act of 1997--Section- by-Section Analysis title i: promoting competition, quality, and beneficiary choice in medicare Section 1: Short title; table of contents, definitions. Section 2: Findings Section 101: Establishment of Plan Inprovement and Competition Office Subsection (a), establishes an office within Health Care Financing Administration to carry out several of the pro- quality, pro-consumer mandates of the legislation. Subsection (b), defines duties. Subsection 102: HMO and Competitive Pricing Demonstration Projects Subsection (a), directs the Secretary to conduct demonstration projects for competitive bidding between HMO contractors in counties in which the AAPCC rate is 120 percent of the national average AAPCC rate, or higher. Subsection (b), directs reports to Congress. Subsection (c), waives certain requirements under the Social Security Act. Subsection (d), requires that the projects be conducted within existing department funding. Subsection 103: Medigap amendments Subsection (a), guarantees issues of Medicare supplemental insurance regardless of preexisting health conditions. Subsection also requires community rating of Medigap policies. Further, this subsection guarantees offer of Medigap coverage to persons who leave Medicare risk plans for any one of several reasons, including voluntary disenrollment at any time during the first 12 months of enrollment in a risk plan (and had not been in a risk plan, earlier). Subsection (b), limits exclusion from coverage due to pre- existing health conditions. Subsection (c), clarifies non-discrimination requirements during initial enrollment periods. Subsection (d), extends the six-month initial enrollment period to non-elderly Medicare beneficiaries. Subsection (e), sets effective dates. Subsection (f), defines transition rules including a directive that the National Association of Insurance Commissioners amend its Model Regulation to reflect Medicare supplemental insurance policy changes required by the section. title ii: increasing medicare coverage options Subtitle A: Risk Plan Improvements Section 201: Changes in medicare managed care program Subsection (a), HMO payments, amends the current formula for determining local HCFA annual reimbursement rate increases for persons insured by risk-sharing plans providing both Part A and Part B benefits (Medicare Risk plans). The reformulation would, beginning in 1998, set a new minimum payment ``floor'' requiring that HCFA pay no plan less than 80 percent of the national average for payments to all plans in 1997. For each community, payment increases in subsequent years would be determined by selecting the highest figure from three alternative formulas; (1) 102 percent of the previous year's rate, (2) in 1999, 80 percent of the 1998 national average, and in 2000 and in subsequent years increasing the rate by the previous year's national average growth rate for Medicare managed care plan reimbursements, or (3) an increase determined by a ``melded'' rate of local and national managed care average reimbursements, according to the following formula: 1998: area specific percentage of increase is determined by the sum of 80 percent of the local average increase in the average adjusted per capita cost (AAPCC) in previous year, and 20 percent of the national AAPCC increase. 1999: area specific percentage determined by the sum of 75 percent of the local AAPCC increase in the previous year, and 25 percent of the national AAPCC increase. 2000: area specific percentage determined by the sum of 70 percent of local AAPCC increase in previous year, and 30 percent of the national AAPCC increase. 2001: area specific percentage determined by the sum of 65 percent of the local AAPCC increase in previous year, and 35 percent of the national AAPCC increase. 2002: area specific percentage determined by the sum of 60 percent of the local AAPCC increase in previous year, and 40 percent of the national AAPCC increase. 2003, and in each subsequent year: area specific percentage determined by the sum of 60 percent of the local AAPCC increase in previous year, and 40 percent of the national AAPCC increase. This section also contains certain budgetary protections for beneficiaries receiving treatment for end-stage renal disease, and for high-cost-growth metropolitan counties. Subsection (b) creates additional quality standards for section 1876(c)(6) of the Act, requiring Medicare managed care plans to meet new standards established by the Secretary of HHS in consultation with private accreditation organizations, and addressing such issues as ongoing quality assurance programs stressing (1) health outcomes, and (2) providing review by physicians and other certified health professionals. Plans meeting these additional standards may waive the requirement of at least 50 percent non-Medicare beneficiary enrollment for participation as a Medicare Risk contractor. Subsection (c) requires coordinated enrollment and disenrollment periods for Medicare managed care plans, similar to so-called ``open season'' periods for Federal Employee Health Benefit Program plans. Subsection (d) sets service area requirements for participating plans, including requirements that plans provide enrollment within all of a metropolitan statistical area if such organization provides enrollment in any part of the metropolitan area. Some limited exclusions may be allowed. Subsection (e) provides other enhanced enrollee protections involving provision of emergency room care and services, renal dialysis, and reimbursement of services outside the plan's services area (specific to renal disease). Subsection (f) allows the Secretary in certain instances to make additional payments to plans insuring certain individuals, for reasonable costs related to anomalies in specific service areas. Subsection (g) provides for intermediate sanctions against plans for program violations, short of termination. These intermediate sanctions may include civil penalties of not more than $25,000 per offense, and suspension of new enrollment. The section also provides for reasonable notice to the organization and a right of appeal. Subsection (h) requires that Medicare managed care plans must submit to standardized quality review through independent organizations to determine and demonstrate that they have maintained the new, higher quality performance levels required under this legislation. The section also requires a review of plans' quality performance by the U.S. General Accounting Office, no later than July 1998. Subsection (i) sets an effective date for Section 101 as the contract years beginning with 1998. Section 202: Quality report cards and comparative reports Subsection (a) requires that beginning in calendar year 1998, the Secretary will begin distribution of quality report cards to beneficiaries on eligible managed care plans and on Medicare supplemental policies, including a comparison of benefits, costs and quality indicators developed under this section. Subsection (b) directs the Secretary to develop quality indicators on (1) disenrollents statistics, (2) care outcomes, (3) population health status, (4) appropriateness of care, (5) consumer satisfaction, (6) access to care, including waiting time for scheduled appointments and access to emergency room care, and (7) preventative care programs. Subsection (c) directs the Secretary to develop standardized reports comparing plans on the basis of (1) monthly premiums, (2) choice of doctors, (3) choice of hospitals, (4) service area, (5) emergency room care coverage, (6) hospital charges, (7) physician charges, (8) prescription drug coverage, (9) ambulance coverage, (10) coverage of routine eye exams and eyeglasses, (11) coverage of skilled nursing facilities and home health care, (12) coverage of hearing exams and hearing aids, (13) coverage of mental health therapy, (14) the number of beneficiaries in the plan, and several other indicators of plan coverage. Subsection (d) requires that plans divulge to the Secretary information required to complete this comparative analysis. The Secretary also is empowered to collect, on a pro rata basis, costs from plans to carry out the requirements of this section. Subsection (e), definitions. Section 203: Preemption of state laws restricting managed care Subsection (a) preempts states from establishing care mandates for health insurance coverage in Medicare. Subsection (b) preempts state laws restricting managed care arrangements. This preemption would lift state laws which (1) prohibit or limit carriers from offering incentives to enrollees to use services of participating providers, (2) prohibit or limit carriers from limiting services to participating providers, and other state restrictions on managed care plans. This subsection also includes a number of definitions. Subsection (c) preempts state laws restricting utilization review programs. However, the section specifies that this preemption exempts laws preventing denial of lifesaving medical treatment pending transfer of enrollees to another health care provider. Subsection (d), effective date, January 1, 1998. Section 204: Appeals Subsection (a) requires all Medicare Risk contractors to designate an independent ombudsman to assist enrollees in exercising rights to dispute plan decisions, and in other grievances. This section also directs the Secretary to establish no later than January 1, 1998, an office for the collection of data one each plan pertaining to decisions on the disallowance of services to beneficiaries, in full or in part. Subsection (b) requires that plans provide enrollees with clear and understandable description of grievance and appeal procedures. Subsection (c) creates an expedited HCFA grievance and appeals procedure. Section 205: Medicare HMO Enrollment Fair Subsection (a), mandates that the Secretary require and coordinate annual enrollment fairs in each Medicare payment area to inform beneficiaries of plans offered by health care organizations. Subtitle B: Maintaining Fee-for-Service Program Section 211: Failsafe budget mechanism Subsection (a) requires payment adjustments to achieve specified Medicare targets. Sets annualized, five-year spending targets for Medicare, Parts A and B, according to budget estimated under Clinton Administration plan. Includes a ``fail-safe'' budget mechanism allowing the Secretary to undertake proportional reductions in provider reimbursements if spending targets otherwise would be exceeded by billing volume. Section 212: Maintenance of part B premium at current percentage of part B program costs Subsection (a) maintains monthly premium setting formula at the current percentage of actual Part B program costs. Subsection (b) sets effective date, applying to premiums paid for months beginning with January 1997. title iii--promotion of programs of all-inclusive care for the elderly (pace) and of social health maintenance organizations (shmos) Section 301: Definitions Section 302: Expanding the availability of qualified organizations for frail elderly community projects (program of all-inclusive care for the elderly (pace)) Subsection (a) directs the Secretary to establish PACE provider status for public or nonprofit organizations to provide comprehensive health care services, on a capitated basis, to frail elderly patients who are at risk of institutionalization in skilled nursing facilities, and who would qualify for benefits under both Medicare and Medicaid. Such organizations would qualify for three-year periods, with re-qualification procedures. Requirements for assuming financial risk are specified. The subsection, the Secretary would be required to act on applications within 90 days. Subsection (b) provides for terms and conditions of approval, equivalent to those contained in conditions of approval for an On Lok waiver, section 603C of the Social Security Amendments of 1983, as extended by OBRA 1985. The section also defines other entry requirements, and certain responsibilities of the Secretary to assure quality and feasibility of the plan. Subsection (c) defines eligibility for participation by PACE plans. Subsection (d) sets reimbursement to the organization through a capitation basis. Subsection (e) applies Section 302 statutes to plans currently operating under an On Lok waiver. Subsection (f) applies current Social Security Act statutes relating to income and resources of institutionalized spouses to any individual receiving services from an organization operating as a PACE provider. Subsection (g) allows participating plans to also offer services to frail populations other than the elderly, except where the Secretary finds provision of such services may impair the ability of the organization's performance as a

Mr. WYDEN

Mr. WYDEN. Mr. President, as this Congress moves forward to strengthen and secure the Medicare Program for future generations, three issues are crystal clear. First, we must have the political will to modernize Medicare to reflect both the quality and the efficiency of private health care plans now serving most working Americans, and in particular the Federal Employees Health Benefits Program which many Members of Congress, their staff and families, and other Federal employees enjoy. Second, we must maintain our commitment to current and future Medicare beneficiaries by preserving a basic, high-quality portfolio of health services for all enrollees, irrespective of their income, where they live, or their particular health circumstances. Third, we must begin the transformation of Medicare financial foundations in a way that is first fair to all beneficiaries, and second insures that Medicare will be there for our children and their children, and that it will not bust the Federal budget in the bargain. I believe that the legislation I introduce, today, The Medicare Modernization and Patient Protection Act of 1997, meets all three of these primary goals. While fully preserving traditional, fee-for- service Medicare, this legislation also will create an array of new, high-quality, cost-efficient health plans for Medicare beneficiaries, and offer those enrollees positive incentives to try them. It will provide new protections and consumer rights to Medicare beneficiaries in capitated health plans. It will mandate new penalties and enforcement mechanisms to eradicate fraud and abuse now stripping billions of dollars per year from the program. And it will create new support systems for some of Medicare's most desperately ill and poor beneficiaries, and their families. Finally, through new cost-conscious management systems and a firm fiscal control mechanism, this plan will reduce Medicare cost growth by approximately $100 billion over the next 5 years, and with financial constraints that will continue to control runaway spending growth after fiscal year 2002. The Medicare Modernization and Patient Protection Act will offer seniors more health plan choices by eliminating the huge variability in capitated payments to health plans in counties around the nation. At the same time, it will raise the minimum payment to 80 percent of the national average payment, leveraging higher reimbursements and I believe more plan offerings in up to 20 percent of our counties. This proposal also establishes an outlier fund, an account fueled by withholding up to five percent of payments to Medicare health maintenance organizations. Medicare managers would have discretion to withhold those payments from plans which are being over-compensated by the HMO payment formula, and disburse those funds in the form of extra payments to plans which have avoided risk selection in their beneficiary recruitment and as a result are providing services to sicker enrollees with above-average health care costs. Compared to the meat-cleaver approach of reducing all plan payments from the current 95 percent of local average health care costs, to 90 percent, this is a surgical solution to two significant Medicare managed care plan problems: (a) plan overpayments and (b) plans which avoid enrolling older, frailer beneficiaries because they cut profit margins. At the end of the year, any funds remaining in this account would be rolled back into the Medicare hospital insurance budget. At the same time, this bill reforms current rules for Medicare supplemental insurance, or Medigap policies, requiring that such policies must be issued to any eligible beneficiary at any time. This change will encourage more seniors to try capitated plans, because they know the Medigap safety net always will be available to them. Seniors would be protected from unfair denial of service decision and other health plan abuses through a strengthened and streamlined appeals process. Also, seniors would receive more informative and easily comparable information on health plans in their communities, and through the mail on a regular basis through annual enrollment fairs. The legislation also would require the collection of customer service and satisfaction data, and performance information to be used in qualitative analysis by Medicare to produce published report cards on plan performance, and help consumers make kitchen-table assessments of their plan options. By Federal statute, plans also would be barred from muzzling doctors and other health care practitioners in their conversations with patients about their medical condition and all treatments appropriate to their case. New criminal and civil penalties are created for practitioners and plans who rip off the system. Programs for hospice care, Alzheimer's respite care, and prospective payment for both home care and skilled nursing care are added to Medicare. The legislation requires Medicare to study and make recommendations on the more extensive and appropriate use of community pharmacy, telemedicine and so-called social health maintenance organization plans for dual eligibles in its portfolio of services to beneficiaries. The fiscal integrity portion of this bill would set overall part A and part B spending limits for each of the next 5 years. These overall spending limits would include target spending allotments for each of the several major areas of Medicare activity: doctors, hospitals, diagnostic services, nursing homes, and the like. Typically, Medicare has sought to control costs in these areas in the past by rolling back reimbursement rates for goods and services. Providers, however, have watered down Medicare's attempts at thrift by increasing volume in the face of lower per-service payments. Too often this has led to waste and inefficiency, with providers ordering procedures and services that beneficiaries really don't need, crippling Medicare with unnecessarily high costs. With $100 billion in cumulative savings expected in 5 years, my proposal would require that Medicare practitioners live within the budget's ceiling by mandating reduced reimbursements if cumulative billings otherwise would bust an individual service sector's annual spending plan. Despite these restraints, Medicare fee-for-service providers will enjoy generally healthy annual increases under this proposal. Beneficiaries should see no change in the level or quality of care they receive. Expensive, unnecessary care, however, could be sharply curtailed. Mr. President, I believe that this Congress should not as a first step relinquish Medicare restructuring to a special commission. I think most of us have an acute awareness of what is needed to fix the program for the long term. Some steps will be harder than others. But as the old Chinese proverb reminds us, a trip of a thousand miles begins with the first step. I hope my colleagues will agree with me that the Medicare Modernization and Patient Protection Act is that good first step, and join with me in co-sponsoring this legislation. Mr. President, I ask unanimous consent that additional material be printed in the Record. The Medicare Modernization and Patient Protection Act of 1997--Section- by-Section Analysis title i: promoting competition, quality, and beneficiary choice in medicare Section 1: Short title; table of contents, definitions. Section 2: Findings Section 101: Establishment of Plan Inprovement and Competition Office Subsection (a), establishes an office within Health Care Financing Administration to carry out several of the pro- quality, pro-consumer mandates of the legislation. Subsection (b), defines duties. Subsection 102: HMO and Competitive Pricing Demonstration Projects Subsection (a), directs the Secretary to conduct demonstration projects for competitive bidding between HMO contractors in counties in which the AAPCC rate is 120 percent of the national average AAPCC rate, or higher. Subsection (b), directs reports to Congress. Subsection (c), waives certain requirements under the Social Security Act. Subsection (d), requires that the projects be conducted within existing department funding. Subsection 103: Medigap amendments Subsection (a), guarantees issues of Medicare supplemental insurance regardless of preexisting health conditions. Subsection also requires community rating of Medigap policies. Further, this subsection guarantees offer of Medigap coverage to persons who leave Medicare risk plans for any one of several reasons, including voluntary disenrollment at any time during the first 12 months of enrollment in a risk plan (and had not been in a risk plan, earlier). Subsection (b), limits exclusion from coverage due to pre- existing health conditions. Subsection (c), clarifies non-discrimination requirements during initial enrollment periods. Subsection (d), extends the six-month initial enrollment period to non-elderly Medicare beneficiaries. Subsection (e), sets effective dates. Subsection (f), defines transition rules including a directive that the National Association of Insurance Commissioners amend its Model Regulation to reflect Medicare supplemental insurance policy changes required by the section. title ii: increasing medicare coverage options Subtitle A: Risk Plan Improvements Section 201: Changes in medicare managed care program Subsection (a), HMO payments, amends the current formula for determining local HCFA annual reimbursement rate increases for persons insured by risk-sharing plans providing both Part A and Part B benefits (Medicare Risk plans). The reformulation would, beginning in 1998, set a new minimum payment ``floor'' requiring that HCFA pay no plan less than 80 percent of the national average for payments to all plans in 1997. For each community, payment increases in subsequent years would be determined by selecting the highest figure from three alternative formulas; (1) 102 percent of the previous year's rate, (2) in 1999, 80 percent of the 1998 national average, and in 2000 and in subsequent years increasing the rate by the previous year's national average growth rate for Medicare managed care plan reimbursements, or (3) an increase determined by a ``melded'' rate of local and national managed care average reimbursements, according to the following formula: 1998: area specific percentage of increase is determined by the sum of 80 percent of the local average increase in the average adjusted per capita cost (AAPCC) in previous year, and 20 percent of the national AAPCC increase. 1999: area specific percentage determined by the sum of 75 percent of the local AAPCC increase in the previous year, and 25 percent of the national AAPCC increase. 2000: area specific percentage determined by the sum of 70 percent of local AAPCC increase in previous year, and 30 percent of the national AAPCC increase. 2001: area specific percentage determined by the sum of 65 percent of the local AAPCC increase in previous year, and 35 percent of the national AAPCC increase. 2002: area specific percentage determined by the sum of 60 percent of the local AAPCC increase in previous year, and 40 percent of the national AAPCC increase. 2003, and in each subsequent year: area specific percentage determined by the sum of 60 percent of the local AAPCC increase in previous year, and 40 percent of the national AAPCC increase. This section also contains certain budgetary protections for beneficiaries receiving treatment for end-stage renal disease, and for high-cost-growth metropolitan counties. Subsection (b) creates additional quality standards for section 1876(c)(6) of the Act, requiring Medicare managed care plans to meet new standards established by the Secretary of HHS in consultation with private accreditation organizations, and addressing such issues as ongoing quality assurance programs stressing (1) health outcomes, and (2) providing review by physicians and other certified health professionals. Plans meeting these additional standards may waive the requirement of at least 50 percent non-Medicare beneficiary enrollment for participation as a Medicare Risk contractor. Subsection (c) requires coordinated enrollment and disenrollment periods for Medicare managed care plans, similar to so-called ``open season'' periods for Federal Employee Health Benefit Program plans. Subsection (d) sets service area requirements for participating plans, including requirements that plans provide enrollment within all of a metropolitan statistical area if such organization provides enrollment in any part of the metropolitan area. Some limited exclusions may be allowed. Subsection (e) provides other enhanced enrollee protections involving provision of emergency room care and services, renal dialysis, and reimbursement of services outside the plan's services area (specific to renal disease). Subsection (f) allows the Secretary in certain instances to make additional payments to plans insuring certain individuals, for reasonable costs related to anomalies in specific service areas. Subsection (g) provides for intermediate sanctions against plans for program violations, short of termination. These intermediate sanctions may include civil penalties of not more than $25,000 per offense, and suspension of new enrollment. The section also provides for reasonable notice to the organization and a right of appeal. Subsection (h) requires that Medicare managed care plans must submit to standardized quality review through independent organizations to determine and demonstrate that they have maintained the new, higher quality performance levels required under this legislation. The section also requires a review of plans' quality performance by the U.S. General Accounting Office, no later than July 1998. Subsection (i) sets an effective date for Section 101 as the contract years beginning with 1998. Section 202: Quality report cards and comparative reports Subsection (a) requires that beginning in calendar year 1998, the Secretary will begin distribution of quality report cards to beneficiaries on eligible managed care plans and on Medicare supplemental policies, including a comparison of benefits, costs and quality indicators developed under this section. Subsection (b) directs the Secretary to develop quality indicators on (1) disenrollents statistics, (2) care outcomes, (3) population health status, (4) appropriateness of care, (5) consumer satisfaction, (6) access to care, including waiting time for scheduled appointments and access to emergency room care, and (7) preventative care programs. Subsection (c) directs the Secretary to develop standardized reports comparing plans on the basis of (1) monthly premiums, (2) choice of doctors, (3) choice of hospitals, (4) service area, (5) emergency room care coverage, (6) hospital charges, (7) physician charges, (8) prescription drug coverage, (9) ambulance coverage, (10) coverage of routine eye exams and eyeglasses, (11) coverage of skilled nursing facilities and home health care, (12) coverage of hearing exams and hearing aids, (13) coverage of mental health therapy, (14) the number of beneficiaries in the plan, and several other indicators of plan coverage. Subsection (d) requires that plans divulge to the Secretary information required to complete this comparative analysis. The Secretary also is empowered to collect, on a pro rata basis, costs from plans to carry out the requirements of this section. Subsection (e), definitions. Section 203: Preemption of state laws restricting managed care Subsection (a) preempts states from establishing care mandates for health insurance coverage in Medicare. Subsection (b) preempts state laws restricting managed care arrangements. This preemption would lift state laws which (1) prohibit or limit carriers from offering incentives to enrollees to use services of participating providers, (2) prohibit or limit carriers from limiting services to participating providers, and other state restrictions on managed care plans. This subsection also includes a number of definitions. Subsection (c) preempts state laws restricting utilization review programs. However, the section specifies that this preemption exempts laws preventing denial of lifesaving medical treatment pending transfer of enrollees to another health care provider. Subsection (d), effective date, January 1, 1998. Section 204: Appeals Subsection (a) requires all Medicare Risk contractors to designate an independent ombudsman to assist enrollees in exercising rights to dispute plan decisions, and in other grievances. This section also directs the Secretary to establish no later than January 1, 1998, an office for the collection of data one each plan pertaining to decisions on the disallowance of services to beneficiaries, in full or in part. Subsection (b) requires that plans provide enrollees with clear and understandable description of grievance and appeal procedures. Subsection (c) creates an expedited HCFA grievance and appeals procedure. Section 205: Medicare HMO Enrollment Fair Subsection (a), mandates that the Secretary require and coordinate annual enrollment fairs in each Medicare payment area to inform beneficiaries of plans offered by health care organizations. Subtitle B: Maintaining Fee-for-Service Program Section 211: Failsafe budget mechanism Subsection (a) requires payment adjustments to achieve specified Medicare targets. Sets annualized, five-year spending targets for Medicare, Parts A and B, according to budget estimated under Clinton Administration plan. Includes a ``fail-safe'' budget mechanism allowing the Secretary to undertake proportional reductions in provider reimbursements if spending targets otherwise would be exceeded by billing volume. Section 212: Maintenance of part B premium at current percentage of part B program costs Subsection (a) maintains monthly premium setting formula at the current percentage of actual Part B program costs. Subsection (b) sets effective date, applying to premiums paid for months beginning with January 1997. title iii--promotion of programs of all-inclusive care for the elderly (pace) and of social health maintenance organizations (shmos) Section 301: Definitions Section 302: Expanding the availability of qualified organizations for frail elderly community projects (program of all-inclusive care for the elderly (pace)) Subsection (a) directs the Secretary to establish PACE provider status for public or nonprofit organizations to provide comprehensive health care services, on a capitated basis, to frail elderly patients who are at risk of institutionalization in skilled nursing facilities, and who would qualify for benefits under both Medicare and Medicaid. Such organizations would qualify for three-year periods, with re-qualification procedures. Requirements for assuming financial risk are specified. The subsection, the Secretary would be required to act on applications within 90 days. Subsection (b) provides for terms and conditions of approval, equivalent to those contained in conditions of approval for an On Lok waiver, section 603C of the Social Security Amendments of 1983, as extended by OBRA 1985. The section also defines other entry requirements, and certain responsibilities of the Secretary to assure quality and feasibility of the plan. Subsection (c) defines eligibility for participation by PACE plans. Subsection (d) sets reimbursement to the organization through a capitation basis. Subsection (e) applies Section 302 statutes to plans currently operating under an On Lok waiver. Subsection (f) applies current Social Security Act statutes relating to income and resources of institutionalized spouses to any individual receiving services from an organization operating as a PACE provider. Subsection (g) allows participating plans to also offer services to frail populations other than the elderly, except where the Secretary finds provision of such services may impair the ability of the organization's performance as a

Mr. WYDEN

Mr. WYDEN. Mr. President, when a certified public accountant provides an opinion on a company's financial statements, investors and consumers rely on that statement. This role is vital to the efficient workings of our capital markets, which are the envy of the world. To keep our markets the best, investors must have confidence in them. That is why I have worked over the years for stronger rules to protect investors from corporate fraud. In recent years, corporate fraud has been perpetrated in the health care arena, military contracting and in the savings and loan fiasco, costing taxpayers billions of dollars. As a Member of the House and as a new Senator, I have worked to put in place clear procedures for early detection of fraud and illegal acts so as to protect the public from huge losses of their hard-earned tax dollars. To strengthen the fight against fraud, I worked as part of a bipartisan coalition that was successful in adding a new Section 10A to the Securities Exchange Act of 1934. I wish to take a moment today to update my colleagues on the status of that section's implementation. Since the enactment of this law in December 1995, I have been interested in how the Securities and Exchange Commission (SEC) and the accounting industry would respond to the new requirements and the spirit of the law. I am pleased that both the industry and the Securities and Exchange Commission have taken positive steps to assure that both the letter and the spirit of the law are fully adhered to. Within the industry, I would note that the American Institute of Certified Public Accountants (AICPA) last year issued a revised statement of Auditing Standards (SAS) Number 82 ``Consideration of Fraud in a Financial Statement Audit.'' The new SAS supersedes Statement of Auditing Standards (SAS) Number 53 relating to ``The Auditor's Responsibility to Detect and Report Errors and Irregularities.'' The previous AICPA Statement of Auditing Standards Number 53 required auditors to report errors and irregularities. The new SAS takes an important step forward by making clear for the first time an auditor's responsibility to detect material fraud in financial statements and by offering various fraud risk factors to be considered in planning and performing all audits. The new revised SAS, read in conjunction with the AICPA's SAS Number 54 relating to an auditor's responsibility to detect illegal acts, is not only consistent with Section 10A but also promotes the intent of that provision to put procedures in place to help detect fraud early. To date, the SEC has only limited experience with Section 10A because it becomes effective in two stages. For companies that file selected quarterly financial data with the SEC, Section 10A applies to annual reports for fiscal years beginning on or after January 1, 1996. For companies that do not file these reports, the provision applies to annual reports for fiscal years beginning on or after January 1, 1997. Many financial reports are filed at the end of the calendar year, meaning that most company audits for the 1996 fiscal year have not yet been completed. The SEC has assured me that it will evaluate and report on its experience with implementation of Section 10A in a timely manner. In addition, I wrote SEC Chairman Arthur Levitt seeking his views on whether the AICPA's new SAS Number 82 and existing SAS 54 relating to illegal acts are consistent with the purpose and intent of Section 10A. In his reply, Chairman Levitt states: ``We believe that both these standards improve the ability of auditors to detect management fraud and are consistent with the purposes of Section 10A.'' Mr. President, the vast majority of accountants are honest, capable professionals. The number of audit failures is actually quite low compared to the amount of work they do. The AICPA's new revised SAS No. 82 and section 10A are added protection for investors and corporations against such failures. I am pleased with both the work of the AICPA in clarifying the role of auditors in detecting fraudulent acts and with Chairman Levitt's reply assuring us that the SEC and AICPA procedures should work well together to promote the early detection of corporate fraud. I submit for the Record my letter to SEC Chairman Levitt and his reply of January 31, 1997, and ask that they be printed. The material follows: U.S. Senate, Washington, DC, January 10, 1997. Hon. Arthur Levitt, Jr., Chairman, Securities and Exchange Commission, Washington,

Mr. WYDEN

Mr. WYDEN. Mr. President, I introduce private relief legislation for Ms. Rose-Marie Barbeau-Quinn. Senator Hatfield championed Ms. Barbeau-Quinn's cause in the 104th Congress, and at his request and the request of many in the Portland area, I and Senator Smith are now picking up the legislation to make Ms. Barbeau-Quinn a citizen of this country. Ms. Barbeau-Quinn, a native of Canada, is a long time member of the Portland community and resident of Oregon. She lived in Portland with her now deceased husband, Mr. Michael Quinn since 1976, and together they ran the Vat and Tonsure Tavern, a unique and respected restaurant in the Portland area. While Ms. Barbeau-Quinn and her husband lived together for over 16 years, they did not actually marry until shortly before Michael Quinn's death in 1991. Since Oregon does not recognize common law marriage, and Ms. Barbeau- Quinn was not married the 2 years required by immigration law, she has not been able to file for permanent residency in this country. While I do not intend to introduce many private relief bills, because of Senator Hatfield's involvement in this matter and Ms. Barbeau-Quinn's compelling case, I think it is appropriate that the Senate pass legislation to ensure that Ms. Barbeau-Quinn remains a member of the Portland community for many years to come.

Mr. WYDEN

Mr. WYDEN. Mr. President, I introduce private relief legislation for Ms. Rose-Marie Barbeau-Quinn. Senator Hatfield championed Ms. Barbeau-Quinn's cause in the 104th Congress, and at his request and the request of many in the Portland area, I and Senator Smith are now picking up the legislation to make Ms. Barbeau-Quinn a citizen of this country. Ms. Barbeau-Quinn, a native of Canada, is a long time member of the Portland community and resident of Oregon. She lived in Portland with her now deceased husband, Mr. Michael Quinn since 1976, and together they ran the Vat and Tonsure Tavern, a unique and respected restaurant in the Portland area. While Ms. Barbeau-Quinn and her husband lived together for over 16 years, they did not actually marry until shortly before Michael Quinn's death in 1991. Since Oregon does not recognize common law marriage, and Ms. Barbeau- Quinn was not married the 2 years required by immigration law, she has not been able to file for permanent residency in this country. While I do not intend to introduce many private relief bills, because of Senator Hatfield's involvement in this matter and Ms. Barbeau-Quinn's compelling case, I think it is appropriate that the Senate pass legislation to ensure that Ms. Barbeau-Quinn remains a member of the Portland community for many years to come.

Mr. WYDEN

Mr. WYDEN. Mr. President, I inadvertently neglected to ask that a copy of legislation I introduced with Senators Dodd and Simon be printed in the October 3, 1996, Congressional Record. I request that this bill, the Human Tissues Safety Act of 1996, be printed in the Congressional Record to be dated October 21, 1996. The bill follows:

Mr. WYDEN

Mr. WYDEN. Mr. President, I introduce the Human Tissues Safety Act of 1996. I want to acknowledge at this time the hard work and cosponsorship of my colleagues, Senators Dodd and Simon, who have acted tirelessly in crafting this legislation which I believe enjoys broad support throughout the industry, and which offers patients receiving transplanted human tissues substantial new safety protection and assurance of quality. This bill addresses regulation by the Food and Drug Administration of human tissue, including cells grown from a patient's own tissue, for transplantation. The bill also addresses the regulation of stem cells obtained from umbilical cord blood, which involves similar issues. The purpose of this legislation is to ensure that human tissue is regulated in a manner that ensures its safety, while allowing efficacy to be demonstrated through the use of patient outcome registries rather than premarket approval mechanisms that would impede patient access and burden the development of important new tissue repair therapies. Mr. President, I find it shocking that FDA does not even have a list of the hundreds of tissue banks in this country that process human tissue from cadavers. Without such a list, FDA cannot send inspectors to these tissue banks to ensure that they comply with the Agency's infectious disease screening requirements. We should not wait until a child get AIDS from infected tissue to empower FDA to ensure compliance with its infectious disease screening requirements. At the same time, our bill would create reduced regulation for the safest type of human tissue--human cells that are taken from a patient biopsy, grown in cell culture, and then reimplanted into the same patient to repair or replace similar tissue. This type of tissue, known as autologous tissue, presents no risk of infectious disease. Although autologous tissue has historically been unregulated, both in the U.S. and throughout the world, the FDA recently announced that it would begin requiring premarket approval for this class of tissue in December 1997. The FDA's policies for allogeneic, that is, from a donor source, and autologous, that is, from the same patient, tissue are inconsistent with the concept of regulating products based on risk. For instance, cartilage that is obtained from a cadaver presents a number of risks-- infectious disease, rejection by the patient's body, graft-versus-host disease, and the risks associated with using immunosuppressive drugs-- but is not subject to premarket approval. It does not make sense to require premarket approval for a patient's own cartilage, when alternative, and more risky, sources of cartilage are essentially unregulated. This bill approaches this field from a very different perspective. We begin with a recognition that transplantation of human tissue, whether allogeneic or autologous, has been an unregulated practice of medicine for over thirty year. During this time, the major problems with tissue and, for that matter, organ transplantation have been, first, the risk of infectious disease and, second, the lack of enough donated tissues and organs for all the patients who need them. There has never been any demonstrated need for a premarket approval mechanism for tissue transplantation. Indeed, the lack of premarket approval has permitted rapid progress to occur in this field, along with faster patient access to important new therapies. This bill also recognizes that human cells and tissues are not drugs, biological products, or medical devices, and that it is inappropriate to regulate them as if they were. Drugs may be toxic or carcinogenic, while tissue is not. Drugs circulate in the bloodstream and have systemic effects, while tissue is typically transplanted into a localized area and does not circulate in the blood. For these, and many other reasons, tissue is generally less risky than the products that FDA traditionally regulates. The results of transplantation generally are much more predictable than are the effects of a synthetic chemical. It does not make sense to regulate human tissue under a regulatory regime designed for vastly different products. Nor does it make sense to regulate autologous tissue more stringently than allogeneic tissue. We also recognize that, unlike the patented products that FDA regulates, human tissue transplantation typically involves nonproprietary substances, such as heart valves, bone marrow, corneas, and ligaments. As a result, it's difficult for physicians, tissue banks, and biotechnology companies that develop new ways to use tissue to financially justify the expenditures associated with meeting premarket approval requirements. It is unclear, for instance, that bone marrow transplantation would have been developed had FDA required premarket approval for this technology. And, indeed, when FDA decided to require premarket approval for human heart valves, two of the four tissue banks that supplied these heart valves to surgeons went out of business. The bottom line is that FDA's plan to regulate many types of human tissue as if they were drugs, and to regulate autologous tissue more stringently than allogeneic tissue, is an exercise of trying to fit square pegs in round holes. It will significantly increase the costs of developing new tissue repair therapies, while delaying patient access for years. This bill also addresses the regulation of umbilical cord blood, a related field with tremendous medical promise. Until recently, a baby's umbilical cord was considered to be a disposable medical waste. Now we know that umbilical cord blood is a rich source of stem cells, which like bone marrow can be used in transplantation to treat childhood leukemia and other cancers. In fact, cord blood stem cells are even better than bone marrow stem cells because cord blood cells require less precise donor matching than bone marrow cells. Bone marrow transplantation has been essentially unregulated for the past 30 years, and during that time the principal problem has not been a lack of safety or efficacy, but a lack of bone marrow. Only about 10 percent of transplant candidates are able to obtain a donor match in time to save their lives. So cord blood transplantation is an exciting and potentially lifesaving new development. Unfortunately, while bone marrow transplantation was developed at a time when FDA did not feel the need to subject every new therapy to premarket approval, cord blood transplantation was not. As in the case of autologous cell therapies, FDA is proposing to regulate cord blood transplantation as if it were a drug, significantly hindering the development of this new therapy. Mr. President, this bill does not answer all of the questions. For example, I believe that when we take up this legislation at the beginning of the next Congress we must address issues including safeguarding the confidentiality of proprietary company and patient information likely to be recorded during the registry process. Also, oversight will be needed to ensure that if and when FDA implements this process, an overriding theme drives the regulatory exercise . . . that being that the rigor of the FDA's requirements match, but not exceed, the degree of manipulation a particular human tissue product undergoes. This is an exciting and potentially very important new field of biomedical research. It is my intention to focus on this issue early in the next Congress.

Mr. WYDEN

Mr. WYDEN. Mr. President, I have decided to wait until the end of the session to take a few moments to talk about the extraordinary service of our senior Senator, Mark O. Hatfield, because in a very real sense, it is almost impossible for citizens in our State to imagine that Mark O. Hatfield is not involved in a public way in service to our State. His career has been truly extraordinary. I was 2 years old when Senator Hatfield began his remarkable service to the people of our State. At that time he was a State legislator. He moved quickly through leadership positions in our State--State senator, secretary of state, Governor--and his career has been marked by several qualities that I think have been so important in public service and that he will always be remembered for, not just by the people of our State but by the people of our country. When Senator Hatfield ran in his first campaign for the Senate, it was after there had been a great debate among the citizens of our country and the Governors. Senator Hatfield was the lone voice of dissent in his party with respect to the Vietnam war. When he ran for the Senate, billboards were put up at that time with just one word, and that word was ``courage.'' If there has been anything which has marked Senator Hatfield's service to the public, it has been courage; not just on issues with respect to peace, but, again and again, Senator Hatfield was the one who would tell both political parties, both Democrats and Republicans, ``You are not going at it the right way. There is a better approach.'' That is true, whether it was national service or the motor voter program--just a couple of examples of recent vintage where he has bucked the tide in his party--or numerous other instances. It is always possible to see that courage in Mark O. Hatfield. We know that courage is always a trait that will be important to the people of our country and to the people of Oregon. In addition to those special votes and public acts that showed great courage, Senator Hatfield is also known for his effort to bring civility to politics. Maybe we call it the second ``C'' in terms of what is important for politics in the next century. Courage is important, but so is civility. In our State as well as in the Halls of Congress, it is well understood that when there is a serious problem and tempers are short, Senator Hatfield has been the one who has been able to bring parties together, been able to find common ground and find a solution simply because he refused to lose his temper, refused to yield to the pressures of the moment. I hope others will try to emulate those special qualities of civility that Senator Hatfield has brought to his service. There are several substantive areas that I would like to mention because they are important to the people of the Northwest, but I think they are important to our country as well. The first is that, as we seek to balance the budget--and we all understand that, as citizens at home have to balance their budgets, they have made it crystal clear they want the Federal Government to balance its budget--we still have to figure out a way to make a handful of key investments in our future while we still move to balance the budget. That is what Senator Hatfield's service on the Senate Appropriations Committee has been all about. It is to try to figure out ways to keep the deficit down, to get us to a balanced budget, while at the same time making that small number of key investments in transportation, in education, in communications that really will pay great dividends for our country. The spirit of the West and the history of the West has been that private investment has always followed those well-targeted public investments, and that is what Senator Hatfield has tried to do in his service on the Appropriations Committee. Let me also add that he has brought an approach in that service to try to reward imagination and creativity in government. We are especially proud of the pioneering work that we have done in our work on the environment and with our Oregon health plan. This session, Senator Hatfield led the effort to get our innovative welfare reform proposal approved. I think it is important to stress that, in his service on the Appropriations Committee, what he has always tried to highlight is the importance of rewarding States, private citizens, and communities that are willing, as has been the Oregon tradition, to get out in front, to take a bold approach, to try to break out of the old ways of doing business. I think it is especially important that this Senate follow that approach in the days ahead. Let me say in concluding, in his departure from the U.S. Senate, Mark O. Hatfield leaves a lasting and inspirational model for all citizens, regardless of party, who aspire to public service. I am going to miss his advice and counsel. His service is going to be greatly missed by the people of Oregon and by the country. We wish him and his wife Antoinette the best for the days ahead. I yield the floor.

Mr. WYDEN

Mr. WYDEN. Mr. President, with the conference report on S. 1994, the FAA bill, is still pending before the Senate, I want to take a moment to run through the provisions dealing with air safety. Having authored these with Senators McCain and Ford, I want the legislative history to be clear about how we got here and what we expect. When we began the process, this was a relatively modest reauthorization bill, no safety measures to speak of. But we have come a long way: with this legislation, we are going beyond all the talk about safety. The conference report includes two central provisions on air safety; the first eliminates the FAA's so-called ``dual mandate'' to make safety paramount at the FAA; the second requires the NTSB to make airline safety information available to the public. Just as the American public relies on the FDA to assure that the food supply is safe, the flying public relies on the FAA to make sure aviation is safe. This is the FAA's most important and fundamental mission. Building an infrastructure for an ever-increasing demand for air travel is not. The problem is that until today, the law gave the FAA a dual mandate. It said to the FAA, go out and promote air commerce but keep an eye on safety as well. Mr. President, that simply isn't acceptable. The dual mandate created a dilemma for the Agency. If, for example, an FAA official believed new safety equipment, like better flight data recorders, would greatly improve safety, but it carried a huge price tag, what should that official do? That official would have to decide whether the safety benefits outweighted the costs to the aviation community. That is not the type of cost-benefit analysis I find acceptable. That is why I sponsored the amendment, adopted unanimously by the Commerce Committee, to eliminate the Agency's dual mandate and make safety paramount. The FAA should not have to choose between safety and promotion of the industry. The genesis for second provision on aviation safety information is my long-held belief that one thing Government can and should do is give American consumers access to good, unbiased information. It is time to adopt new policies that empower the consumer, to make it possible for consumers to get critical information about aviation safety in our country. Everyone who flies should be able to make informed choices about the airlines they fly and the airports they use. This legislation will enable consumers to do that. Right now, it is possible for consumers to find out if their bags may be crushed and whether their flights will arrive on-time. But it is pretty darn hard for consumers to find out if the airline they are flying on has been fined for violating a major safety law. Back in July, Senator Ford and I wrote the FAA asking them to work with the NTSB, industry, labor and others to come up with a way to make aviation safety information available to the public. I have talked to people in all parts of the aviation community--the FAA, NTSB, airlines, labor, manufacturers, pilots, and consumer groups--about the best way to do this. While there are certainly differences over how to do it, everyone agrees that it should be done. And I agree with those in the industry who say that anything involving safety should not be part of competition. But by having uniform definitions, standards, and public access to this information, I believe we will move safety out of the shadows and into the sunshine. To get this kind of information today, consumers have to go through the legalistic torture of the Freedom of Information Act. I do not think that's good enough. In addition, the kind of safety information gathered by the FAA and the NTSB is also a problem. It is pretty tough to figure out what's an accident and what's an incident. It is certainly unfortunate if a flight attendant trips and breaks a leg during a flight, but that shouldn't be recorded in the same way as an engine losing power in mid- air. The intent of the provision in this bill is to have the NTSB make accurate information available to the public about aviation safety, including accidents and violations of safety regulations. This particular provision focuses on the NTSB, and I expect the NTSB effort to parallel the FAA's ongoing project of looking at how to make its information on accidents as well as violations of its regulations available to consumers. In a few weeks, the FAA will be reporting back to Senator Ford and myself on the best way to handle a broader task: getting the FAA's more comprehensive safety information on accidents and fines for violations of safety regulations out to consumers. I look forward to this report. Mr. President, there are many other important elements in this legislation, but I wanted to take this time to explain in greater detail those relating to aviation safety. These are critical components of this bill. I hope my comments will provide some guidance to the NTSB and the FAA as they proceed to put them into practice.

Mr. WYDEN

Mr. WYDEN. Mr. President, there has been considerable discussion in this Congress about assaults on our environment. But up until now, a serious, stealth assault that threatens our environment, our citizens' health, and quality of life has been essentially ignored. The threat I am referring to arises not from action that this Congress has taken. Rather, it comes from decades of Federal inaction in the face of haphazard development activities that are slowly degrading the landscape of our states and our communities. Mr. President, what I am referring to is the wholesale strip malling of America. If this trend continues unchecked, it will imperil our Nation's productive lands and natural resources, while turning the landscape into an unbroken expanse of suburban sprawl. This pattern of sprawling, uncontrolled development is in many instances promoted by the Federal Government. Despite the major impacts many Federal programs have on growth and land use, the Federal Government has largely turned a blind eye to the visual blight these programs spawn, let alone the environmental, health and economic impacts of unmanaged growth and development. Besides turning our landscapes into eyesores, unmanaged growth contributes to traffic congestion that snarls our highways, creating both additional stresses for commuters and additional exhaust emissions that degrade the quality of our air. Uncontrolled development not only hurts our citizens where they live and breathe, it also hits them in their wallets. Several studies have come out that show the costs of sprawling growth are significantly higher than more compact, managed growth patterns. These studies show that taxpayers can save billions of dollars in public facility capital construction and operation and maintenance costs by opting for growth management. Time and time again, I'm asked at town meetings what I can do at the Federal level to help manage growth in my home State of Oregon, so our State doesn't get overrun by suburban sprawl. The answer, Mr. President, is not to create a new Federal program that will embroil the Federal Government in land use decisions that have historically been State and local issues. Rather, what we should do is create incentives to encourage and build on the State and local growth management efforts already underway. For example, Oregon's pioneering Land Use Act builds environmental and resource protections into the State's growth management and development strategies. But our State gets no credit for this innovative program from the Federal Government. As a result, Federal development projects in Oregon have to undergo Federal reviews that in many cases duplicate the process under State law. That's bureaucratic overkill. Oregon and other States that have similar programs should be recognized by the Federal Government both when new Federal development projects are undertaken in these States and when new Federal requirements are imposed. Today, I am introducing the Local Growth Management Incentives Act. This legislation will give Oregon and other States and localities with good growth management programs the credit they deserve. Under this legislation, States that have good growth management programs will get several incentives. First, the legislation directs Federal agencies to take steps to eliminate duplication of studies, environmental assessments, planning and other activities to the extent these actions have already been undertaken under a State or local growth management plan. Because the State of Oregon and many cities in our State have environmentally protective growth management programs, development projects in our State frequently have to go through layers of duplicative environmental reviews--first at the local level, and then at the State level, and then again at the Federal level. In some cases, virtually identical environmental analyses are required by the different levels of government, each according to different sets of regulations. Let me cite several examples affecting the Port of Portland in Portland, OR: The Port of Portland's proposed development of additional marine terminals at Hayden Island in the Columbia River has already undergone extensive reviews and analysis by the city of Portland and by our State agencies. But in order for this project to proceed to the actual development stage, it still must undergo still another round of reviews by two Federal agencies--the Army Corps of Engineers and the National Marine Fisheries Service. The port estimates that if it could just eliminate the duplicative requirements, two or more years of unnecessary delay could be avoided for this project . The port's efforts to identify better ways of handling materials dredged from around its docks and piers and from the Willamette River navigation channel is subject to two virtually identical, essentially independent environmental analyses, one by the State of Oregon and another by the Corps of Engineers. Avoiding duplication by allowing the Corps of Engineers to rely upon the State analysis could save considerable money for both the port and the Corps and expedite this project. The port is currently planning further development and expansion at the Portland International Airport, the port's marine terminals, and several port-owned general aviation airports, all of which contain wetland areas. These activities could be facilitated, without diminishing environmental protections, if the State of Oregon's extensive process for addressing the environmental impacts associated with wetlands could be relied upon by the appropriate Federal agencies. Under my legislation, Federal agencies would have to incorporate, as part of the reviews they require, any relevant reviews and analyses already conducted under State and local programs. This would save the project sponsors considerable time and expense compared to starting the Federal reviews essentially from scratch. The net effect of this provision is that Federal development projects reviewed and approved under good State and local programs can avoid redundant Federal reviews that increase costs and cause delays with no environmental benefits. If environmental safeguards are already in place under State law, these protections should be recognized when it comes time to develop federally supported projects in the State. Second, States and localities with good growth management programs will be eligible for extensions of up to 1 year to comply with new Federal requirements, when this additional time is needed to integrate a new Federal requirement with the State or local growth management program. However, additional time would not be provided if an extension of time would adversely affect public health or the environment. This incentive recognizes that good growth management programs offer a more comprehensive and more long-term approach to protecting our environment than many of the specific requirements imposed by Federal environmental programs. At the same time, coordinating Federal requirements with State and local programs is hard work, as two leading growth management experts point out in their recent book ``Land Use in America.'' For this reason, we should give those States and localities that are undertaking this difficult, but ultimately rewarding effort the extra time they need to do it right. The same amount of additional time granted to the State or locality would also be provided to any private party in that jurisdiction who is subject to a compliance deadline under the new Federal requirement, unless this would adversely affect public health or the environment. While States and localities are working to meld their programs with Federal requirements, private parties should not be subject to double jeopardy by having to comply first with a Federal requirement and then subsequently with a different requirement after the State or locality modifies its program to meet the new Federal mandate. Third, Federal agencies conducting development projects and other activities affecting growth must ensure that their activities are consistent with States' and localities' growth management programs. This provision, which is modeled on a similar consistency requirement in the Coastal Zone Management Act, empowers States and localities by giving them the ability to affect Federal activities that could undermine State and local efforts to manage growth locally. Fourth, my legislation amends the Intermodal Surface Transportation Efficiency Act [ISTEA] to give priority for discretionary spending under ISTEA to any State or locality that has a growth management program that meets the eligibility criteria set out in the bill. Giving States and localities with good growth management programs priority for ISTEA funding will not only provide a financial incentive to establish these programs, it will also help reduce Federal, State, and local transportation costs and even help reduce air pollution from motor vehicles. The legislation I am introducing is the beginning and not the end of a process. It is my hope that the Local Growth Management Incentives Act will begin a discussion on what the Federal Government should be doing to address the impacts Federal actions have on growth and land use. In the next Congress, I will be looking for additional incentives to offer States and localities so they will develop their own programs to manage growth. In summary, I think there is an appropriate role for the Federal Government to help States and localities to manage growth so we have smart growth, instead of either uncontrolled sprawl or NIMBY [Not In My Back Yard] efforts to block any kind of growth. I am introducing my legislation today in an effort to jumpstart a dialog on how the Federal Government can promote well-managed, sustainable growth that will best serve our environment, our citizens' health and, our Nation's economic well-being in the 21st century.

Mr. WYDEN

Mr. WYDEN. Mr. President, passage of a Coast Guard reauthorization bill is a matter of vital importance to Oregon, particularly to smaller communities on the Oregon coast. A strong Coast Guard presence is essential to safeguard the lives of fishermen, recreational boaters, and all others who venture out into the frigid Northwest waters. Because of the cold temperature of Pacific Northwest waters, a delay in Coast Guard response time by even a few minutes could mean a matter of life and death to capsized boaters. For that reason, I worked with a bipartisan group of coastal State Senators to ensure Coast Guard stations would not be closed unless there are strong safeguards in place to ensure maritime safety will not be diminished. Specifically, under section 309 of the conference report, the Secretary of Transportation is prohibited from closing any Coast Guard multimission small boat station unless the Secretary determines that closure of a station will not diminish maritime safety in the area of the station, taking into account water temperature and other local conditions. This section also provides an opportunity for affected communities to have a voice in any decision on a proposed station closure. The Secretary must provide an opportunity for public comment and hold public meetings before closing any small boat station. The Coast Guard stations in Oregon covered by section 309 are: Coos Bay, Depoe Bay, Siuslaw River, Tillamook Bay, Chetco River, Yaquina Bay, and Umpqua River. Section 309 also contains a provision I authored to ensure that all small boat stations will have available at least one vessel capable of performing ocean rescues. This provision was included to address a situation that arose last summer when the Rogue River Sardet station near Gold Beach was assigned a 20-foot vessel that was useless for performing ocean rescues. Under my provision, all small boat stations, including seasonally operated facilities like the Rogue River Sardet, will be guaranteed to have at least one vessel capable of performing ocean rescues. By including these provisions in the conference report, we are giving the Coast Guard the tools needed to protect our citizens' lives and enhancing safety in the waters off Oregon's coast.

Mr. WYDEN

Mr. WYDEN. Mr. President, there has been considerable discussion in this Congress about assaults on our environment. But up until now, a serious, stealth assault that threatens our environment, our citizens' health, and quality of life has been essentially ignored. The threat I am referring to arises not from action that this Congress has taken. Rather, it comes from decades of Federal inaction in the face of haphazard development activities that are slowly degrading the landscape of our states and our communities. Mr. President, what I am referring to is the wholesale strip malling of America. If this trend continues unchecked, it will imperil our Nation's productive lands and natural resources, while turning the landscape into an unbroken expanse of suburban sprawl. This pattern of sprawling, uncontrolled development is in many instances promoted by the Federal Government. Despite the major impacts many Federal programs have on growth and land use, the Federal Government has largely turned a blind eye to the visual blight these programs spawn, let alone the environmental, health and economic impacts of unmanaged growth and development. Besides turning our landscapes into eyesores, unmanaged growth contributes to traffic congestion that snarls our highways, creating both additional stresses for commuters and additional exhaust emissions that degrade the quality of our air. Uncontrolled development not only hurts our citizens where they live and breathe, it also hits them in their wallets. Several studies have come out that show the costs of sprawling growth are significantly higher than more compact, managed growth patterns. These studies show that taxpayers can save billions of dollars in public facility capital construction and operation and maintenance costs by opting for growth management. Time and time again, I'm asked at town meetings what I can do at the Federal level to help manage growth in my home State of Oregon, so our State doesn't get overrun by suburban sprawl. The answer, Mr. President, is not to create a new Federal program that will embroil the Federal Government in land use decisions that have historically been State and local issues. Rather, what we should do is create incentives to encourage and build on the State and local growth management efforts already underway. For example, Oregon's pioneering Land Use Act builds environmental and resource protections into the State's growth management and development strategies. But our State gets no credit for this innovative program from the Federal Government. As a result, Federal development projects in Oregon have to undergo Federal reviews that in many cases duplicate the process under State law. That's bureaucratic overkill. Oregon and other States that have similar programs should be recognized by the Federal Government both when new Federal development projects are undertaken in these States and when new Federal requirements are imposed. Today, I am introducing the Local Growth Management Incentives Act. This legislation will give Oregon and other States and localities with good growth management programs the credit they deserve. Under this legislation, States that have good growth management programs will get several incentives. First, the legislation directs Federal agencies to take steps to eliminate duplication of studies, environmental assessments, planning and other activities to the extent these actions have already been undertaken under a State or local growth management plan. Because the State of Oregon and many cities in our State have environmentally protective growth management programs, development projects in our State frequently have to go through layers of duplicative environmental reviews--first at the local level, and then at the State level, and then again at the Federal level. In some cases, virtually identical environmental analyses are required by the different levels of government, each according to different sets of regulations. Let me cite several examples affecting the Port of Portland in Portland, OR: The Port of Portland's proposed development of additional marine terminals at Hayden Island in the Columbia River has already undergone extensive reviews and analysis by the city of Portland and by our State agencies. But in order for this project to proceed to the actual development stage, it still must undergo still another round of reviews by two Federal agencies--the Army Corps of Engineers and the National Marine Fisheries Service. The port estimates that if it could just eliminate the duplicative requirements, two or more years of unnecessary delay could be avoided for this project . The port's efforts to identify better ways of handling materials dredged from around its docks and piers and from the Willamette River navigation channel is subject to two virtually identical, essentially independent environmental analyses, one by the State of Oregon and another by the Corps of Engineers. Avoiding duplication by allowing the Corps of Engineers to rely upon the State analysis could save considerable money for both the port and the Corps and expedite this project. The port is currently planning further development and expansion at the Portland International Airport, the port's marine terminals, and several port-owned general aviation airports, all of which contain wetland areas. These activities could be facilitated, without diminishing environmental protections, if the State of Oregon's extensive process for addressing the environmental impacts associated with wetlands could be relied upon by the appropriate Federal agencies. Under my legislation, Federal agencies would have to incorporate, as part of the reviews they require, any relevant reviews and analyses already conducted under State and local programs. This would save the project sponsors considerable time and expense compared to starting the Federal reviews essentially from scratch. The net effect of this provision is that Federal development projects reviewed and approved under good State and local programs can avoid redundant Federal reviews that increase costs and cause delays with no environmental benefits. If environmental safeguards are already in place under State law, these protections should be recognized when it comes time to develop federally supported projects in the State. Second, States and localities with good growth management programs will be eligible for extensions of up to 1 year to comply with new Federal requirements, when this additional time is needed to integrate a new Federal requirement with the State or local growth management program. However, additional time would not be provided if an extension of time would adversely affect public health or the environment. This incentive recognizes that good growth management programs offer a more comprehensive and more long-term approach to protecting our environment than many of the specific requirements imposed by Federal environmental programs. At the same time, coordinating Federal requirements with State and local programs is hard work, as two leading growth management experts point out in their recent book ``Land Use in America.'' For this reason, we should give those States and localities that are undertaking this difficult, but ultimately rewarding effort the extra time they need to do it right. The same amount of additional time granted to the State or locality would also be provided to any private party in that jurisdiction who is subject to a compliance deadline under the new Federal requirement, unless this would adversely affect public health or the environment. While States and localities are working to meld their programs with Federal requirements, private parties should not be subject to double jeopardy by having to comply first with a Federal requirement and then subsequently with a different requirement after the State or locality modifies its program to meet the new Federal mandate. Third, Federal agencies conducting development projects and other activities affecting growth must ensure that their activities are consistent with States' and localities' growth management programs. This provision, which is modeled on a similar consistency requirement in the Coastal Zone Management Act, empowers States and localities by giving them the ability to affect Federal activities that could undermine State and local efforts to manage growth locally. Fourth, my legislation amends the Intermodal Surface Transportation Efficiency Act [ISTEA] to give priority for discretionary spending under ISTEA to any State or locality that has a growth management program that meets the eligibility criteria set out in the bill. Giving States and localities with good growth management programs priority for ISTEA funding will not only provide a financial incentive to establish these programs, it will also help reduce Federal, State, and local transportation costs and even help reduce air pollution from motor vehicles. The legislation I am introducing is the beginning and not the end of a process. It is my hope that the Local Growth Management Incentives Act will begin a discussion on what the Federal Government should be doing to address the impacts Federal actions have on growth and land use. In the next Congress, I will be looking for additional incentives to offer States and localities so they will develop their own programs to manage growth. In summary, I think there is an appropriate role for the Federal Government to help States and localities to manage growth so we have smart growth, instead of either uncontrolled sprawl or NIMBY [Not In My Back Yard] efforts to block any kind of growth. I am introducing my legislation today in an effort to jumpstart a dialog on how the Federal Government can promote well-managed, sustainable growth that will best serve our environment, our citizens' health and, our Nation's economic well-being in the 21st century.