Medicare Prescription Drug, Improvement, and Modernization Act of 2003-Conference Report-Continued

MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 2003-CONFERENCE REPORT-CONTINUED

Mr. GRASSLEY. Mr. President, I think the place for me to start is where the Senator from California left off; that is, the impression that is left that this bill is going to confuse the seniors of America, and almost that the purpose of it might be to confuse seniors.

But let me make very clear to all the seniors who are listening, and everybody else who is listening, one of the keystones of this legislation is to say to the seniors of America: If you do not want to do anything, if you do not want anything to do with this, you do not have to have it. This is strictly voluntary.

For any senior in Iowa or California who comes to their respective Members of Congress and says: Congressman so and so, or Senator so and so, just leave my Medicare alone; I am satisfied, each of us can say to them: If you do not want to worry about all this that we are talking about-prescription drugs or anything new about Medicare-you do not have to because you can keep traditional Medicare as you have known it for the last 35 years. Just keep it as is, if you are satisfied with it.

But for those who might not be satisfied, we give them several options. They have a right to choose. They have a right to keep traditional Medicare with a prescription drug program that they can choose to go into, or they also have the right to choose a new Medicare-preferred provider organizations-that is very close to what baby boomers now have in the workplace. They can choose that with an integrated drug benefit plan.

So we are not trying to confuse anybody. We are trying to give seniors the right to choose. We are trying to give seniors who are totally satisfied with what they have right now an opportunity to just stay where they are right now. It is the right of seniors to choose.

I think I better be very clear because so much of the opposition to this bill today has come from the other side of the aisle, mostly Democratic Members of the Senate.

We are here today with a piece of legislation because over the years 2001 and 2002-after Senator Jeffords switched from being a Republican to being an independent and casting his lot with the Democrats, so they were a majority during the remainder of 2001 and all of 2002-there was an effort early on to develop a bipartisan approach to a drug benefit during the last Congress.

When that was developing, there was a fear that there might be a bipartisan bill reported out of the Senate Finance Committee, a year ago, and the then-majority leader, now the minority leader, Senator Daschle, decided that this was an issue that ought to be brought to the Senate floor, not worked out in committee.

Remember, you develop bipartisanship in the Senate in the committee. You do not do it very often here on the floor of the Senate. You build coalitions.

Remember, nothing gets done in the Senate that is not bipartisan-unlike the House of Representatives, where partisan things can be done-because, remember, the Senate of the United States is that only institution in our political system where minority rights are protected.

So a year ago, the then-majority party decided that this ought to be debated on the floor. But they also knew that it would be impossible to get the bipartisan majority that it takes to get things done. They gambled that they needed an issue for the last election rather than a product. They gambled on an issue that we would not do anything last year, and the way they maneuvered this, nothing was done because nothing in a partisan way, even by majority Democrats, can be produced out of this body that is not somewhat bipartisan.

Then there was an election, and they found out that issue did not work for them; that Republicans were put in a majority. This gave, in this new majority, in this new Congress, Senator Baucus and I, the top Democrat and the top Republican on the committee, an opportunity to do our magic and put together a bipartisan bill. That bill came to the Senate floor and was passed 76 to 21. It went to conference, and came out of conference in a bipartisan way. And we are here because the majority Republicans and some sensible Democrats want to produce a product and not have an issue for the next election. I happen to think, from the comments I have heard today-all the fault that can be found with this bipartisan product-that there are still too many people on the other side of the aisle who have not learned a lesson: No. 1, how do you get anything done in the Senate? It has to be bipartisan. And, No. 2, they did not learn from the mistakes of the last election when they thought they needed an issue. Do they think if it did not work in 2002, it is going to work in 2004?

So that is why we are where we are because there are Democrats who know that you do not get anything done in the Senate if there is not a bipartisan coalition. There are Republicans who have understood that for a long period of time.

So that is background to what I want to tell the people of America and my colleagues about why this bill should be adopted. During this process, I am going to correct some of the statements made by my colleagues so far today.

I want to correct what my colleague from Iowa said earlier about this bill's impact on rural America and on our State of Iowa in particular.

The rural health provisions of this bill go further and wider than any other legislation that this Congress has ever considered. It enjoys the strong support of the Nation's doctors and hospitals, and it is also strongly endorsed by the Iowa Medical Society and by the Iowa Hospital Association, two of the strongest advocates for rural equity in my State and my colleague's State.

I will read an excerpt from each and then ask unanimous consent that both letters be printed in the RECORD.

This is from the Iowa Medical Society president, Tom Evans, M.D.: "[P]assage of the bill," meaning the bill before us, "is critical for rural states like Iowa." "He said: "In addition to providing seniors with prescription drug coverage"-and I want to emphasize this part of his statement-"this legislation fixes many of the reimbursement issues that have unfairly penalized rural States. Congress must pass this legislation before the Thanksgiving [Day] recess."

Now, I go to the Iowa Hospital Association, which in 2001 circulated statistics, already referred to, showing Iowa in last place in per-beneficiary spending. The Iowa Hospital Association: "The Iowa Hospital Association strongly endorses passage of this legislation." "In an evaluation of the per-beneficiary increase, this legislation provides Iowa hospitals with the second largest percentage increase per Medicare beneficiary of any state in the Union. This amounts to a per-beneficiary increase of $583, which is the thirteenth highest increase of any state in the Union.

Mr. President, beyond those quotes, I could give a lot of evidence, but I think those quotes speak volumes about our rural package. That package in this legislation speaks for itself. It brings real improvements and equitable payments to hospitals and doctors in Iowa and way beyond.

I ask unanimous consent to have these letters printed in the RECORD.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

IOWA HOSPITAL ASSOCIATION
Des Moines, IA, Nov. 20, 2003.

Hon. CHARLES GRASSLEY,
U.S. Senator, Hart Senate Office Building Washington, DC.

DEAR SENATOR GRASSLEY: Congratulations in reaching an agreement on a conference report that directly and significantly impacts the issue of equity and fairness for hospitals and physicians in rural America and particularly for Iowa. Just this morning, the entire Iowa Hospital Association Board was briefed on the impact of your Medicare legislation and on a unanimous vote endorsed the pending legislation.

In an evaluation of the per-beneficiary increase, this legislation provides Iowa hospitals with the second largest percentage increase per Medicare beneficiary of any state in the Union. This amounts to a per-beneficiary increase of $583, which is the thirteenth highest increase of any state in the Union.

The Iowa Hospital Association strongly endorses passage of this legislation and will today ask its entire membership to weigh-in on behalf of the legislation with the entire congressional delegation of Iowa in an effort to support your work to achieve passage of this legislation before the Thanksgiving holiday. It is our hope that when Congress completes its work and you return to Iowa for the holidays, that all Iowa providers will have an opportunity to congratulate you for successful passage of this historic legislation.

Sincerely,

Kimberly A. Russel,
IHA Board Chair.

Kirk Norris,
President/CEO

IOWA MEDICAL SOCIETY STRONGLY SUPPORTS PASSAGE OF MEDICARE REFORM LEGISLATION

The Iowa Medical Society (IMS) announced today its strong support for the Medicare Prescription Drug and Modernization Act of 2003 conference report.

IMS President Tom Evans, MD, said passage of the bill is critical for rural states like Iowa. "In addition to providing seniors with prescription drug coverage, this legislation fixes many of the reimbursement issues that have unfairly penalized rural states," he said. "Congress must pass this legislation before the Thanksgiving recess."

Evans said the bill protects Iowans' access to physicians by replacing a 4.5 percent payment cut scheduled for 2004 with two years of modest payment increases. The bill also fixes a component of the reimbursement formula that deals with geographic practice cost adjustors that causes huge reimbursement swings from state to state.

"If this legislation isn't passed, the American Medical Association estimates that a 4.5 percent cut in reimbursement will take $30 million away from Iowa's health care system in 2004," he said. "Now add to this the fact that Iowa already receives among the lowest payment rates in the country, and you can see how Medicare is threatening our ability to care for our patients."

Evans also thanked Senator Charles Grassley for his work on this bill as Chair of the Senate Finance Committee, and he urged Iowa Senator Tom Harkin and Iowa's Congressional Representatives to support the Medicare conference report.

The Iowa Medical Society is the professional association representing over 4,600 MDs and DOs. The IMS core purpose is to assure the highest quality health care in Iowa through its role as physician and patient advocate.

Mr. GRASSLEY. Now let me speak to what this bill does for Iowa's seniors. The bipartisan agreement provides all of the 485,042 beneficiaries in Iowa with access to Medicare prescription drug benefits, as I have stated previously, on a voluntary basis. It does it for the first time in the history of the Medicare Program. That begins January 2006. Beginning in 2006, the bipartisan agreement will give 142,297 Medicare beneficiaries in Iowa access to drug coverage they would not otherwise have and will improve coverage for many more.

Within 6 months after this bill is signed-in other words, during the year 2004-Iowa residents will be immediately eligible for Medicare approved prescription drug discount cards which will provide them with savings between 10 percent and 25 percent off the retail price of most drugs. Beneficiaries with incomes of less than $12,123, or $16,362 for couples, who lack prescription drug coverage, including drug coverage under Medicaid, will get up to $600 in annual assistance to help them afford their medicine along with a discount card. That is a total of $100,840,345 in additional help for 84,034 Iowa residents during these years of 2004 and 2005, as this interim program is in place, helping Medicare recipients with drugs until we get the permanent program put in place. Then beginning in the year 2006, all 485,042 Medicare beneficiaries living in Iowa will be eligible to get prescription drug coverage through a Medicare approved plan.

In exchange for a monthly premium of about $35, seniors who are now paying the full retail price for prescription drugs will be able to cut their drug costs roughly in half. In many cases, they will save more than 50 percent on what they pay for their prescription medicines. One hundred thirty-three thousand beneficiaries in Iowa who have limited savings and low incomes-and this would generally be those below $12,000 for individuals and $16,000 for couples-will qualify for even more generous coverage. They will pay no premiums for their prescription drug coverage, and they will be responsible for a nominal copayment. That copayment would be no more than $2 for generic drugs and $5 for brand name drugs.

We have 41,300 additional low-income beneficiaries in Iowa with limited savings, and incomes below $13,500 for individuals and $18,000 for couples, qualifying for reduced premiums and a reduced deductible of $50 and a Medicare that will cover 85 percent of their prescription drug costs with no gap in coverage.

Additionally, Medicare, instead of Medicaid, will now assume the prescription drug cost of 50,000 Iowa beneficiaries who are eligible for both Medicare and Medicaid. These seniors generally will pay $1 and $3 per prescription and those in nursing homes will pay zero dollars for their prescriptions. This will save Iowa $175 million over 8 years on prescription drug coverage for its Medicaid populations.

I have tried to address for my colleagues, but particularly for my residents and constituents in Iowa, how this program will impact them as individual beneficiaries of the prescription drug part of our bill. And I have tried to inform my colleagues and my residents of Iowa how the rural equity package will help provide quality care for Iowans because we are increasing the reimbursement for our hospitals and for our doctors in rural America.

Now I will address several of the most egregious misconceptions about the bill that have been spoken on the floor of the Senate today. First, I will address the issue of protecting retiree drug coverage. This would be those people who have, for the most part, coverage from places where they used to work that also continue to cover people with health benefits and prescription drugs after they leave employment.

During the debate on S. 1, when this bill passed the Senate the first time in June of this year, it passed by a 76-to-21 bipartisan vote. At that time, even though we had that high bipartisan majority, my colleagues raised concerns about what they referred to as the high level of employers that would drop their retiree prescription drug coverage should we enact the prescription drug benefit into the Medicare Program.

At that time, the Congressional Budget Office told us that 37 percent of the seniors who have drug coverage-that is roughly one-third of the seniors under Medicare-would lose that coverage if we passed the bill. I think I ought to say that there was another group, the Employer Benefit Association, that studied the same issue and said it would be 3 percent to 9 percent who would lose coverage. So we probably have an intellectually honest difference of opinion by the Congressional Budget Office on the one hand and the Employer Benefit Association on the other hand. But we in the Congress are stuck, as we determine the cost of programs, with what the Congressional Budget Office says. We would rather-and it would be easier-if we could just go by what the Employer Benefit Association says, but we go by CBO because they are God when it comes to saying what something costs. So we had to live with that 37 percent.

Well, as we all know, however, employers have been dropping or reducing prescription drug coverage for many years. So this is really nothing new. If we were not even talking about this bill today, some board of directors of some corporation in America could come to the conclusion that they couldn't afford to cover their retirees anymore and drop them. What could Congress do about that? Nothing. But it is nice to have a program when that happens for people to fall back on. That is one of the reasons for this legislation.

Of course, we want to take care that we can do everything possible to make sure that corporation X doesn't do that. In just the past 2 years, retiree health care coverage has dropped by 22 percent. That was with this Congress not doing anything, not considering this legislation.

We know these days employers are finding it harder and harder to continue to voluntarily provide health insurance coverage. That is due to a lot of factors, including rising health care costs overall. Now, as we were in conference between the House and the Senate, we took this marketplace dynamic of company XYZ, ABC, or whatever corporation-that they could do this. This is a dynamic we had to take very seriously. So we went to great lengths to improve employer participation in drug benefits to keep employers in the game; to keep their retirees covered, as retirees would expect to be covered, but sometimes they are surprised when they are not.

Our conference report reflects this. It includes remarkably better policies for employers than those that were in either the bill that passed in the Senate 76 to 21 or that passed the House in June as well. So I am saying to you we brought back a conference report that was better in regard to employee-retiree coverage than either passed the Senate or the House in the first place.

So what happens when we do that good work? The policies in this conference report have led to major corporate plans endorsing our conference report. So the people on the other side of the aisle, with their charts, who are saying bad damage is being done by this legislation, what would they have us do? Pass nothing? If corporation X decides to drop, and there is nothing there for their employees, do you think those same people are better off if Congress does zilch? Where were they when they voted in the first place, complaining about S. 1 or H. 1, the House bill, when we passed them in June?

Here we are bringing back a conference report that is being endorsed by these corporate plans. Doesn't that mean anything to any of you? Under this conference report, employers will be given an enormous amount of flexibility and options-employers that already provide retiree benefits beyond Medicare coverage. This legislation will help make it more affordable for these employers to continue providing these benefits. We do that by a direct subsidy worth 28 percent of their drug spending between deductibles and the coverage gap.

I should add, too, this conference report makes this 28 percent completely excludable from taxation, so that instead of doing 65 percent good because of a 35 percent tax bracket that corporations are in, it does 100 percent good, bringing down the number of people who might lose coverage.

Now, some people would say, what is this corporate welfare all about-Congress giving money to corporations to do something they have been doing forever. Some people might say, well, when you buy a Chevrolet, you pay for these retirement plans. How many times do you have to pay for them? You pay for them when you buy a car and when you pay a 28 percent subsidy. We are cautious about the fact that some do that.

So I tell my colleagues over there-each of them who are complaining about this-this 28 percent subsidy is something you ought to be glad to have. Sometimes when we give corporations something, you condemn us for giving corporations something; but you cry when we do it and you cry when we don't do it because they might dump their retirees. In the final analysis, we are also doing it to protect the taxpayers and the Medicare Program because it is better to encourage these employers to keep their retirees in these plans at a 28 percent subsidy, which is about $750 per person, instead of having those corporations dump those plans on the Medicare Program, and it is going to cost about $1,250. So that is why we do that.

Now, besides this 28 percent help, we also say that employers can use the flexibility this legislation provides to structure plans that complement Medicare's new drug benefits and provide them even enhanced benefits for their retirees. They can even do better than they are presently doing because of this flexibility we have in the legislation.

These new choices and options will do much more to help and, consequently, not threaten employer-sponsored health care coverage for those who currently receive it.

In fact, the Congressional Budget Office now estimates that the so-called drop rate-in other words, the rate by which corporations will drop their retirees-is now 17 percent because of the changes that were made in conference. In other words, we listened to our colleagues over there complain about a 37 percent potential drop rate because of the way S. 1 was written. But it goes to conference and it comes back from conference with, instead of 37 percent, 17 percent, and you folks are still complaining. I don't understand it. And these 2.7 million retirees will still be better off with Medicare coverage, likely paid for by their former employees. In other words, the 2.7 million people who would have been dropped, according to CBO, because of what we did in the conference-that is better than either bill when first passed in June; 2.7 million people are still going to be in their corporate retiree plan.

So I say to my colleagues-I hope you hear this-we have come a long way since June, when 76 people, in a bipartisan way, voted for this. Half of you over there voted for it. I believe company plans have a lot to be happy about under this conference agreement.

All seniors deserve health care benefits. All seniors deserve access to prescription drug programs. This compromise between the House and Senate provides that, and it makes certain that good sources of existing coverage remain intact. I urge my colleagues to embrace the strong employer provisions we have agreed to and vote for this conference report.

We have also heard from a lot of them over there that somehow we are trying to privatize Medicare. How many times do I have to say it? This program is voluntary. Nobody has to go into anything in this bill if they don't want to. If they want to keep traditional Medicare, keep it. But this issue has been brought up. Do you know why? Because these folks over there, my colleagues over there-every one of them-like to scare seniors. You know, it is called Medicare, but you like to make Medicare into "medi-scare."

You know, it is easy to scare seniors. I have my town meetings around Iowa. I hold town meetings in each of the 99 counties every year so I can keep in touch with my constituents. There are people-the older, the more so-but seniors come up to me and they actually believe what is said on that side of the aisle when people say somebody is going to take their Medicare away from them. They believe that "medi-scare."

They are really nervous. Some of them even have tears in their eyes. I tell them, if you just knew as seniors how you have a hook on Congress, that Congress is scared to death of you, you would be laughing at me instead of being scared of something we might do. That is how the concerns of the seniors of America are taken into consideration by people in the Congress of the United States.

Maybe we ought to have a little more of an independent view than be so concerned about the electoral power of the seniors, but they have tremendous influence on Congress. Maybe some people say too much influence. Regardless, it is wrong for people over here to "medi-scare" our seniors.

I wish to address this issue of privatization, but the easiest answer is that if you are satisfied with what you have-traditional Medicare-don't worry. Also, if you like other provisions in this bill, they are voluntary. You don't have to do them.

This bill before us today brings Medicare into the 21st century practice of medicine. It does not privatize traditional fee-for-service Medicare. Overall, this conference agreement relies on the best of the private sector to deliver drug coverage, supported by the best of the public sector to secure consumer protections and important patients' rights. This combination of public and private resources is what stabilizes the benefits and helps keep costs down.

Seniors will be able to purchase prescription drug coverage on a voluntary basis as part of Medicare's traditional fee-for-service program or be part of a new Medicare-approved private plan where the drug benefit is integrated into broader medical coverage. These Medicare-approved plans have the advantage of offering the same benefits of traditional Medicare, including prescription drugs, but on an integrated, coordinated basis. This creates new opportunities for chronic disease management and access to innovative new therapies.

Let me comment on chronic disease management. That is very important if we are going to keep costs down in the future. We won't have to squeeze seniors at all. In fact, seniors will have a better quality of life under chronic disease management because 5 percent of the seniors are responsible for 50 percent of the cost of Medicare. The reason for that is that we only pay doctors to make people well after they get sick. We never pay enough to keep them well in the first place.

We can concentrate on this 5 percent in chronic disease management, and by so doing, we are going to provide a better quality of life because they will not be in and out of the hospital as much, and we save money there. But also their quality of life is going to be better, and it protects the taxpayers in the process and preserves the longevity of Medicare.

Unlike Medicare+Choice, we set up a regional system where plans will bid in a way that doesn't allow them to choose the most profitable cities and towns. Cherry-picking cannot take place. Systems like this work well for Federal employees, such as the postmaster in New Hartford, IA, my hometown. He has a choice of several plans. We want to give that same choice to his parents who today only have traditional Medicare. They have no right to choose.

We provide an alternative plan for people who want to try something new, something that is probably close to what baby boomers have for health plans where they work. We have set up preferred-provider organizations. Are they right for everyone? We give seniors the right to choose. Our bill sets up a playing field for preferred-provider organizations to compete for beneficiaries. We believe preferred-provider organizations can be competitive and offer a stronger, more enhanced benefit than traditional Medicare, assuming seniors want to choose that. They have that choice.

Let me be clear, no senior has to go into a preferred-provider organization. My policy has always been to let seniors keep what they have if they like it with no changes. All seniors, regardless of whether they choose a PPO or not, can still choose prescription drug coverage if they want to, to go along with their traditional Medicare, but it is their right to choose.

I can't mention preferred-provider organizations without correcting the record regarding the preferred-provider organization stabilization fund that the other side has called a slush fund. It is no slush fund. It is something that those of us who live in rural America know we have to have. We learned a lesson from Medicare+Choice because in 1997, I worked hard to bring greater reimbursement to rural America through Medicare+Choice so that people in Iowa would have the same options that 40 percent of the people in Miami have chosen: to go into an HMO. It is a voluntary choice. If they don't like it, they can get out tomorrow. Get in today; get out tomorrow. In rural America, we enhanced greatly the reimbursement for them, but they have not come because of cherry-picking.

We want the preferred provider organizations to serve all of America, rural as well as urban. The stabilization fund is so those of us in rural America have an opportunity to get the same benefits as people in New York City or Los Angeles or Miami.

The bipartisan agreement on a final Medicare bill establishes this stabilization fund. It was not in the Senate bill. Some people say the Kyl provisions were similar to that, but Senator Kyl will tell you he had a whole different idea in mind. His idea is not even in this bill, but we did take a stabilization fund to accomplish something he wants to accomplish. He wants his entire State of Arizona to be served by PPOs, not just Phoenix. We did this in an effort to expand access to private health plans in all areas of the country and, additionally, to maintain existing health care choices in areas where health plans face particularly difficult challenges.

My colleagues on the other side who find fault with this conference report are always talking about this slush fund as benefiting some organization's profit motive.

Every one of them has rural areas. My colleagues ought to want the people in the rural parts of their State to be served the same way as people in the urban parts of the State.

The reality is that this is not a slush fund, but it is to help beneficiaries have equal services, whether they live in rural America or urban America, and that will be helped by this stabilization fund. It is targeted and its plans are held accountable. Resources will be distributed from the stabilization fund only when specific conditions are met. Moreover, in instances where these conditions are met, then health plans will be accountable for using these funds only to promote affordable health coverage to beneficiaries, not for profit. Under no circumstances will plans then be permitted to use these funds to pad their bottom line.

It expands choices and ensures access in rural areas. The fund is designed to expand and preserve beneficiary choices and benefits in areas where it is most difficult to provide private health plans and to get them to participate in this program.

The stabilization fund will ensure that millions of additional beneficiaries, including many in rural areas, will have access to health plans offering high quality, comprehensive benefits, and low out-of-pocket costs. If the stabilization fund is not successful, the worst case scenario is that the funds will be returned to the U.S. Treasury.

Now I will speak about the accurate explanation of how this bill helps low-income seniors. We did something in the conference report that the House did so the Senate receded to the House on this point, and that is where we in the Senate decided to leave dual eligibles who were covered by Medicaid. That is the way it passed the Senate. The House wanted to have one program for seniors, a totally Federal program, so dual eligibles in the House bill were taken away from Medicaid and put in Medicare. We accepted what the House wanted to do, as a matter of equality I suppose. We had other motivations for doing it in the Senate.

In fact, most of the support for doing that-that was one of the shortcomings that Democrats said about the Senate bill in June. Now we are hearing complaints from them about aspects of this dual eligible, how it impacts seniors, particularly on asset tests. That is one of the reasons we tried to avoid putting dual eligibles under Medicare in the Senate bill, because we wanted asset tests to be the same for this group. Now they are complaining, I think inaccurately, which I will prove in a minute, about it negatively impacting people with less coverage than they presently have.

We have heard from the other side how 6 million low-income eligible seniors will be worse off under this conference report. That is inaccurate. It is a lot of talk, and I want to tell the American public the truth about this issue. Beneficiaries are not hurt by this bill. They are helped. This bill provides generous predictable coverage to 6.4 million dual eligibles, but it does not stop there. It provides coverage to an additional 7.7 million low-income seniors. Madam President, 14.1 million seniors are eligible for low-income subsidy, nearly 36 percent of Medicare beneficiaries.

So who are these dual eligibles? They are the 6.4 million who are enrolled in both Medicare and Medicaid.

This conference report for the first time provides drugs to dual eligibles through Medicare rather than Medicaid. This is a great help for the States that have budget problems, and Medicaid is a growing, biggest part of State budgets.

As I said, the Senate bill left dual eligibles in Medicaid. That policy allowed the Senate to provide generous coverage for low-income seniors. S. 1 focused on providing drug coverage to seniors who did not have any coverage whatsoever, and duals did have that coverage. So in the spirit of compromise, the Senate conferees changed the policy in the Senate bill.

The conference report provides prescription drugs for dual eligibles through Medicare. It is not exactly the same, but in general policy it is the same way they were treated in the House bill. Providing drugs for dual eligibles through Medicare was a cornerstone issue for House conferees.

The conference report covers duals in the Medicare Program. The coverage is designed to benefit as many low-income seniors, including duly eligibles, as possible, given the budget constraints of $400 billion in our budget.

This bill comes out at about $395 billion. Blanket statements about the reduction of benefits for the dual eligibles in the conference report are not accurate. We have heard some of those inaccurate statements this Saturday as we have debated this bill. This bill is generous and does not leave 6.4 million seniors worse off. I will bet tomorrow those over on the other side will be putting those signs up again that say that. Well, don't do it.

For instance, unlike the Senate bill or the current Medicaid Program, the conference agreement does not have cost sharing above the catastrophic limits for the dual eligibles. That is right. There is no cost sharing. I hope my colleagues on the other side get that.

I will put this in perspective, then, from the State level. According to the Kaiser Family Foundation, the Commonwealth of Massachusetts currently charges $2 for every prescription filled by dual eligibles. There is no catastrophic limit for duals in that Medicaid Program in that State, just a requirement for beneficiaries to pay $2 for every single prescription.

Like many Medicaid Programs, this bill establishes copayments for a majority of the dual eligibles who are either equal to or less than those required by most State Medicaid Programs. So let's get that straight. These copayments are no more than, and in some cases less than, those required in most State Medicaid Programs.

More specifically, today 25 States have copayment levels for generic and brand-name drugs set at $1 or higher for dual eligibles enrolled in their Medicaid Programs. In this conference agreement, dual eligibles with incomes below 100 percent of poverty will be responsible only for a copayment between $1 and $3 for their Medicare drug benefit. Taking a step back, it seems to me that this level of cost sharing is very similar to what the duals pay for in Medicaid coverage.

In fact, in South Dakota, duals pay $2 per prescription. That policy is on par with the coverage offered through this bill. This conference report contains a generous drug benefit, then, for dual eligibles. There is no donut, or no loss of coverage, no gap in coverage, for low-income Medicare beneficiaries. But my colleagues on the other side would lead us to believe otherwise.

The bill guarantees all 6 million dual eligibles access to prescription drugs. Under the conference report, dual eligibles will have better access through Medicare than they do today, specially since State Medicaid Programs are increasingly imposing restrictions on patients' access to drugs because of budget problems that 45 of our 50 States have.

Further, States have the flexibility to provide coverage for classes of drugs, including over-the-counter medicines that might not even be covered by the Medicare Program.

This bill ensures appeal rights for dual eligibles. Under the agreement, duals will maintain appeal rights, such as those that they presently have in the Medicaid Program. The dual eligibles are a fragile population and are well taken care of in this bill. The conference report recognizes and provides generous coverage to these 6 million beneficiaries and in fact goes further by providing full drug coverage to 7.7 million more low-income seniors.

So I turn now to highlighting what this bill does to protect Medicare in the long run. I have heard some Members trying to assert that this $400 billion expansion of one of the most successful social programs in our country's history is going to destroy traditional Medicare; you have said it, "Medicare as we know it." That is another one of your "medi-scare" tactics.

I know Members are tired. I know we are nearing the closing of our first session of the 108th Congress. Many Members are using these wornout lines because they would rather not take a serious look at the bipartisan Medicare agreement we put together and really assess whether or not those scare tactics are true. I am here to tell all my colleagues and the people of this country that the allegations that this Medicare bill destroys traditional Medicare are falsehoods.

This Medicare bill strengthens and improves traditional Medicare in a number of ways. We are not talking about just Medicare as it has been for the last 38 years. We are talking about some improvements we made in traditional Medicare that seniors will have the choice, the right to choose to stay in if they want to. I will discuss just three.

First, we add new preventive program benefits. For the first time ever, every new Medicare enrollee will receive a "Welcome To Medicare" physical; they go to the doctor when they go into Medicare, get a benchmark physical. Hopefully, nothing is wrong. But if something is wrong, we know about it right away and it is part of our effort to see that we zero in on keeping people well, as opposed to waiting until they get sick and it costs a heck of a lot more. It is part of our program, of a quality of life for our seniors. It is part of our program of zeroing in on the 5 percent of the people who, because of not having chronic care management, are costing us 50 percent of the total costs.

Seniors are going to have physicals that will help them-maybe their lifestyle, like getting their weight checked, but more seriously, the heart; receive cancer, diabetes, and bone mass screenings. It is very important to have an initial physical because, as we say in Iowa, an ounce of prevention is worth a pound of cure.

Consider these statistics. In 2000, 6.2 percent of the U.S. population had diabetes. Heart disease and stroke are the first and third leading causes of death in the United States. In 2003, 1.1 million Americans will have a heart attack. Diabetes, heart disease, and other chronic conditions exact an awful toll on our seniors. By getting an initial physical, seniors can get valuable information on their health status. They can enroll in weight loss programs, start a blood pressure medicine, or know whom to call if something goes wrong.

We have also eliminated the deductibles and the copays on screening tests for heart disease and diabetes, so beneficiaries do not incur any costs. There is an extent to which that cost today may inhibit them or divert them from having needed tests, so this is an additional incentive, particularly for those with limited resources who might not otherwise access these benefits. Adding preventive benefits is just one way we have improved traditional Medicare.

A second way we have improved the fee-for-service program is by providing access to disease management. It is a common option available to younger people in health insurance. If you have a chronic health condition such as heart disease, diabetes, asthma, you can get extra help managing your condition. You may be taking a lot of medications and seeing several doctors. Disease management programs help patients take responsibility for their health care and better control of their lives, but they also involve health professionals in that process, to aid you.

When this Medicare bill becomes law, seniors with access will have access to these services. It will be a voluntary program and one that will improve the quality of life for millions of Medicare beneficiaries.

Another improvement is this bill provides an additional $25 billion for rural health care providers. That is new money to strengthen our Nation's hospitals, physicians, ambulance riders, and dialysis clinics, just to name a few. This is the biggest funding boost Congress has ever passed for our rural health care system. This is going to help fee-for-service, traditional Medicare because in some places in this country there is not an adequate number of health care providers. Providers in rural States such as mine, Iowa, practice some of the lowest cost medicine in the country. Yet health care providers in rural areas lose money on every Medicare patient they see. This Medicare bill takes historic steps toward correcting geographic disparities that penalize rural health care providers.

So when I hear people in Washington say this bill is going to destroy traditional Medicare, I suggest that each of them take a closer look at this legislation. Providing new preventive benefits, allowing seniors to access state-of-the-art disease management programs, and mending the rural health care safety net will help millions of seniors with these three important ways we are strengthening Medicare.

I would like to turn now to a subject that is important to me, to the taxpayers, and to the seniors, and that is the issue of curbing waste, fraud, and abuse. You just read in your news releases from HHS, $11.5 billion of waste, fraud, and abuse within health care. If we can save that money, we are going to make Medicare strong for a long time in the future.

When it comes to reimbursements for many of the items and services that Medicare covers, the price, historically speaking, has not been right. That goes, for instance, for doctors and hospitals in rural areas who are paid too little, and some drugmakers and equipment suppliers, to name a few, who are paid too much.

This conference agreement makes great strides toward correcting both the underpayment and the overpayment that plague the Medicare Program. I have already talked about the underpayments to rural States such as Iowa and how this bill corrects that through the $25 billion of new money we are injecting into making Medicare reimbursements equitable.

But I want to talk now about just the opposite. There are overpayments in Medicare. Overpayments eat away at Medicare's reserves, eating away at its solvency slowly, like a cancer. Overpayments are bad for taxpayers, they are bad for beneficiaries, both of whom deserve to pay a fair price. In certain areas of Medicare, in many payment systems there are few fair prices.

Fee schedules pay too much, providers play games with complex rules and regulations, and beneficiaries pay a higher copay as a result. The sad fact is that Medicare's price is often far higher than the marketplace price. This conference agreement begins to change that in significant ways.

My colleagues should read title III of the conference report, and that is entitled, "Combating Waste, Fraud, and Abuse."

Our bipartisan initiative in this bill will end overpayments, reduce fraud, and cut down on opportunities for abuse to the tune of $31.3 billion as scored by the Congressional Budget Office. That is significant.

These measures in this bill directly reduce Medicare's spending on overpriced, wasteful, fraudulent items, and services to the tune of $31.3 billion over 10 years.

Throughout my time in Congress, I have worked hard to combat fraud and waste in Federal programs. In 1986, I successfully passed False Claims Act improvements that give whistleblowers new rights and protections under Federal law. In just the last year alone, civil fraud recoveries have tallied a record $2.1 billion, the Justice Department announced just last week. This is a 75-percent increase over the prior years' recoveries of $1.1 billion, and brings total recoveries to over $12 billion since I got that bill passed. Of the $2.1 billion, $1.4 billion is associated with suits initiated by whistleblowers.

While the False Claims Act is one of our best weapons in the war on fraud and abuse, our policies in this new language of the title III conference agreement adds still more weapons to our arsenal.

First, we make important technical clarifications to existing law that strengthen and improve what is known as the secondary payer statute. The purpose of the statute is to ensure that Medicare pays first for seniors' medical needs when other sources should be, in fact, paying instead of the taxpayer paying.

These other sources include, for instance, employer coverage. In addition, when a Medicare beneficiary is injured by wrongful conduct of another entity, that entity's liability insurance or the entity itself, if it has no insurance, or it might be self-insured, is always required to pay first instead of having the taxpayers pay. The provisions in title III do not change existing law in this area but, in fact, clarify the intent of Congress in protecting Medicare's resources.

According to the Congressional Budget Office, these clarifications alone promise to restore Medicare over $9 billion out of that $31 billion.

Second, we change the way Medicare pays for durable medical equipment, first by slowing the spending growth in these areas for 3 years, and then by instituting a competitive mechanism that will deliver a fair market price for seniors.

While I have concerns about the impact of such a new system on very many small businesses across America, the supply of high-quality equipment especially in rural areas, I am confident that good protections are in this conference agreement for small business and for our seniors as well.

The Congressional Budget Office estimates that these changes will save Medicare $6.8 billion out of that $31 billion.

Next, title III institutes what we call market pricing mechanisms for drugs administered in the doctors' offices that both the Office of Inspector General and the GAO have concluded are priced far higher than their actual costs.

In addition to the financial toll these overpayments take on the taxpayers, they also affect Medicare's beneficiaries who are often required to pay dramatically higher copayments for the drugs they rely on. In some instances, these copayments can even exceed the actual prices the doctors paid for the drug.

In recommendations to Congress, the GAO urged Medicare to take steps to begin paying doctors for Part B-covered drugs and related services at levels that reflect the doctor's actual acquisition costs-not some inflated cost. And they use information about actual market transactions prices to bring that about.

I am pleased that our conference agreement accomplishes this first by reducing the so-called average wholesale price by 10 percentage points, and then instituting a new payment system based on manufacturers' reported average sale price-or ASP reporting-which will be closely scrutinized by the inspector general on an ongoing basis ensuring its accuracy.

Errors or abuse of the system will be corrected swiftly so that Medicare will never again pay an unfair price.

These changes result in Medicare savings of approximately $11 billion out of that $31 billion total.

Finally, title III takes similar steps to correct overpayments for respiratory medicine which the Office of Inspector General has said are priced far in excess of their actual costs. These drugs will be reduced by 10 percentage points in 2004, and then priced on a similar average sale price system, as others I just mentioned, and that will begin in the year 2005.

The Congressional Budget Office says that this policy alone will save Medicare $4.2 billion of that $31 billion total.

I have listed three or four examples of how you save that $31 billion.

I believe all of these changes have been carried out in a compassionate fashion with twin goals of protecting both the Medicare Program's resources and our senior citizens' access to those services. We have done both.

Our market-based improvement Part B drug payments are accompanied by sweeping changes in payments for clinical services associated with delivering them.

We worked closely with oncologists to ensure that access to cancer care was not harmed.

Similarly, we went to great lengths to ensure that seniors who rely on medical equipment supplies will be able to rely on them as they do today.

Finally, to my colleagues who talk about cost containment and the need for Medicare to curtail its spending, I say this: It starts right here. Cost containment begins by ensuring that the costs to Medicare and to the taxpayers who finance it are, in fact, fair.

The conference agreement starts us down the road. The sum total of $31.3 billion of savings, and the market prices we are imposing on future spending in this area, are in my view, the most significant cost containment policies in this conference agreement.

In the months and years ahead as Medicare spending increases with the expansion of benefits that we are going to pass here shortly, our focus on cost containment will obviously increase. The best thing that Congress can do is to be vigilant. We all need to watch Medicare's outlays closely, and to listen to whistleblowers who are patriotic citizens telling us when there is fraud and crying for government to do something about it.

We also need to pay attention to other private individuals who have inside information on wrong doing. We need to heed the warnings of the Office of Inspector General, and, most of all, insist that Medicare never pay more than market price. Taxpayers, on the one hand, and the seniors' Medicare services, on the other hand, deserve nothing less.

I want to conclude by talking about the views of very many organizations that support the conference report.

Mr. GRASSLEY. Madam President, I want to quote from some.

As you know, I have a chart up here talking about the AARP. All of you colleagues on that side of the aisle have been saying to me all day how dastardly it is that the AARP is backing this legislation. Some Members have even spoken of them becoming a political organization. They cannot become a political organization or they will lose their tax-exempt status. But you accuse them of being a tax-exempt organization.

It is funny, last year when they did not come out for the bipartisan bill that several Members brought out, that the Democrat majority did not want to let pass because they wanted an issue in the last election instead of a product, the AARP was not backing what I, Senator Snowe, Senator Jeffords, Senator Breaux, and Senator Hatch wanted to do. Ours was a bipartisan effort, or a tripartisan effort, with Senator Jeffords being an Independent, to get a bill through because you cannot get through anything in this body if it is not bipartisan. The AARP did not like what we were doing. They did not discourage us but they did not help us. They actually sent letters out to support what Senator Kennedy was trying to do a year ago.

I did not accuse the AARP of being a tool of the Democrat Party like Members on the other side are accusing the AARP of being in bed with the Republicans. They are not in bed with the Republicans. They are in bed with a bipartisan group of this body who want to do something for seniors of America. It is funny how the AARP is OK when they are helping Senator Kennedy but they are not OK if they are helping a bipartisan group led by Senator Grassley and Senator Baucus.

I would say they are discretionary in what they do. They may not be consistent, but thank God they are not consistent because they would not be representing the diverse group they represent.

Here is what the AARP says in their endorsement:

AARP believes that millions of older Americans and their families will be helped by this legislation.

They continue:

This bill provides prescription drug coverage at little cost to those who need it most: People with low-incomes, including those who depend on Social Security for all or most of their income. It will provide substantial relief for those with very high drug costs and will provide modest relief for millions more.

The last sentences I will read:

An unprecedented $88 billion will encourage employers to maintain existing health retiree benefits. The legislation will help speed generic drugs to market and add important new preventive and chronic care management services. This legislation protects poor seniors from future soaring prescription drug costs.

All the Members complaining about the AARP, put that in your pipe and smoke it.

Then we have the National Council on the Aging:

. . . we find it too difficult to again say to millions of vulnerable seniors in need: Sorry, come back in a few years and maybe there will be some help for you then.

Another sentence:

We urge Congress to pass the Medicare bill so that millions of seniors with greater needs will receive long-awaited and badly-needed prescription drug coverage.

Are Members trying to tell me the National Council on the Aging does not know what is good for seniors when they see it? Put that in your pipe and smoke it.

The Alzheimer's Association says:

This is a historic accomplishment that may potentially provide meaningful relief to the 4.5 million Americans dealing with Alzheimer's disease-many of whom also suffer other health issues.

That is from Sheldon Goldberg, president and CEO of the Chicago-based national organization for the Alzheimer's Association.

Are Members telling me the Alzheimer's Association cannot make a judgment if this bill is good for their members? Go put that in your pipe and smoke it.

From the American Diabetes Association:

. . . contains important improvements to the Medicare Program that will benefit many people living with or at risk for diabetes.

. . . the prescription drug package assists seniors living with diabetes by providing coverage for insulin and syringes, a critical component for seniors that take insulin to manage their diabetes.

. . . the American Diabetes Association supports passage of-and strongly urges Congress to enact-the Medicare package as a way to improve the lives of millions of seniors living with diagnosed and undiagnosed diabetes.

Are Members trying to tell me the American Diabetes Association does not know a good piece of legislation when they see it? Put that in your pipe and smoke it.

We have a statement by Advancing Health in America, AHA, saying:

It provides prescription drug benefits to the elderly and provides needed Federal relief to hospitals, particularly rural hospitals.

The legislation includes important provisions that help patients by providing hospitals the resources necessary to continue caring for America's seniors.

Tell me an organization called Advancing Health in America does not know what is good for their Members.

From the American Medical Association:

Congress listens to America's patients and physicians who serve it.

The status quo is unacceptable to patients and their physicians. The Medicare conference agreement includes numerous provisions that will improve seniors' access to medical services.

Tell me the American Medical Association does not know what is good for their members or what is good for their members' patients.

The Arthritis Foundation says:

The Arthritis Foundation supports a Medicare Prescription Drug, Improvement, and Modernization Act for 2003 that for the first time would provide coverage for prescription drugs and biologicals for persons with arthritis.

Can Members tell me the Arthritis Foundation does not know what is good for their members, know a good piece of legislation when they see it?

We have the American Pharmacists Association:

. . . APhA supports this as an important, long-overdue step toward providing Medicare beneficiaries greater access to medications and critical pharmacist services.

The proposal creates a comprehensive benefit that provides coverage for drug products and pharmacist services, and provides seniors their choice of pharmacists and ensures any willing pharmacist can participate in a plan and incorporates important administrative efficiencies.

Those Members who oppose this bill, are you trying to tell the people of America that the American Pharmacists Association does not know a good piece of legislation when they see it and that they cannot speak for not only their membership but also their patients and clients they serve?

From the College of American Pathologists:

This legislation will improve Medicare coverage for seniors and protect access to the physicians and services upon which they rely for quality of care.

The conference agreement also preserves critical health care services provided by independent laboratories in to hospital patients, especially in smaller and rural communities.

Are Members telling me, as they criticize this legislation, that the College of American Pathologists would support legislation that is not good for their patients and the people they serve?

The Federation of American Hospitals:

This agreement does more to improve Medicare coverage for seniors than any legislation since its program inception.

That is 38 years.

The Federation of American Hospitals commends President Bush, the Congressional leadership, and members of the Medicare Conference Committee for their great efforts in bringing these vital improvements to the Medicare to fruition.

H.R. 1 would greatly enhance the ability of hospitals to provide necessary care medical care to Medicare beneficiaries. It would make important strides in ensuring that all hospitals have sufficient funding to meet the medical needs of this nation's seniors and would particularly aids though hospitals that serve seniors in rural areas.

Every Member has rural areas in their State. And we have a major hospital association supporting this legislation because it is particularly going to serve seniors in rural America.

Now, tell me that they do not know a good bill when they see it.

Here is something that answers complaints that were heard late this morning or early this afternoon. One of the first speakers on the other side of the aisle, the Senator from Illinois, was complaining about this not doing enough for generics. But here we have the Generic Pharmaceutical Association:

The Generic Pharmaceutical Association today called the Medicare Conference compromise on generic drugs a tremendous victory for all consumers that will ensure timely access to affordable pharmaceuticals. . . .

The House and Senate conferees have met the challenge of eliminating some of the most serious barriers to generic competition by closing loopholes that have unnecessarily delayed the timely introduction of affordable pharmaceuticals-and American consumers, young and old alike, will be the winners.

Now, how many of you speaking today have complained about this legislation not doing anything about the cost of drugs? And we know that putting generics on the market sooner is one of the ways to bring down tremendous drug costs.

Now, the Generic Pharmaceutical Association supports this legislation, and yet you do not recognize that they understand a good piece of legislation when they see it.

We have the United Seniors Association:

We commend the Senate and House Conferees on their historic step to benefit every senior in America. Partisan politics and rhetoric-without-results on prescription drugs are simply unacceptable. Years of hard work by many in Congress and years of heartache for America's seniors have led us to this point. The whole senior world is watching and Congress must not collapse so near the finish line.

Are you trying to tell me that the United Seniors Association looks at this legislation and sees it is good for their members, and yet you cannot see that?

We have The 60 Plus Association:

The bill makes available much needed assistance to millions of seniors who lack any prescription drug coverage. Significantly, those who can least afford to pay will get the most help [from this legislation].

From the Rural Hospital Coalition:

We support your efforts to modernize Medicare and give senior citizens a prescription drug benefit that they deserve. . . . [T]his bill strengthens health care in rural America.

From the National Rural Health Association:

This bill is a big boost for the rural healthcare system. . . . A stronger healthcare system will help revitalize rural economies which will positively impact rural Americans throughout the country.

We have the National Hospice and Palliative Care Organization:

NHPCO strongly supports these provisions and believes these changes will improve the quality and timeliness of hospice and palliative care for seniors and their families.

From the Mayo Clinic, 150 miles from my home in Iowa:

Mayo Clinic supports the compromise Medicare reform legislation that has emerged from a congressional conference committee.

We have NAMI, The Nation's Voice on Mental Illness:

This conference agreement does represent an improvement for Medicare beneficiaries living with mental illness. . . . NAMI feels strongly that it is time for Congress to end partisan stalemate over this issue and take advantage of the $400 billion available this year to spend on a new drug benefit.

This is kind of a partisan statement I am going to read to you, but it does represent a group of people who are impacted by what we do here with dual eligibles. It is from the Republican Governors Association:

Medicare will provide first-time access to prescription drug coverage to many of our seniors. The agreement also assists states with the costs related to the dual eligible population. Assistance to low income persons as well as critical protection against high out-of-pocket drug costs are essential components of this legislation. . . . [T]he preventive benefits found in this measure will keep our constituents healthier.

From the Alliance For Aging Research:

With this act the millions of Medicare beneficiaries will no longer have to wait from 15 months to 5 years for access to new state-of-the-art medicines and life-saving and life-enhancing technologies. In addition, and most importantly, it targets those with the greatest need by providing significant low-income subsidies for prescription drugs that will assist millions of Medicare beneficiaries living longer and healthier lives. . . . This will be a giant step toward expanding and modernizing Medicare, while preserving the power of science and technology to improve and enhance the lives of our people in the future.

Lastly, we have the American Benefits Council, a news release. The headline: "Medicare, prescription drug reform bill represents historic, positive achievement."

We urge swift enactment of the legislation. . . .

I have quoted these statements from these outstanding organizations for the RECORD because they speak louder than any Member of this Senate can about what is good about this legislation.

I would hope that you folks on the other side of the aisle would take these statements into consideration, particularly tomorrow, when I am told 15 of you are going to speak, probably most of you against this legislation. I would appreciate you taking into consideration what these major groups have said.

Madam President, I yield the floor and suggest the absence of a quorum.