Medicare Hospital Accreditation Act of 2004

Mr. President, today I am reintroducing the Medicare Assurance of Prescription Transition Assistance Act of 2004. It is my hope that this will be put on the Senate Calendar so it can be considered under rule XIV.

Let me give a little background about what this legislation is intended to correct.

As all of us know, this last year we passed a major revision, a major amendment to the Medicare Act. The Medicare Act was passed in 1965. In this last year, the prescription drug bill has been added to it. That was a controversial piece of legislation which I wound up opposing in its final form. I supported the version we passed through the Senate initially. I opposed the version that finally came from the conference and was sent to the President for signature.

But there was one part of that prescription drug legislation that contained a very real benefit for a lot of low-income Americans. That is the $600 subsidy that was made available this year and again next year for Medicare recipients with incomes in this category that allowed them to take advantage of the benefit.

The legislation I am introducing today will provide simply that CMS automatically enroll many of these low-income Medicare seniors and people with disabilities into this prescription drug card in order that they get the benefit of the discount card. Of course, that benefit is hard to quantify. They would get that benefit, but more importantly, they would get access to

this $600 subsidy this year and another $600 subsidy next year, which would go against the cost of prescription drugs they incur during those 2 years.

Underscoring the need for this legislation, yesterday Dr. Mark McClellan, the Administrator of the Centers for Medicare and Medicaid Services, or CMS, testified before the Senate Special Committee on Aging that only 1 million of the more than 7 million low-income Medicare beneficiaries who are eligible for the $600 subsidy under the Medicare prescription drug card are currently enrolled.

This chart makes that point very clearly. The title of this chart is ``Low Enrollment Plagues Prescription Drug Plan.'' This first bullet states that 7 million low-income Medicare beneficiaries are eligible for this $600 subsidy. The number of low-income beneficiaries that CMS projected would actually enroll would be 5 million. So 5 million of the 7 million were supposed to enroll. In fact, the number of low-income beneficiaries who have enrolled turns out to be 1 million.

So there are 6 million Americans eligible for the $600 transition assistance under the Medicare prescription drug bill who are not receiving any help. In other words, 14 percent of those who are eligible for this $600 subsidy are actually getting assistance at the present time. Unfortunately, many of those seniors who are eligible live in my home State of New Mexico, and I am very anxious that we provide this benefit to them since it is a part of the law.

The President and the leadership in the Senate have vowed to bottle up any legislation that would reopen the Medicare prescription drug bill at this time, or before the end of this Congress. Unfortunately, that would include bills such as the one I am reintroducing today, which is really intended to ensure that the people who are eligible for the limited benefit provided under this bill actually receive that benefit.

If we are serious about trying to provide assistance to our Nation's most vulnerable low-income seniors and people with disabilities, then we should undertake the rather straightforward but significant step that is called for in this legislation, and that is automatically enrolling those who are eligible for the $600 subsidy into the discount drug card program.

Considering that it is unclear whether the savings offered by the drug discount card itself will amount to much, and that is just hard to quantify, frankly, the main benefit is not the discount card itself; it is the $600 credit which is available to low-income individuals.

Specifically, the $600 is available to any individual whose income is less than $12,569 per year or any married couple whose income is less than $16,862 per year. For those Medicare savings program beneficiaries who get cost-sharing assistance through Medicaid because they have incomes below 135 percent of poverty but are not receiving prescription drug coverage, they clearly meet the income criteria under the act and their automatic enrollment is the only way to ensure they will receive the $600 subsidy that those of us in Congress intended they receive.

In fact, when the prescription drug bill was passed, the administration claimed that 65 percent of those eligible for the $600 transitional assistance would actually be enrolled.

According to the Centers for Medicare and Medicaid Services, or CMS, the agency expected 5 million people of the 7 million--again, as is stated on this chart--including 29,000 of the estimated 45,000 in my home State of New Mexico, would actually enroll. Under the CMS assumptions, those beneficiaries combined would save $5 billion nationally, or $35 million in my home State of New Mexico, over this 2- year period.

Much of that savings is not going to be realized by those seniors unless we pass the legislation I am introducing today.

Part of the explanation for the low enrollment is the poor advertising campaign that the General Accounting Office has criticized and with which we are generally familiar. This poor advertising campaign included running ads in Capitol Hill newspapers such as Roll Call and the Hill. Unfortunately, most of the low-income seniors in my State do not subscribe to either Roll Call or the Hill. In fact, they do not know those publications exist.

According to a national survey by the Kaiser Family Foundation, only 18 percent of senior citizens are even aware that the low-income transitional assistance program was included in the prescription drug bill. So it is hard to believe that 65 percent of those who are eligible will enroll when less than one-fifth of them even know the program exists.

Fortunately, CMS has already laid the groundwork for this automatic enrollment. Two months ago, the agency issued guidance for how State pharmacy assistance programs can automatically enroll their members who have incomes below 135 percent of poverty in the low-income assistance benefit. Those enrollees continue to represent the bulk of those who have enrolled and they remain the model for how to ensure that low- income beneficiaries get the prescription drug assistance they need.

CMS can take this additional step, which I am calling for in this legislation, to automatically enroll MSP members who do not have prescription drug coverage. I believe CMS has the authority to take the step on its own right now, but the legislation I have reintroduced today would clarify the law in this regard and would ensure that low- income seniors and people with disabilities actually receive this transitional assistance as promised by the administration and the Congress.

As the Medicare Rights Center has asked: Given their definite eligibility and clear need for help to pay for their prescription drugs, why not save these people and the Government the hassle of application and automatically enroll them?

That is exactly the right question to be asked. There are a number of low-income seniors and people with disabilities who are very sick, who have cognitive and mental illnesses and do not have access to or feel comfortable with the use of the Internet. Many will wrongly slip through the cracks and fail to get the $600 subsidy that could benefit them substantially this year and next year. In such cases, if an individual has not enrolled for whatever reason, it begs the question as to what choice automatic enrollment would take away at that point.

It is not enough to say, look, we believe these seniors have a choice of a great many discount cards and we do not want to prejudge that for them. The truth is, most of the people I am talking about are completely unaware that there is such a thing as a drug discount card or that there is such a thing as a $600 subsidy for which they could qualify. This lack of knowledge on their part is through no fault of their own and we should do all we can, and CMS should do all it can, to get them enrolled so they can benefit from this $600 subsidy. Either CMS or the States should take the affirmative step of automatically enrolling these individuals in the program. If we fail to assist them in this manner, what is really lost is not the choice that they might have between one card or another but the $1,200 in real prescription drug assistance that they do today qualify for and that they should be receiving.

As a Kaiser Family Foundation study last year indicated, Medicare beneficiaries with no drug coverage were nearly three times more likely than people with drug coverage to forgo needed prescription drugs. While CMS has estimated that 65 percent of the low-income beneficiaries would sign up for the $600 subsidy, by any measure signing up just 14 percent of these beneficiaries can only be viewed as a major failure. It has not been viewed as that so far either by the administration or by the Congress.

Once again, I call on the administration to take this important step on its own and enroll these individuals for this benefit. In light of the fact they have failed to do so, despite several calls from me and other Members of Congress for them to do so, I am reintroducing this bill, and I hope the Senate leadership will bring it to the floor for immediate action.

There is over $1 billion of prescription drug assistance for over 1 million of our Nation's most vulnerable citizens at stake. It is time for the Senate to pass this bill.

Mr. President, I ask unanimous consent that the text of the legislation be printed in the Record.

Mr. President, I am introducing legislation today to correct a problem that is impairing the efficiency of the Low-Income Housing Tax Credit program. As my colleagues know, the low-income housing credit has been a remarkably successful incentive for encouraging investment in residential rental housing for low-income families. Under Section 42 of the Internal Revenue Code, a tax credit is available for investment in affordable housing. The credit is claimed annually over a period of ten years. Qualified residential rental projects must be rented to lower-income households at controlled rents and satisfy a number of other requirements throughout a prescribed compliance period which is generally 15 years from the first taxable year the credit is claimed.

Today, virtually all of the equity for housing credit investments comes from publicly-traded corporations investing through housing credit funds. An investor wishing to dispose of an interest in housing credit property during its 15-year compliance period is subject to a recapture of housing credits previously claimed unless a bond or U.S. Treasury securities are posted to the Internal Revenue Service. The amount of the bond to be posted is based on the amount of housing credits claimed and the duration remaining in the compliance period. The purpose of the bond is to guarantee to the IRS that it can collect the appropriate recapture tax amount in the event that the property is no longer in compliance with the requirements of the housing credit program.

At the time the housing credit program was enacted in 1986, the drafters of the statute were concerned that owners would claim the benefits of the tax credits and then avoid the continuing compliance requirements by transferring the credits to a straw party with minimal assets that the IRS could go after to collect recapture tax liability. This was a potential concern because housing credits are provided on an accelerated basis in the sense that they are claimed over a ten-year period, while the property must remain in compliance with the targeting rules over a minimum 15-year period.

However, the experience with the housing credit over the past 15 years demonstrates that this concern no longer has any validity. When the housing credit program was enacted, policymakers were thinking in terms of previous affordable housing tax incentives that supported an aggressive

tax shelter market dominated by individual investors. As it turns out, over 99 percent of the investment capital in the housing credit program comes from publicly-traded corporations that pose none of the risks of noncompliance that motivated enactment of the recapture bond rules in the first place. Ironically, sales of individual partnership interests in low-income housing fund public partnerships with more than 35 investors are exempt from the recapture bond rules.

There are also a number of other provisions in Code section 42 that adequately address potential noncompliance. In 1989, Congress added the requirement that all state allocating agencies adopt ``extended use agreements'' to be recorded as restrictive covenants on housing credit properties, which require the property to remain in compliance. In addition, the State allocating agencies were given oversight responsibilities to ensure continued compliance through site inspections and property audits.

The requirement to purchase recapture bonds forces investors to incur unnecessary costs and has produced a complex administrative burden on the IRS. Because bond filings are done building-by-building, and single sales transactions frequently involve hundreds of properties, each with dozens of buildings, bond filings may involve thousands of separate filings. Worse yet, the few remaining surety companies writing this type of business operate in a very inefficient market. Recapture surety bonds are priced in a fashion that does not measure the true risk of non-compliance, but rather relies solely on the credit rating of the company requesting the bond. This is a function of the fact that surety underwriters do not understand the housing credit program in general or the risk of non-compliance in particular. At the same time, the incidence of non-compliance with housing credit program rules is exceedingly rare.

Meanwhile in the aftermath of the September 11th terrorist acts and the spate of corporate accounting scandals that occurred in 2002, the surety market has been in turmoil. Recapture bond premiums, even for highly rated public companies, have more than tripled over the past two years. This has imposed dead weight costs on the housing credit program. By making it more difficult to transfer credit investments, the recapture bond rule impairs the liquidity of housing credit investments, reducing credit prices generally, and undermining the overall efficiency of the program. In the absence of the recapture bond requirement, more dollars would flow into affordable housing itself and less into the higher rate of return that must be paid to investors to compensate for the dead weight costs that the bonds impose on the program.

The IRS recently responded to a series of questions posed about the recapture bond requirement. According to the IRS, between 1997 and 2003, recapture bonds covering approximately $1.8 billion of tax credits have been posted with the Treasury but in the 17 years since the requirement was enacted, the Service has never made a single claim on a recapture bond. That works out to bond premium payments in excess of $150 million to ensure against an event that has never occurred. These costs are unnecessary and are imposing a real drag on the market for investments in housing credit properties.

My bill will solve this problem by repealing the recapture bond requirement effective for disposition of interests in LIHTC properties after the date of enactment. An owner of a building, or interest therein, that has been the subject of a disposition and is still within the remaining 15-year compliance period with respect to such building would be required to submit a report to its former investors when a recapture event with respect to such building occurs. A copy of recapture event forms sent to investors would be required to be filed with the IRS in order to provide the Service with the information necessary to ensure that all recapture liabilities are timely paid.

The general statute of limitations applicable to taxpayers would also be modified so that investors who dispose of a building after the effective date of the legislation would remain liable for any potential recapture liability for a period extending through the compliance period for such building to provide the IRS with additional time to audit the partnership's return to ensure the building's continuing compliance with the credit's requirements. Taxpayers who disposed of a building (or interest therein) prior to the date of enactment would not be required to maintain existing recapture bonds (or other alternative security), but cancellation of existing bonds would trigger an extension of the statute of limitations provided for in the legislation.

These changes will improve the overall efficiency of the housing program and ensure that more dollars actually flow into affordable housing. This is a very important improvement in an otherwise excellent program, and I encourage my colleagues to join with me in cosponsoring this legislation.

I ask unanimous consent that the text of the bill be printed in the Record. The legislation is identical to a bill that Congressmen Houghton, Johnson, Neal, and Rangel have introduced in the House. I also ask unanimous consent to include a copy of a letter from 12 national housing organizations to Chairman Bill Thomas endorsing the House bill, H.R. 3610.

Mr. President, I rise today to speak to an issue that is vitally important--hospital safety. For too long, the Federal Government has not had the appropriate oversight authority to assure safety in our Nation's hospitals.

I am proud to introduce the Medicare Hospital Accreditation Act, bipartisan legislation that will give the Centers for Medicare and Medicaid Services (CMS) the same oversight capacity over hospital accreditation that it has over all other health care accrediting bodies.

The Joint Commission for Accreditation of Health Organizations (JCAHO) is a private, not-for-profit organization. In 1965 Congress granted JCAHO ``deeming authority'' for Medicare certification under Section 1865 of the Social Security Act. This sweeping authority gave hospitals accredited by JCAHO the ability to participate in Medicare with minimal CMS oversight. Since then, JCAHO has accredited most of our Nation's hospitals--over 80 percent in 2002. No other health care accreditation program has had this same statutory exception.

Congress gave JCAHO an important role to detect and correct problems that directly affect the lives of patients in hospitals. Congress, CMS and in turn the American people, rely upon JCAHO's work to ensure the quality and safety in our Nation's hospitals.

JCAHO's own mission claims to continuously improve the safety and quality of care provided to the public through the provision of health care accreditation.

Unfortunately, JCAHO was entrusted with this responsibility without the necessary checks and balances so crucial to a government responsive to the needs of the people it serves.

This GAO report is only the most recent evidence showing problems with the Joint Commission. In June of 1990, the GAO found that CMS, which was then called the Health Care Financing Administration (HCFA), needed to reevaluate the criteria used to evaluate the JCAHO's survey process and recommended that HCFA establish a means to detect significant differences between state agency and Joint Commission surveys.

In May of 1991, the GAO published a report titled ``Hospitals with Quality-of-Care Problems Need Closer Monitoring'' and recommended that HCFA closely monitor the Joint Commission's follow-up of hospital efforts to correct deficiencies it found related to Medicare conditions of participation.

Then in 1999, the Inspector General for the Department of Health & Human Services also raised serious concerns. The IG looked at how well the Joint Commission identified deficiencies in hospitals and found that the Joint Commission's surveys were not likely to identify patterns of deficient care.

Today's GAO findings are likewise significant. Over the course of 3 years--

between 2000 and 2002--500 hospitals were surveyed by both JCAHO and by a state survey agency on behalf of CMS. According to the GAO, a comparison of these surveys revealed that the state surveys often found serious deficiencies--serious deficiencies that went overlooked or unnoticed by JCAHO.

In fact, the GAO found that out of the 157 hospitals found with serious deficiencies, JCAHO identified only 34. In other words, compared to state surveyors, JCAHO missed hospitals with deficiencies 78 percent of the time.

A hospital that prepared and administered drugs in violation of federal and state laws is just one example of a serious deficiency found by a state agency, but missed by JCAHO in its 2000 survey.

Serious deficiencies found by state agencies but missed by JCAHO represent a pattern of deficient care--not merely isolated incidents. Unlike isolated incidents, a pattern of deficient care raises grave concerns because of the potential to place dozens of lives in danger, involving for example a floor or entire wing where many hospital patients are receiving their care.

Because JCAHO's hospital ``deeming authority'' is statutorily mandated, CMS cannot terminate this authority. Today, we are taking the first step to give CMS the same oversight capability over JCAHO that it has over all other health care accrediting organizations.

This legislation will give CMS the authority and responsibility to hold JCAHO accountable and, if necessary, restrict or remove its hospital accreditation authority. It will bring uniformity to the health care accreditation process and will provide a more effective chain-of-command. JCAHO will have to answer to CMS--as it does in other sectors of health care accreditation.

The GAO recommends that Congress grant CMS greater oversight over JCAHO's hospital accreditation process. CMS agrees. JCAHO agrees. My colleague from across the aisle and across the Capitol, Congressman Stark--who as we speak is introducing the companion bill in the House of Representatives--agrees with this finding.

I urge your support for this much-needed legislation.

Mr. President, I rise today to speak to an issue that is vitally important--hospital safety. For too long, the Federal Government has not had the appropriate oversight authority to assure safety in our Nation's hospitals.

I am proud to introduce the Medicare Hospital Accreditation Act, bipartisan legislation that will give the Centers for Medicare and Medicaid Services (CMS) the same oversight capacity over hospital accreditation that it has over all other health care accrediting bodies.

The Joint Commission for Accreditation of Health Organizations (JCAHO) is a private, not-for-profit organization. In 1965 Congress granted JCAHO ``deeming authority'' for Medicare certification under Section 1865 of the Social Security Act. This sweeping authority gave hospitals accredited by JCAHO the ability to participate in Medicare with minimal CMS oversight. Since then, JCAHO has accredited most of our Nation's hospitals--over 80 percent in 2002. No other health care accreditation program has had this same statutory exception.

Congress gave JCAHO an important role to detect and correct problems that directly affect the lives of patients in hospitals. Congress, CMS and in turn the American people, rely upon JCAHO's work to ensure the quality and safety in our Nation's hospitals.

JCAHO's own mission claims to continuously improve the safety and quality of care provided to the public through the provision of health care accreditation.

Unfortunately, JCAHO was entrusted with this responsibility without the necessary checks and balances so crucial to a government responsive to the needs of the people it serves.

This GAO report is only the most recent evidence showing problems with the Joint Commission. In June of 1990, the GAO found that CMS, which was then called the Health Care Financing Administration (HCFA), needed to reevaluate the criteria used to evaluate the JCAHO's survey process and recommended that HCFA establish a means to detect significant differences between state agency and Joint Commission surveys.

In May of 1991, the GAO published a report titled ``Hospitals with Quality-of-Care Problems Need Closer Monitoring'' and recommended that HCFA closely monitor the Joint Commission's follow-up of hospital efforts to correct deficiencies it found related to Medicare conditions of participation.

Then in 1999, the Inspector General for the Department of Health & Human Services also raised serious concerns. The IG looked at how well the Joint Commission identified deficiencies in hospitals and found that the Joint Commission's surveys were not likely to identify patterns of deficient care.

Today's GAO findings are likewise significant. Over the course of 3 years--

between 2000 and 2002--500 hospitals were surveyed by both JCAHO and by a state survey agency on behalf of CMS. According to the GAO, a comparison of these surveys revealed that the state surveys often found serious deficiencies--serious deficiencies that went overlooked or unnoticed by JCAHO.

In fact, the GAO found that out of the 157 hospitals found with serious deficiencies, JCAHO identified only 34. In other words, compared to state surveyors, JCAHO missed hospitals with deficiencies 78 percent of the time.

A hospital that prepared and administered drugs in violation of federal and state laws is just one example of a serious deficiency found by a state agency, but missed by JCAHO in its 2000 survey.

Serious deficiencies found by state agencies but missed by JCAHO represent a pattern of deficient care--not merely isolated incidents. Unlike isolated incidents, a pattern of deficient care raises grave concerns because of the potential to place dozens of lives in danger, involving for example a floor or entire wing where many hospital patients are receiving their care.

Because JCAHO's hospital ``deeming authority'' is statutorily mandated, CMS cannot terminate this authority. Today, we are taking the first step to give CMS the same oversight capability over JCAHO that it has over all other health care accrediting organizations.

This legislation will give CMS the authority and responsibility to hold JCAHO accountable and, if necessary, restrict or remove its hospital accreditation authority. It will bring uniformity to the health care accreditation process and will provide a more effective chain-of-command. JCAHO will have to answer to CMS--as it does in other sectors of health care accreditation.

The GAO recommends that Congress grant CMS greater oversight over JCAHO's hospital accreditation process. CMS agrees. JCAHO agrees. My colleague from across the aisle and across the Capitol, Congressman Stark--who as we speak is introducing the companion bill in the House of Representatives--agrees with this finding.

I urge your support for this much-needed legislation.

Mr. President, I seek recognition today to introduce the Christopher Kangas Fallen Firefighter Apprentice Act, a bill designed to correct a flaw in the current definition of ``firefighter'' under the Public Safety Officer Benefits Act.

On May 4, 2002, 14-year-old Christopher Kangas was struck by a car and killed while he was riding his bicycle in Brookhaven, PA. The local authorities later confirmed that Christopher was out on his bike that day for an important reason: Chris Kangas was a junior firefighter, and he was responding to a fire emergency.

Under Pennsylvania law, 14- and 15-year-olds such as Christopher are permitted to serve as volunteer junior firefighters. While they are not allowed to operate heavy machinery or enter burning buildings, the law permits them to fill a number of important support roles, such as providing first aid. In addition, the junior firefighter program is an important recruitment tool for fire stations throughout the Commonwealth. In fact, prior to his death Christopher had received 58 hours of training that would have served him well when he graduated from the junior program.

It is clear to me that Christopher Kangas was a firefighter killed in the line of duty. Were it not for his status as a junior firefighter and his prompt response to a fire alarm, Christopher would still be alive today. Indeed, the Brookhaven Fire Department, Brookhaven Borough, and the Commonwealth of Pennsylvania have all recognized Christopher as a fallen public safety officer and provided the appropriate death benefits to his family.

Yet while those closest to the tragedy have recognized Christopher as a fallen firefighter, the Federal Government has not. The Department of Justice announced that Christopher Kangas was not a ``firefighter,'' and therefore not a ``public safety officer'' for purposes of the Public Safety Officer Benefits Act. The DOJ based its determination on an arbitrarily narrow definition of ``firefighter,'' deciding that the only people who qualify as firefighters are those who play the starring role of spraying water on a fire or entering a burning building. According to this definition, those who play the essential supporting roles of directing traffic, performing first aid, or dispatching fire vehicles apparently don't count.

Any firefighter will tell you that there are many important roles to play in fighting a fire beyond operating the hoses and ladders. Firefighting is a team effort, and everyone in the Brookhaven Fire Department viewed young Christopher as a full member of their team.

As a result of this DOJ determination, Christopher's family will not receive a $267,000 Federal line-of-duty benefit. In addition, Christopher will be barred from taking his rightful place on the National Fallen Firefighters Memorial in Emmitsburg, MD. For a young man who dreamed of being a firefighter and gave his life rushing to a fire, keeping him off of the memorial is a particularly cruel blow.

The bill I introduce today will ensure that the Federal Government will recognize Christopher Kangas and others like him as firefighters. The bill clarifies that all firefighters will be recognized as such ``regardless of age, status as an apprentice or trainee, or duty restrictions imposed because of age or status as an apprentice or trainee.'' The bill applies retroactively back to May 4, 2002 so that Christopher can benefit from it.

My bill is a companion to H.R. 4472, introduced by Congressman Curt Weldon, Congressman Weldon, who is himself a former fireman and fire chief, is chairman of the Congressional Fire Services Caucus. There is no one in Congress better suited to understand this situation than Congressman Weldon, and I am honored to join him in the effort to right this wrong.

I am submitting together with this bill a request under Senate rule XIV that the bill be placed directly on the Senate calendar and not be referred to committee. This is a noncontroversial, technical bill. I hope that my colleagues will join me in ensuring its speedy passage into law.