A bill to amend the Workforce Investment Act of 1998 to provide for a job training grant pilot program.

Mr. President, today I am introducing legislation, the Rural Health Care Fairness and Medicare Equity Act, that will help to make Medicare reimbursement more fair and equitable for rural and small urban hospitals and physicians. I am pleased to be joined in introducing this bill by Senator Burns.

First, let me take a few minutes to describe some of the challenges facing rural health care systems and why I feel it is critical for the Senate to act now to reduce the inequities in Medicare funding between rural and urban providers.

Rural America depends on its small town hospitals, physicians and nurses, nursing homes, emergency ambulance services, and other members of our rural health care system. And because of past cuts in Medicare reimbursement, plus the historical unfairness in Medicare payments, these vital services are in jeopardy. Fortunately, Congress acted in 1999 and again in 2000 to address some of the cuts that turned out to have a larger impact than intended.

However, additional legislation is still needed to improve Medicare reimbursement for health care providers in order to stabilize the Medicare program and ensure that beneficiaries, especially in rural areas, will continue to have access to their local hospitals, physicians, nursing homes, home health, and other services. Many small rural hospitals in particular serve as the anchor for the full range of health care services in their communities, from ambulatory to long-term care. Medicare is the single most significant payer for services at these hospitals, and as such, it has an impact on the whole community.

Part of the problem in North Dakota is simply demographics: North Dakota's population is the fifth oldest in the Nation, and about two- thirds of North Dakota's 103,000 Medicare beneficiaries live in rural areas. In addition, North Dakota's population--and the population of many rural states in our Nation's Heartland--is shrinking daily. In fact, in 13 of North Dakota's counties, there were 20 or fewer births for the entire county in 2001.

Admissions to rural hospitals have dropped by a drastic 60 percent in the last two decades, and those patients who do remain tend to be older, poorer, and sicker. This means that rural hospitals tend to be disproportionately dependent upon Medicare reimbursement, to the extent that Medicare accounts for 75 to 80 percent of the revenue for some rural hospitals. Obviously, given this reality, Medicare reimbursement has a major impact on the financial health of rural hospitals.

Another part of the problem is that Medicare has historically reimbursed urban health care providers at a much higher rate than their rural counterparts. North Dakota Medicare beneficiaries pay the exact same Medicare payroll taxes and premiums as beneficiaries elsewhere but receive less benefit from the Medicare program. Medicare beneficiaries in North Dakota receive an average of $4,458 in Medicare benefits. This is $632 less than the national average spending per Medicare beneficiary of $5,490, and $5,500 less than the spending for Medicare beneficiaries in Washington, DC. Moreover, most North Dakotans do not even have the option of Medicare+Choice plans because Medicare reimbursement for these plans is so low in rural areas that they are not offered.

As a result of the skewed Medicare formula, North Dakota hospitals are reimbursed significantly less than hospitals of similar size and type elsewhere in the country. For instance, North Dakota hospitals are reimbursed as much as $2,000 less for a Medicare beneficiary with heart failure compared to hospitals of a similar size and mission in Minnesota, New York and California. More specifically, for example, St. Alexius Medical Center in Bismarck, North Dakota is paid about $4,000 for a heart failure patient. A similar sized hospital, with a similar mission, would be paid $5,900 in California, $6,500 in New York, and $6,800 in Minneapolis, MN for caring for the same patient.

Likewise, a similar payment inequity exists for physicians. For example, a physician in Beulah, ND is paid about $46 by Medicare for an office visit, while a doctor in San Francisco is paid $63 for a comparable office visit. A physician who inserts a pacemaker in a patient in New York City is paid about $646, but a doctor who performs the exact same procedure in Fargo, ND is paid only $481, about a quarter less.

This inequity in Medicare reimbursement has real consequences for hospitals and clinics: They have to reduce services, have greater difficulty recruiting staff, are less able to make capital improvements, and struggle to give their patients access to the latest innovations in medical care.

The bill I am introducing today, the Rural Health Care Fairness and Medicare Equity Act, would address the rural inequity in Medicare reimbursement in five ways. First, this bill would equalize the ``standardized payment'' which forms the basis for Medicare's reimbursement to hospitals. You would think something called the ``standardized payment'' would already be standard, but the fact is that hospitals in rural and small urban areas, including all of North Dakota, receive a smaller standardized payment than large urban hospitals. This bill would raise all hospitals up to the same standardized payment. The fiscal year 2003 Omnibus Appropriations bill enacted by Congress earlier this year takes a step in the right direction by equalizing this base payment for the last six months of this fiscal year, but my bill would make this equalization permanent.

Second, my bill would create a wage index floor for the hospitals in this country with the very lowest wage indexes. The current wage index, which is an important factor in a hospital's total Medicare reimbursement, is based on an antiquated theory that it costs more to hire hospital staff in urban areas than it does in rural areas. That may have been true once, but it is no longer true today. Today, hospitals in North Dakota are competing with hospitals in Minnesota, Chicago and elsewhere for the same doctors and nurses, and they have to pay competitive wages in order to recruit staff. However, their low wage index has the effect of limiting the salaries that many rural and small urban hospitals can afford to pay their staff. By creating a floor, we would at least level the playing field a bit for hospitals with a wage index under 0.85.

Third, this bill would reduce the importance of the wage index in factoring a hospital's total Medicare reimbursement. The current ``labor market share'' of 71.1 percent overstates the actual amount that hospitals in North Dakota and nationwide pay for labor. For instance, in North Dakota, a hospital in Bismarck has a labor market share of 58 percent, while a small rural hospital in Cando, ND has a labor market share of 55 percent. For hospitals in North Dakota and other states that already have a low wage index this overstatement of labor costs magnifies the reimbursement inequity. My bill would set the labor market share at 62 percent, which more closely reflects what the correct proportion should be. However, hospitals that would be adversely affected by this change would be held harmless.

In addition, this legislation creates alternative criteria for some hospitals to appeal to the Medicare program for a higher wage index. Hospitals currently can qualify for reclassification to an area with a higher wage index if they can demonstrate that they are proximate to the area to which they seek to be reclassified and pay similar wages or have a similar patient case-mix. The current reclassification process has been used predominantly in areas with high population density as a way for hospitals to increase their Medicare reimbursement. According to a GAO study last year, two-thirds of all hospitals that are able to reclassify are in two areas--California and the northeast.

Unfortunately, however, many rural and small urban hospitals located in states with a large land base and lots of distance between communities largely have not been able to take advantage of the reclassification process because they cannot meet the proximity criteria. This is the case even though, despite the longer distances between communities, hospitals are still competing against each other to recruit nurses and other staff. To address this concern, my bill would create an alternative reclassification process for hospitals in sparsely populated states with large distances between metropolitan areas that do not meet the current proximity criteria but do meet the other reclassification criteria.

Finally, my legislation would establish a floor of 1.00 for the physician work component of the Medicare physician payment system. The Medicare program currently adjusts physician payments based on a ``geographic practice cost index'' that is intended to reflect regional cost-of-living differences. The result has been that physicians in rural areas are generally reimbursed less by Medicare for providing the same exact level of care as doctors in urban areas. Since rural medical practices tend to serve higher proportions of Medicare beneficiaries, they are doubly impacted by this payment inequity.

As many of my colleagues know, it is already very difficult to recruit physicians to rural underserved areas. In fact, many small towns in my State are increasingly relying on foreign physicians working in the country under J-1 visas because they are unable to recruit American physicians. I am very concerned that the disparity in

Medicare reimbursement for doctors provides yet another reason for physicians to decline to serve in rural areas.

By establishing a floor of 1.00 for the work geographic practice cost index, this legislation will ensure that doctors' work in rural areas would at least be valued at the national average. However, it would still allow for payments higher than the national average for physicians serving in areas with a high cost of living.

In closing, I think we as a nation need to acknowledge that a strong health care system is an important part of our rural infrastructure. Over the years, we have determined that rural electric service, rural telephone service, an interstate highway system through rural areas, and rural mail delivery, to name a few services, make us a better, more unified nation. We need to make the same determination in support of our rural health care system, and I will be fighting for policies, such as those reflected in this legislation, that reflect rural health care as a strong national priority. I encourage my colleagues to join Senator Burns and me in cosponsoring this bill.

Mr. President, I rise today to introduce my Child Nutrition Initiatives Act of 2003. This legislation consists of a number of proposals that I believe will significantly improve the nutrition benefits available to our Nation's children through Federal child nutrition programs.

I am hoping that this legislation will serve as a starting point in the Senate's debate over how to improve child nutrition programs this year. It is not meant to be a comprehensive proposal for reauthorization, nor does it represent all of the potential improvements that could be made to the programs that I will be supporting in the Agriculture Committee. I look forward to working with Chairman Cochran and with Senator Harkin, the ranking Democrat on the Committee, as well as the rest of the Committee to craft a comprehensive bill.

The Committee has already held two hearings on child nutrition legislation, where we heard from a wide variety of nutritionists, school food service operators and others interested in these programs. They presented us with a wide variety of ideas, some of them appearing in my bill, which underlined the immense impact of these programs to the nutritional health and well-being of all of our children and grandchildren. Undersecretary Bost also testified, and he too offered an array of proposals for improving these programs. I look forward to more detailed proposals from the Department of Agriculture on how we can better serve the children in these programs.

I was encouraged to hear that the Administration is interested in providing much-needed financial help for schools choosing to improve their nutritional environment. We know that many school food service directors and employees want to offer healthier, more appetizing options to the children they serve, yet the cost of providing attractive fresh fruits and vegetables, or milk in child-friendly plastic containers kept chilled in a cooler, is often prohibitive. Increased per-meal reimbursements will encourage school cafeterias to spend more on the foods that are healthiest for kids. With these funds, schools will be able to make the salad bar and the milk cooler just as attractive to school children as less nutritious foods.

Healthier food in the school cafeteria does little good if children do not understand the benefits of eating apples over high-fat junk food. For years, the Nutrition Education and Training, NET, program provided critical support for state and local efforts to increase and improve nutrition education in classrooms. It is in the classrooms where the most effective and innovative nutrition education is happening, and NET offered teachers the resources they needed to develop a nutritional curriculum for their students. Unfortunately, this program has not been funded in the last few years. My bill would reinstate funding for the NET program, and encourage strong nutrition education at the local level.

It is amazing how many kids do not know where the food that they eat comes from. It's also amazing how far some farm products travel to get to the cafeteria table. My bill includes a farm-to-cafeteria program that will provide one-time grants to connect farms with their local school system. These grants would be used to buy equipment and pay for other costs to provide the freshest farm products available to our children. Projects funded by the farm-to-cafeteria program would also give children first-hand experience about how food is produced. This new program would also provide economic benefits for small, local firms by keeping food dollars within the community.

My support for these new farm-to-cafeteria projects comes in part from the amazing successes demonstrated by the WIC Farmers Market Nutrition Program. Years ago, I helped create this program, which provides vouchers to WIC families good for fruits and vegetables at their local farmers market. The effects of this program have been stunning. In Vermont, recipients and farmers are raving about this program, which provides fresh, local, and healthy food to those who need it most. There has also been an unexpected educational component to this program, with many recipients reporting that the farmers who sell them the food have also helped them learn how to best prepare it. This is a win-win situation. My bill will secure steady and predictable funding for the Farmers Market Nutrition Program.

Every State receives a small amount of funds to administer and ensure the integrity of all Federal child nutrition programs. Though these funds are distributed based on usage of the programs, there has been an all-State minimum to ensure that all States still have enough funds to meet the basic administrative requirements mandated by law. This minimum, however, has not been raised since 1981, despite inflation and expansion of the responsibilities of the states. My bill updates the minimum funding level to reflect inflation since 1981 and also indexes it for inflation into the future.

I am pleased that my bill has the support of the American School Food Service Association, the National Association for Farmers Market Nutrition Programs, the National Milk Producers Federation, the International Dairy Foods Association, and the Community Food Service Coalition.

Opponents of my bill will undoubtedly point to the cost of these programs, stating ``there is no money for such programs.'' Well, I answer them

with one word: priorities. Our Nation is faced with a growing health crisis. Children are growing up and growing out. They eat more, eat less nutritious foods and exercise less. It is a health epidemic that plagues them throughout life. By acting now, we can increase the quality of life for these children and save in healthcare costs down the line. For example, a study for the American School Food Service Association and the National Dairy Council found that by improving the quality, and therefore consumption, of milk in our school lunch programs, we could save between $800 million to $1.1 billion in health care costs every year.

I joined with a number of fellow senators in requesting that Congress provide a modest increase of $1 billion per year in the Budget Resolution so that we on the authorizing committees might make some long-awaited and essential improvements to the child nutrition programs. I am disappointed that increased funds were not provided. The Senate sent a clear message to America's children: we would rather give a several hundred billion dollar tax cut to a small minority of health adults than protect our children, through $1 billion in programming, from a health crisis.

The Federal Government reaches well over 25 million children each year with these programs. We have a tremendous opportunity to be proactive--to teach kids about food and give them nutritious options. We have a growing health crisis on our hands as our children grow wider because of unhealthy diets and less exercise. We must get serious about finding solutions to the problem. Or we can wait, and allow a system already doing its very best, working at maximum capacity, to deteriorate. I am for acting now and I hope the Senate is too.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I rise to introduce The Rural Health Care Fairness and Medicare Equity Act with my good friend and colleague, Senator Dorgan, from North Dakota.

Many predominately rural States, such as my home State of Montana, face difficult challenges in the health care arena. Funding, staffing shortages, and inadequate reimbursement levels have plagued many hospitals and health care providers in the most rural areas of our country since the passage of the Balanced Budget Act of 1997. I have been a strong supporter of improving access to health care in these areas through education and telemedicine, but many rural communities in particular still face dangerous health care-related shortages.

The Rural Health Care Fairness and Medicare Equity Act seeks to make Medicare reimbursement more fair and equitable for rural and small urban hospitals and physicians by correcting the unintended inequities in the Medicare system put in place by the Balanced Budget Act of 1997 with five components. First, this act would provide a single standardized amount under the Medicare inpatient Provider Payment System, PPS, by permanently raising the standardized amount for rural and other hospitals to the same standardized amount level as large urban area hospitals. My colleagues in the Senate and I recognized the importance of doing this in the fiscal year 2003 Omnibus Appropriations package, which made this change for the remaining months of fiscal year 2003. We should now standardize hospital levels by making this change permanent, and this bill does just that.

Second, this bill would change the hospital labor market share from its current level of 71.1 percent, to 62 percent, based on a study done by the University of North Carolina Rural Health Research and Policy Analysis Center demonstrating that the current hospital labor market share is too high. Hospitals that would be harmed by this change would be held harmless. Third, this legislation would create a wage index floor of 0.85 for hospitals that would otherwise have a wage index less than the floor. Thirty of my colleagues and I cosponsored legislation in the 107th Congress that included a 0.925 floor, and I am hopeful that by setting the floor at 0.85, this provision will be better targeted toward rural hospitals with negative Medicare inpatient margins, helping our rural health centers to not only keep their doors open, but to continue providing quality, affordable health services to the rural communities they serve.

Fourth, this bill would create new, alternative criteria for hospital reclassification. This bill would require the Secretary of Health and Human Services to develop a new category of reclassiciation of hospitals for area wage index and standardized amount purposes. I am greatly concerned that the current reclassification process, particularly the proximity and adjacency criteria, has not been helpful to hospitals in States like Montana, with large land bases and lots of distance between communities, even though these hospitals must still compete with one another for nurses and other health care staff.

Two-thirds of all hospital reclassification take place in California and in the Northeast, largely because of these proximity and adjacency criteria. This bill would allow hospitals located in sparsely populated States that do not meet these prohibitive criteria to re-classify if they otherwise need reclassification criteria. This bill defines a sparsely populated state to be one in which there are fewer than 20 people per square mile of land, under which eight States, including Montana, qualify. Finally, the Rural Health Care Fairness and Medicare Equity Act would create a physician geographic adjustment floor of 1.0 for the physician work component of the Medicare physician payment system, beginning in 2004. This provision would lessen the geographic disparities in Medicare payment so gravely affecting physicians in the field today.

Patients in both rural and urban areas depend on the availability of quality health care providers to offer superior, affordable health services to people across the Nation. Medicare physician payments are intended to correspond to the costs that efficient providers incur. Instead, research has shown that the sustainable growth rate, SGR, under which reimbursement rates are supposed to be adjusted annually fails to account for all the relevant factors that affect the cost of physician payments, and maintains further inequities, such as Medicare paying different amounts for the same service, depending on where the service is provided.

Cuts in Medicare reimbursement to health care providers have forced health providers to make difficult choices, including becoming a nonparticipating Medicare provider, moving to areas with better reimbursement rates or less Medicare patients, retiring from practice early, limiting or discontinuing charitble care, reducing staff, or leaving Medicare entirely. The impact on these cuts has taken a serious toll on rural communities, such as those in Montana. The most recent cut in physician payment levels was the largest in Medicare history, immediately affecting 1 million health care professionals and the countless millions of elderly and disabled patients they, in turn, serve. Not only does this create a negative health care environment so adverse to the principles of the Medicare system, but the inequities in physician reimbursement rates have created a crisis situation for many patients in rural areas who do not have the luxury of choosing to see a different health care provider who can still afford to take Medicare patients.

This bill is extremely important to ensure that America's seniors and low-income have access to high quality physician services. It is imperative that Congress continue it commitment to rural health care quality, accessibility, and affordability, and the Rural Health Care Fairness and Medicare Equity Act is an important step toward this goal.

Mr. President, I rise today to introduce legislation to simplify the taxation of life insurance companies. I am joined by my colleague from North Dakota, Mr. Conrad, and my colleague from Kentucky, Mr. Bunning.

Our legislation repeals Sections 809 and Section 815 of the Internal Revenue Code. These provisions are no longer relevant given the significant changes in the life insurance industry over the past 25 years, and repeal will simplify the tax code.

Section 809 was enacted in 1984 as a part of major revisions to the laws governing life insurance companies. It was intended to ensure that mutual life insurance companies do not have a competitive tax advantage over stock life insurance companies. At that time, mutual life insurance companies dominated the market. Now, however, mutuals account for only 10 percent of the industry, and there are very few large mutuals in existence. Section 809 reduces the amount of policyholder dividends a mutual insurance company can deduct according to a complex formula based on the previous 3 years' earnings of stock companies. Section 809 is burdensome and raises very little revenue. Because its original purpose is no longer valid, our bill would repeal the provision permanently. In last year's economic stimulus bill, Congress temporarily suspended Section 809. In addition, President Bush included in his fiscal year 2003 budget submission a proposal to repeal Section 809 permanently.

Section 815 has an even longer history, dating back to 1959. Tax changes in 1959 created an accounting mechanism called a ``policyholder surplus account'' for stock life insurance companies. Stock companies were permitted to defer tax on one-half of their underwriting income as long as that income was not distributed to shareholders. This income was accounted for through the policyholder surplus account, PSA. In 1984, Congress eliminated deferral of tax on underwriting income, but did not address the issue of PSAs. The amounts in these accounts, which are just an accounting entry, and do not contain real money, remain subject to tax if certain triggering events occur. Because virtually no company is willing to ``trigger'' the tax on the account, Section 815 also raises little or no revenue. It does, however, directly inhibit the business decisions of stock companies with PSAs.

Congress has worked hard over the last few years to modernize laws governing the financial services industry to encourage growth and enhance competitiveness. Elimination of outdated tax provisions such as Sections 809 and 815 will complement this effort and provide more rational taxation of life insurance companies.

I urge my colleagues to join us in this initiative.

Mr. President, today I introduce the Registered Nurses' Safe Staffing Act of 2003. I'm introducing this bill on behalf of the American Nurses Association's Chief Executive Officer and President Linda Stierle, MSN, RN, CNAA and Barbara A. Blakeney, MS, APRN, BC, ANP respectively. For over 4 decades I have been a committed supporter of nurses and the delivery of safe patient care. While enforceable regulations will help to ensure patient safety, the complexity and variability of today's hospitals require that staffing patterns be determined at the hospital and unit level, with the professional input of registered nurses. More than a decade of research demonstrates that nurse staff levels and the skill mix of nursing staff directly affect the clinical outcomes of hospitalized patients. Studies show that when there are more registered nurses, there are lower mortality rates, shorter lengths of stay, reduced costs, and fewer complications.

A study published in the Journal of the American Medical Association found that the risks of patient mortality rose by 7 percent for every additional patient added to the average nurse's workload. In the midst of a nursing shortage and increasing financial pressures, hospitals often find it difficult to maintain adequate staffing. While nursing research indicates that adequate registered nurse staffing is vital to the health and safety of patients, there are no standardized, public reporting or the enforcement of adequate staffing plans. The only regulations addressing nursing staff exists vaguely in Medicare Conditions of Participation which states: ``The nursing service must have an adequate number of licensed registered nurses, licensed practice, vocational, nurse, and other personnel to provide nursing care to all patients as needed''.

This bill will require Medicare Participating Hospitals to develop and maintain reliable and valid systems to determine sufficient registered nurse staffing. Given, the demands that the healthcare industry faces today, it is our responsibility to ensure that patients have access to adequate nursing care. However, we must ensure that the decisions in which to provide this care are made by the clinical experts, the registered nurses caring for these patients. Support of this bill supports our nation's nurses during a critical shortage, but more importantly, works to ensure the safety of their patients.

I ask unanimous consent that the text of this bill be printed in the Record.