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Purpose and Summary..

Background and Need for the Legislation


Committee Consideration

Committee Oversight Findings..

Committee on Government Operations

Committee Cost Estimate.

Congressional Budget Office Estimate.

Inflationary Impact Statement

Section-by-Šection Analysis and Discussion.....

Subtitle A-Medicare:

Part A-Provisions Relating to Part B of Medicare (Sec. 4001-4026)....

Part B-Provisions Relating to Parts A and B of Medicare (Sec. 4041-


Part C–Other Provisions Relating to Medicare and Health-Related

Programs (Sec. 4061-4065).

Subtitle B-Health Care Research and Policy:

Part A-Agency for Health Care Research and Policy (Sec. 4101)....

Part B-Outcomes of Health Care Services and Procedures (Sec.


Part C-Additional Authorities and Duties with Respect to Agency

for Health Care Research and Policy (Sec. 4121)...

Part D-General Provisions (Sec. 4131-4135)....

Subtitle C-Medicaid:

Part A-Infant Mortality Provisions (Sec. 4201-4206)

Part B-Child Health Amendments (Sec. 4211-4217)..

Part C—Community and Facility Habilitation Services Amendments

(Sec. 4220-4248).

Part D-Frail Elderly Community Care Amendments (Sec. 4251)

Part E-Hospice Coverage (Sec. 4261).

Part F-Miscellaneous (Sec. 4271-4276)....

Subtitle D-Maternal and Child Health Program (Sec. 4301-4308)..

Subtitle E-Miscellaneous Health Related Provisions (Sec. 4401-4403).


Appendix A List of Procedures and Relative Values

Appendix B Calculation of Conversion Factor..

Appendix C Geographic Practice Cost Indexes.

Dissenting Views on the Relative Value Scale System to the Budget Reconcili-

ation Legislation for Fiscal Year 1990 (Title IV, Subtitle A).....

Dissenting Views of Medicaid Budget Reconciliation Amendments (Title IV,

Subtitle C).....

Additional Dissenting Views on the Health Budget Reconciliation Amend-

ments (Title IV, Subtitle D)...








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PURPOSE AND SUMMARY The purpose of the Medicare and Medicaid Health Budget Reconciliation Amendments of 1989 is to make revisions in Part B of the Medicare program and in the Medicaid program, in accordance with the budget instructions contained in the Concurrent Resolution on the Budget-fiscal year 1989 (H. Con. Res. 106)

The committee bill consists of five subtitles. Subtitle A, containing Medicare Part B provisions, consists of three parts. Part A of subtitle A contains changes in payments for physician services under Medicare, changes in payments for other services covered under Medicare, and changes in the benefits and coverage rules for a variety of services. The most prominent provision in subtitle A, Part A is the comprehensive reform in the method of paying for physician services. The bill would replace the current "reasonable charge" method with a fee schedule, using a resource-based relative value scale. Most of the savings in the bill, in response to the instructions of the budget resolution, are achieved through the elimination of the annual update for physician fees. This part also provides new coverage for pap smears, expands mental health services, refines several provisions from recent reconciliation acts, and requires several studies designed to help resolve policy issues in the future. It would also provide protection against out-of-pocket expenses for Medicare enrollees who have their cost-sharing paid under Medicaid.

Part B of subtitle A of the bill includes changes designed to improve the performance of health maintenance organizations and peer review organizations, an enhancement in payments for primary care residency programs, and a provision making information on preventive health practices available to Medicare enrollees.

Part C of subtitle A contains miscellaneous provisions relating to health programs within the jurisdiction of the committee. It would instruct the Secretary of Health and Human Services to appoint administrative law judges who would hear health-related cases exclusively. It would make technical changes in the Bipartisan Commission on Comprehensive Health Care and would elevate the current Office of Rural Health Policy to the office of the undersecretary. It also includes a resolution expressing the sense of the House of Representatives that the committee, and the Committee on Ways and Means, review the Medicare Catastrophic Coverage Act and hold hearings, and another resolution expressing the sense of


the Congress that the Medicare benefits and premiums enacted last year in the catastrophic act be made voluntary during this session.

Subtitle B establishes the Agency for Health Care Research and Policy, and consists of four parts. Part A amends the Public Health Service Act to establish a new Agency for Health Care Research and Policy and, within the Agency, a Forum for Quality and Effectiveness in Health Care. Part B amends the Social Security Act to provide for a program of research on the outcomes of medical care, to be conducted through the Agency. Parts C and D contain general and transitional provisions needed to implement Parts A and B.

Subtitle C, containing Medicaid provisions, consists of five parts. Part A consists of infant mortality provisions to expand Medicaid coverage for pregnant women and infants and provide appropriate services for this population. Part B, the "Child Health Amendments," phases in mandatory coverage of children up to 100 percent of the poverty level. Part C, the “Community and Facility Habilitation Services Amendments," extends, on a State option basis, the availability of community services to individuals with mental retardation or a related condition, establishes quality assurance guidelines for services in the community and institutions, and outlines protections for employees of institutions where services to this population are provided. Part D, the "Frail Elderly Community Care Amendments,” establishes community care for the frail elderly as a optional, statewide service, and Part E mandates hospice care as a covered service under the Medicaid program. Part F contains miscellaneous amendments to the Medicaid program, including provisions relating to nurse aide training, preadmission screening, and other matters relating to nursing home reform contained in the Omnibus Budget Reconciliation Act of 1987.

Subtitle D is a reauthorization of the Maternal and Child Health Block Grant Program. It contains an increase in the authorization level and improvements in the program's structure and operation.

Subtitle E, “Miscellaneous Health-Related Provisions,” includes technical amendments to the National Childhood Injury Vaccine Compensation program. It also includes a technical amendment on Congressional access to information from the Food and Drug Administration and mandates a study by the Comptroller General on health benefits for retirees of a bankrupt employer.

BACKGROUND AND NEED FOR THE LEGISLATION The Concurrent Resolution on the Budget-fiscal year 1990 (H.Con.Res. 106, adopted May 17, 1989) provided for unspecified savings in the Medicare program of $2.3 billion in fiscal years 1990 and 1991. The Budget Resolution assigns this savings target to both this committee and the Committee on Ways and Means, without instructions as to how much is to be achieved in Part A, which is not within the jurisdiction of this committee, and how much is to be achieved in Part B, which is within the jurisdiction of both committees. Therefore, this committee does not have a specific target for the Medicare savings it must achieve. The net savings from this committee are consolidated with the net savings from the Committee on Ways and Means to determine whether the target has been met. This year, as in the past, the committee has attempted to

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achieve its savings without reducing benefits or increasing the outof-pocket expenses of the Medicare enrollees. The committee is also concerned, however, that continual reductions in payments to providers of service, without adequate evaluation of the effects of prior reductions, will inevitably impact on enrollees in the form of reduced quality of care or barriers to accessibility.

The Budget Resolution also provides $200 million in new entitlement authority for fiscal year 1990 to begin Medicaid initiatives to combat infant mortality, improve child health, make communitybased services available to the frail elderly and individuals with mental retardation, and require coverage of hospice services. The committee bill contains each of these initiatives. Under the bill, an additional 84,000 poor pregnant women and 64,000 poor infants would receive Medicaid coverage for prenatal care in fiscal year 1991. An additional 355,000 poor children between the ages of 1 and 7 would receive the preventive health care services under Medicaid that same year. About 15,000 individuals with mental retardation or a related condition would receive services in the community rather than an institution. And community-based services would reach approximately 15,000 low-income frail elderly to help them avoid placement in a nursing home. In the view of the committee, these modest, incremental improvements respond effectively to the most urgent unmet needs of the three populations the Medicaid program serves: poor women and children, poor elderly, and poor disabled individuals.


The Committee's Subcommittee on Health and the Environment held one day of hearings on Medicaid and the Mentally Retarded on September 30, 1989, and heard testimony from 19 witnesses, including three Members of Congress and the Congressional Budget Office. On February 8th, 1989, the subcommittee held hearings on the Medicaid Infant Mortality Initiatives. Testimony was received from 7 witnesses, representing the chairman of the National Commission to Prevent Infant Mortality, a Member of Congress and 5 other organizations. The subcommittee also held a one day hearing on March 13th, 1989 on the development and use of medical practice guidelines in assuring quality of health care. Testimony was received from 7 witnesses, representing the Physician Payment Review Commission, a health insurance association, and 5 medical associations. On May 25th, 1989, the subcommittee held a one day hearing on Medicare Physician Payment Reform. Testimony was received from 12 witnesses, including 2 Members of the House of Representatives, Chairman of the Physician Payment Review Commission, and 9 other organizations. The subcommittee held a one day hearing on June 8th, 1989 on Miscellaneous Medicare and Medicaid Reconciliation Provisions. Testimony was received from 24 witnesses, including a Member of Congress, the Congressional Budget Office, the Health Care Finance Administration, and 9 other organizations. Finally, on June 16, 1989, the subcommittee held a hearing on H.R. 2601, Health Care Research and Policy. Testimony was received from 7 witnesses, representing the Department of Health and Human Services, and 6 other organizations.

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