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   She even offered to issue a ``Presidential Proclamation'' promising once again to do what had already been promised and promised and promised. My staff worked with OMB on the content of such a proclamation, but I told them it would not be necessary. I would take her at her word and believed the administration would live up to the personal commitment she made to me.

   Here we are a year later, Chugach still has not received its easement. Ms. McGinty is gone, but her commitment on behalf of this administration remains. It is now the responsibility of others to ensure the promises she made to me and to Alaska's Native people are kept.

   Congressman YOUNG's House Resources Committee has reported a bill, H.R. 2547, to address this issue legislatively, in the hope of forcing the administration to do what it has promised to do. Senator MURKOWSKI has been tireless in his efforts to get the Federal Government to live up to the promises made to Alaskans concerning access to our State and Native lands. I support those efforts.

   But I take the time today to say clearly to this administration that the promises made by our Government to the Chugach people for access to their lands--and to me personally as their Representative--must be honored. Make no mistake, if the promises made to me by officials in this administration last fall are not lived up to soon, if they oppose the efforts of Congressman YOUNG and Senator MURKOWSKI on this issue, if they continue to obfuscate and ``slow roll'' this commitment, it will be clear to all that this administration does not perceive the true meaning of Robert Service's memorable phrase: ``A promise made is a debt unpaid''!

   Mrs. FEINSTEIN. Mr. President, today I am pleased the Senate is considering the Balanced Budget Refinement Act of 1999, to restore some of the unanticipated cuts in Medicare and Medicaid made in 1997 and I commend the Senate leadership, the Finance Committee, Senators ROTH and MOYNIHAN, and the Administration for their hard work in developing this bill. The bill includes several important provisions.

   The Balanced Budget Act of 1997 has been one of several factors threatening the overall stability of the health care system in California, which many believe to be on the verge of collapse. Today I will focus on eight provisions of the bill which are particularly important to California.

   CALIFORNIA'S HEALTH CARE SYSTEM ERODING

   During the past few months, I have met with many California health care leaders who have convinced me that the Medicare and Medicaid cuts contained in the Balanced Budget Act of 1997 have undermined the financial stability of California's health care system. In the past 6 months, I have urged President Clinton, Secretary Shalala, and Senators ROTH and MOYNIHAN to join me in addressing the impact the Balanced Budget Act of 1997 is having on our nation's health care system.

   California's health care system, in the words of a November 15th Wall Street Journal article, is a ``chaotic and discombobulated environment.'' It is stretched to the limit:

   Thirty-seven California hospitals have closed since 1996, and up to 15 percent more may close by 2005.

   By 2002, the Balanced Budget Act of 1997 will result in cuts of $5.2 billion for California hospitals. For California's two largest Catholic health systems, Catholic Healthcare West and St. Joseph's Health System, the loss amounts to over $842 million.

   Over half of my state's hospitals lose money on hospital operations annually.

   Hospitals have laid off staff.

   California physician groups are failing at the rate of one a week, with 115 bankruptcies or closures since 1996.

   Academic medical centers, w hich incur added costs unique to their mission, are facing margins reduced to zero and below.

   The University of California's five medical centers wi ll lose $225 million.

   California hospitals are contending with the impact of BBA while facing a projected margin of negative 7.58 percent by 2002, compared to the national rate of negative 4 percent.

   For rural California hospitals, because 40 percent of patients receive Medicare and 20 percent receive Medicaid, 69 percent lost money in 1998, according to the California Health Care Association.

   In short, restoring Medicare cuts is crucial to stabilizing California's health delivery system.

   HOSPITALS

   This bill contains several provisions that will help stabilize California's hospitals by restoring $400 million, according to preliminary estimates of the California Health Care Association. This bill clarifies that Congress' intent was not to impose a 5.7 percent cut in outpatient services, which restores $137

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   SAFETY NET HOSPITALS

   I want to thank the Finance Committee and the Administration for including a provision maintaining adequate Medicaid payments to disproportionate share hospitals. California has a disproportionate burden of uncompensated care. We have one of the highest uninsured rates in the country at 24 percent, while the national rate is 17 percent. California has the fourth highest uninsured rate in the country, a rate that has risen over the last 5 years and now totals over seven million people. As a result of Medicaid reductions in the Balanced Budget Act of 1997, California's Medicaid disproportionate share hospital program could lose more than $200 million by 2002, representing a 20 percent reduction in the program, if what is know as the ``transition rule'' for California's public hospitals is not extended. At my urging, this bill continues for California only the ``transition rule'' allowing California DSH hospitals to calculate Medicaid payments at 175 percent of unreimbursed costs. Under this provision, tens of millions of dollars will be restored to California hospitals.

   Public hospitals carry a disproportionate share of caring for the poor and uninsured. The uninsured often choose public hospitals and frequently wait until their illnesses are exacerbated when they come to the emergency room, making their care even more costly. Without this transition rule, for example, Kern Medical Center, in Bakersfield, would lose $8 million. Alameda County, would lose $14 million.

   Forty percent of all California uninsured hospital patients were treated at public hospitals in 1998, up from 32 percent in 1993. The uninsured as a share of all discharges for public hospitals grew from 22 percent in 1993 to 29 percent in 1998. While overall public hospital discharges declined from 1993 to 1999 by 15 percent, discharges for uninsured patients increased by 11 percent. Large numbers of uninsured add huge uncompensated costs to our public hospitals.

   MEDICAID COMMUNITY CLINICS

   Another important provision is the Medicaid payment method for community health clinics. Extending the phase out of cost-based reimbursement for community health clinics over four years will help alleviate the financial burden associated with the more expedited phase-out proposed under the Balanced Budget Act of 1997.

   BBA 1997 allowed state Medicaid programs to phase-out the previous requirement that clinics be paid on the basis of cost. The phase-out was to occur over 5 years. Under the phase-out, health centers could lose as much as $1.1 billion in Medicaid revenues. California health clinics' could have lost $969 million annually. To halt further decreases in payments to community health, an extended phase-out of cost-based reimbursement has been included in the bill which allows clinics in fiscal year 2000 to be reimbursed at 95 percent and by 2003 at 90 percent of costs.

   California has over 7 million uninsured, and 306 federally qualified health centers and 218 rural health clinics that rely on federal funding so that they can provide vital health services to some of the state's sickest and poorest. Over 80 of California's clinics are located in underserved areas and provide primary and preventive services to 10 percent of the uninsured people in the state. According to the federal Bureau of Primary Health Care's Uniform Data System, 42 percent of California community health center patients are children, 52 percent are adults ages 21-64, and 6 percent are the elderly.

   HOME HEALTH

   I am also pleased that the bill addresses home health care in this bill. For example, the provision which delays the 15 percent reduction in payment for one year will enable home health providers to transition more smoothly and better maintain continuity of services to patients. California will gain $162 million over 5 years as a result of all the home health provisions included in the bill, according to preliminary estimates by the California Association of Health Services at Home.

   While the intent of the BBA 1997 law was to restrain the growth of Medicare home health expenditures, it is now anticipated that home health expenditures in fiscal year 2000 will be lower than they were projected in 1997. CBO estimated that BBA 1997 would cut $16 billion over 5 years. Recent estimates show cuts of $48 billion over 5 years, which is three times more than originally expected. HCFA's 1998 data shows that total Medicare payments to home health agencies declined between 1997 and 1998 by 33 percent; reimbursements dropped from $1.1 billion to $745 million.

   California home health providers have suffered immeasurably since passage of the BBA. In California, 230 home health agencies have closed since 1997, which is 25 percent of all state licensed agencies, largely due to the effects of BBA, according to the California Association for Health Services at Home. For example, the home health agency at the San Gabriel Valley Medical Center, wh ich was providing nearly 10,000 patient visits per year, was forced to close this year due in part to the effects of the BBA. Additionally, between 1997-1998 there has been a 12 percent decrease in the number of patients served nationally and a 35 percent decrease in the number of home health visits nationally. As the population ages and families are more dispersed, it is especially important to help people stay

   in their own homes.

   MEDICAL EDUCATION< p> &n bsp; I support the provisions included in the bill which alleviate reductions in graduate medical ed ucation and begin to restore equity in payment levels. Freezing cuts in the indirect medical education (IME) paym ent at the current level of 6.5 percent for fiscal year 2000, 6.25 percent in 2001, and 5.5 percent in 2002 and thereafter could help stabilize teaching hospitals and prevent a loss of about $3 billion for teaching hospitals nationwide over five years. For example, freezing indirect medical education payment ra tes represents $5 million to UCLA's teaching hospital. California's teaching hospitals as a whole will receive approximately $52 million because of this freeze, according to preliminary estimates by the California Health Care Association.

   The bill also takes a good first step to correct Medicare's direct medical education (DME) form ula, a geographic disparity in payments, that has paid California teaching hospitals far less than teaching hospitals in the Northeast so that California's teaching hospitals can begin to receive payments for medical residents closer to those of their counterparts in other states. Currently, California teaching hospitals receive 40% less in Medicare payments for medical education t han simila r New York institutions. The DME provision in this bill begins to reform a longstanding inequity in the formula that has unfairly compensated medical education i n Californ ia. California's teaching hospitals will benefit from this provision by approximately $52 million over five years, according to the California Health Care Association.

   Many of the nation's teaching hospitals, including UCLA in California, are premier research and clinical care facilities and will be forced to close down beds and lower the quality of care they provide if reductions in indirect medical education ( IME) payme nts continues. According to the Association of American Medical Colleges, 3 0 percent of all teaching hospitals nationwide are now operating in the red, and by 2002, 50 percent of all teaching hospitals will be losing money without this bill.

   Academic medical centers des erve protection because they have multiple responsibilities--teaching, research, and patient care--which cause them to incur costs unique to such facilities. There are 400 teaching hospitals across the country. Teaching hospitals only account for 5.5 percent of the nation's 5,000 hospitals but they house 40 percent of all neonatal intensive care units, 53 percent of pediatric intensive care units, and 70 percent of all burn units. Our nation's teaching hospitals are providing care to some of the nation's sickest patients.

   Academic medical centers als o provide care to a disproportionate share of the uninsured and underinsured. They

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   Medicaid disproportionate share payments to hospitals that serve the impoverished were also reduced five percent over five years as a result of the Balanced Budget Act of 1997. Teaching hospitals receive two-thirds of all Medicaid disproportionate share payments, worth $4.5 billion annually.

   In California, graduate medical edu cation ( GME) fundi ng helps support 108 hospitals that train more than 6,700 residents over three-to-five year periods. In 1997, the direct medical education f unding in California totaled $95 million. Dr. Gerald Levey, the Medical Provost at the University of California Los Angeles wrote that:

   In the 5 1/2 years I have been in my position at UCLA, my colleagues and I have implemented virtually every conceivable cost-cutting measure to keep us financially strong in order to compete in the brutal managed care market and maintain our academic mission of research and teaching. Coming on the heels of these measures, the Balanced Budget Act of 197 has served to literally ``break the camel's back.''

   Teaching hospitals' ability to serve their communities, advance research, and train physicians will be compromised if we do not pass this bill.

   ADEQUATELY PAYING DOCTORS

   I also thank the Finance Committee and Administration for addressing the issue of the ``sustainable growth rate'' factor in payments to physicians under Medicare. The Balanced Budget Act of 1997 changed how Medicare physician payment rates are updated every year, including creating the new sustainable growth rate factor. In the first two years of using the sustainable growth rate, it appears that errors in its calculations were made because projections were used to determine the rate rather than actual data. As a result of these errors, physicians are caring for one million more patients than Medicare anticipated, at a cost of $3 billion according to the American Medical Association .

   California's doctors have made a compelling case that errors in its estimates have caused unintended reductions in payments to physicians. The bill would require HCFA to use actual data beginning in 2001 to calculate payments instead of projections in order to stabilize payments to physicians who treat Medicare patients. While it does not go far enough, it is a step in the right direction towards decreasing fluctuations in physician payments from year to year.

   RETAINING MEDICAID

   Another provision included in this bill that is of great importance to California is removing the December 21, 1999 expiration date for the $500 million Temporary Assistance to Needy Families (TANF) Fund. The expiration date for these funds must be repealed so that states like California can continue to use TANF funds to enroll low-income children and adults in Medicaid and CHIP. As part of the 1996 welfare reform, Medicaid was ``de-linked'' from cash assistance, and states were given increased matching federal funds for administering a new Medicaid family coverage category.

   Of the $500 million provided, as of July 1999, states have only spent 10 percent. Unless federal law is changed very soon, 34 states, including California, will lose these funds by the end of this year because under the law, states have to spend the funds within the first 12 calendar quarters that their TANF programs are in effect. Thus, December 31, 1999, California will lose access to the $78 million remaining of the $84 million allocated if we do not act. Fifteen other states will lose access to their remaining funds in December as well. On September 30, 1999, sixteen states lost access their funds due to these time limits.

   We cannot let these funds lapse in California because we need to enroll more working, low-income people in Medicaid and children in CHIP and ensure that more Californians have access to health services.

   I thank the Committee and Administration for including this provision.

   MEDICARE MANAGED CARE REFORM

   I am pleased with the five-year moratorium placed on NCFA's use of health status risk adjuster for payments to managed care plans included in the bill. HCFA has been using hospitalizations as a measure of health, which is not only an incomplete measure of health but also unfairly penalizes states like California that historically have had a heavy penetration of managed care, lower hospital admissions rates and shorter hospital lengths of stay. The way Medicare pays managed care plans deserves a thorough review to determine if both the payment methodology and the payment rats are appropriate. This moratorium could give us time to conduct a review as well as give HCFA time to develop a better measure of health. Under this provision, $130 million over five years will be restored so that managed care plans can pay providers more adequately, according to preliminary estimates by the California Health Care Association.

   ENVIRONMENT POST-BALANCED BUDGET ACT OF 1997

   Circumstances have changed since 1997 when we passed the Balanced Budget Act. We have eliminated the federal deficit. Because we have a robust economy, lower inflation, higher GDO growth and lower unemployment, we also have lowered Medicare spending growth more than anticipated. This climate provides us an opportunity to revisit the reductions made by the Balanced Budget Act of 1997 and to strengthen the stability of health care services, a system that in my state is on the verge of unraveling.

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