Washington Highlights: July 22, 2005

Contents House Panel Reviews NIH Reauthorization Plan House Panel Approves HEA Reauthorization Bill CMS Proposes Changes to Outpatient Prospective Payments in CY 2006 Senate Committee Approves Increases for VA Health Accounts HELP Committee Passes Health IT Bill AAMC Signs Group Letters to Congress Urging Replacement of SGR Senate Passes Legislation Removing Physician Group Limits on Patients Receiving Substance Abuse Treatment Prior Issues July 15, 2005 July 8, 2005 July 1, 2005 June 24, 2005 June 17, 2005 Archive

House Panel Reviews NIH Reauthorization Plan

The House Energy and Commerce Subcommittee on Health held a hearing July 19 on draft legislation to reauthorize the National Institutes of Health (NIH). NIH Director Elias Zerhouni, M.D., testified on the draft bill, which was released July 12.

Dr. Zerhouni described the committee's analysis in the draft NIH bill as "functional." He said NIH needs mechanisms to analyze and coordinate research on a prospective basis. NIH has shown it can do strategic planning of trans-NIH initiatives on an ad hoc basis (e.g., the Roadmap, Strategic Plan for Obesity Research, and Neuroscience Blueprint), but according to Dr. Zerhouni, there is a need for a permanent structure, such as the draft bill's proposal for a new Division of Program Coordination, Planning and Strategic Initiatives within the Office of the Director. He emphasized this division would address initiatives that are beyond the purview or resources of any one institute or center but need to be undertaken by NIH as a whole. He also said the proposed division would not supplant or dictate specific research plans or investigator initiated research within the institutes and centers.

Dr. Zerhouni said the "core proposal" of the bill is to institutionalize a mechanism for allocating a percentage of the total NIH budget for greater synergy among all the institutes and centers for trans-NIH initiatives on a prospective basis with proper consultation and oversight. He described this mechanism as "a common fund for common needs."

In a July 19 letter to the chairs and ranking members of the full Energy and Commerce Committee and Health Subcommittee, AAMC President Jordan J. Cohen, M.D., stated, "[T]he critical factors underlying the universally acclaimed success of the NIH are merit-based allocation of resources and a carefully balanced approach to addressing scientific opportunity and public health need, as determined by peer investigators and public health officials, and informed by patient and community advocates in deliberation within the NIH. Any modification of the NIH's organization and function must adhere to these foundational principles." The letter identifies several areas of concern with the draft legislation and notes "sufficient time must be afforded for thoughtful consideration and discussion by all stakeholders in the medical research community."

In general, the draft legislation addresses the organization and function of the Office of the Director of NIH and its relationship to the individual NIH institutes and centers, provides enhanced authorities (and possibly increased funding) for strategic planning and support of trans-institute initiatives, and creates a detailed series of reporting requirements covering research and other activities supported by NIH. The draft also eliminates a variety of disease-specific authorizations for appropriations and reporting requirements.

Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525

House Panel Approves HEA Reauthorization Bill

The House Committee on Education and the Workforce July 22 approved legislation (H.R. 609) to reauthorize the Higher Education Act (HEA). The "College Access and Opportunity Act" includes several provisions of interest to medical schools and teaching hospitals, including reduced origination fees and increased unsubsidized loan limits for graduate and professional students. The Committee adopted an amendment calling for a study of medical student indebtedness, but rejected an amendment to extend the Economic Hardship Deferment.

The Committee approved by voice vote an amendment offered by Rep. Tom Price (R-Ga.), an orthopedic surgeon, that calls on the Secretary of Education to conduct a study of the indebtedness of medical students, asking the question of whether the cost of medical school is becoming prohibitive and whether the best and brightest individuals are not choosing careers in medicine because of the potential debt burden. Rep. Charles Boustany (R-La.), a heart surgeon, also spoke in support of the amendment. Rep. Boustany also offered an amendment extending the deferment of student loans for medical resident to 8 years, but subsequently withdrew the amendment because of the large cost estimate from the Congressional Budget Office (CBO).

The Committee defeated by a vote of 28-19 with one member passing an amendment offered by Rep. Rob Andrews (D-N.J.) that would have extended the Economic Hardship Deferment. Rep. Danny Davis (D-Ill.) also spoke in favor of the amendment. Specifically, the Andrews amendment sought to extend the Economic Hardship Deferment from three to five years for medical and dental residents in residencies and fellowships. The amendment also would not have required borrowers to apply for the deferment annually, and would include a greater population of borrowers by expanding from 220 percent to 230 percent the ration of borrower's income to the federal poverty level or minimum wage required for qualification. In a July 20 letter to all committee members, AAMC President Jordan J. Cohen, M.D., wrote "[T]he Andrews amendment would allow future physicians to defer repayment of their student loans for up to five years of medical training, allowing them to postpone these significant additional expenses. Approving this amendment will help the next generation of the nation's physician workforce complete their education without worrying about how they are going to repay their debt."

In the area of loan consolidation, the Committee adopted an amendment sponsored by Rep. Tom Petri (R-Wis.) that would provide borrowers with a one-time choice of a fixed or variable rate for consolidation loans. Under the amendment, the variable rate loans would be set at the 91-day T-bill rate plus 2.3 percent, capped at 8.25 percent; the fixed rate would be set at the 91-day T-bill rate plus 3.3 percent, with a 0.5 percent origination fee that could be discounted by the lender. Committee members rejected a second-degree amendment sponsored by Ranking Member George Miller (D-Calif.) that would have reduced the add-on for the fixed rate option to 2.8 percent and eliminated the 0.5 percent origination fee. Efforts to set a cap on variable rate Stafford and consolidation loans at 6.8 percent rather than the 8.25 percent cited in the bill were also defeated.

Information:
Jonathan Fishburn, Director, Research, Education and Veterans' Legislative Affairs
AAMC Government Relations
jfishburn@aamc.org
(202) 828-0525

Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116

CMS Proposes Changes to Outpatient Prospective Payments in CY 2006

The Centers for Medicare and Medicaid Services (CMS) July 18 posted on its Web site the Medicare hospital outpatient prospective payment system (OPPS) proposed rule for calendar year (CY) 2006. It is scheduled to be published in the Federal Register on July 25.

The proposed rule would raise the conversion factor used to determine payment rates under the OPPS by the full increase in the hospital market basket, currently estimated at 3.2 percent. Sole community hospitals in rural areas would receive an additional payment adjustment increase of 6.6 percent.

CMS is also proposing to pay on a competitive market basis for Part B drugs, biologicals and radiopharmaceuticals administered in hospital outpatient departments. Hospitals would be reimbursed at 106 percent of the average purchase price, instead of at the current rate, 83 percent of the average wholesale price, but average purchase prices tend to be significantly lower than wholesale prices. The proposed methodology is intended to better reflect the cost of drugs administered in physicians' offices. Furthermore, CMS is proposing to add an additional 2 percent to the payment schedule to cover hospital pharmacy handling costs - such as pharmacists' salaries - until such time as a study has been completed to better identify such costs. Under the current system, acquisition and handling costs are bundled into the total reimbursement payment for the drug.

The rule proposes several other changes that would:

• Increase payment rates for most screening evaluations;
• Reduce the maximum beneficiary co-payments for any outpatient services to 40 percent of the total payment to the hospital (down from 45 percent); and
• Decrease payments for some multiple diagnostic imaging procedures that are performed in the same session with the patient.

Comments on the proposed rule are due Sept. 16, and a final rule is scheduled to be published by Nov. 1.

Informaton:
Diana Mayes, Staff Associate
AAMC Division of Health Care Affairs
dmayes@aamc.org
(202) 828-0498

Senate Committee Approves Increases for VA Health Accounts

The Senate Appropriations Committee July 21 approved its version of the FY 2006 Military Construction and Veterans Affairs Appropriations bill, including a $2.977 billion (10.7 percent) increase for VA medical care, and a $10 million (2.5 percent) increase for the VA research program. The Military Construction and Veterans Affairs Appropriations Subcommittee approved the bill on July 19.

The FY 2006 increase provided by Senate appropriators to the VA medical care account includes the Administration's original budget request, which called for an increase of approximately $1 billion, and adds an additional $1.977 billion to counter the projected shortfall that was reported last month [see Washington Highlights, July 1]. These additional funds were designated as "emergency spending," and therefore do not count against the discretionary spending caps. $300 million of the $1.977 billion would be for FY 2005; however the Senate version of the FY 2006 Interior appropriations bill includes $1.5 billion in emergency-designated funds for FY 2005, and Military Construction and Veterans Affairs Chairman Kay Bailey Hutchison (R-Texas) indicated that if the full amount in the Interior spending measure is enacted for FY 2005, the FY 2006 funds in the Military Constriction and Veterans Affairs bill could be reduced. The Senate Committee also rejected the Administration's proposals for increased co-payments and enrollment fees.

The Senate version of the bill also includes $412 million for the VA medical and prosthetics research program, an increase of $10 million (2.5 percent) over FY 2005,and $19 million (4.8 percent) higher than the amount requested by the Administration.

Information:
Jonathan Fishburn, Director, Research, Education and Veterans' Legislative Affairs
AAMC Government Relations
jfishburn@aamc.org
(202) 828-0525

Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116

HELP Committee Passes Health IT Bill

The Senate Health, Labor, Education and Pensions (HELP) Committee July 20 unanimously approved by voice vote, S. 1418, the "Wired for Health Care Quality Act." The bill is sponsored by HELP Committee Chairman Sens. Mike Enzi (R-Wyo.), Ranking Minority Member Edward Kennedy (D-Mass.), Majority Leader Bill Frist (R-Tenn.) and Hillary Clinton (D-N.Y.). The bipartisan legislation blends features of previously introduced bills by Frist-Clinton (S. 1272) and Enzi-Kennedy (S. 1355).

Specifically, the language of the bill codifies the creation of the Office of the National Coordinator of Health Information Technology, establishes a collaborative to adopt health information technology (IT) standards, authorizes two grant programs for individual providers to encourage linkage to a broader network and one grant to support development of IT consortia.

Specifically, the bill authorizes a matching grant program for not-for-profit hospitals and physician group practices to purchase and enhance qualified IT systems. Grant preference would be given to those entities in rural, frontier, or underserved areas.

Providers would also have access to loan funds through a state health information loan fund that would encourage linkage to a broader network and matching grants provided to local or regional health information technology consortia. The bill authorizes $125 million for the 3 programs in FY 2006, $150 million in FY 2007 and such sums as necessary in FYs 2008 to 2010.

The bill's provisions also authorize grants to encourage the adoption of information technology in the medical education system. Preference would be given to community-based medical education programs as well as programs that collaborate with two or more disciplines. The bill authorizes "such sums as necessary" in FY 2006, $5 million in FY 2007 and "such sums as necessary" in FYs 2008-2010.

AAMC Signs Group Letters to Congress Urging Replacement of SGR

The AAMC July 15 joined over 120 physician organizations in signing group letters to the House and Senate, urging enactment of legislation to replace Medicare's Sustainable Growth Rate (SGR) methodology. The letters recommend that Congress halt scheduled reductions in Medicare physician payments for two years. The letters state that the two-year fix would "provide an opportunity" for Congress to "design a payment system that appropriately reflects the costs of practicing medicine." Specifically, the group letters encourage co-sponsorship of House (H.R. 2356) and Senate (S. 1081) legislation that addresses the problematic SGR methodology.

Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526

Senate Passes Legislation Removing Physician Group Limits on Patients Receiving Substance Abuse Treatment

The Senate July 19 passed S. 45, which removes the current statutory limit on physician group practices that treat substance abuse patients. S. 45 was introduced in the Senate by Senators Carl Levin (D-Mich.), Orrin Hatch (R-Utah) and Joseph Biden (D-Del.) on Jan. 24.

The full House has yet to take up companion legislation, but is expected to do so before the end of July. On June 29 and May 4, respectively, the House Judiciary Committee and Energy and Commerce Committee approved H.R. 869, the House version of S. 45. H.R. 869 is sponsored by Rep. Mark Souder (R-Ind.). In addition to the AAMC, S. 45/H.R. 869 has been endorsed by over 40 provider and patient groups.

The 106th Congress enacted the Drug Addiction Treatment Act (DATA) of 2000 to expand treatment options for patients addicted to opiates. A limit of 30 patients per treating physician was included in the legislation to address concerns about potential abuse or diversion of the treatment medications. In addition to the limit per physician, DATA also contained language that imposed a 30 patient cap on group practices as well as amending the Controlled Substances Act. H.R. 869 clarifies that group practices would not be limited to 30 patients, while still limiting each provider within the group to 30 patients seeking treatment for their drug addictions.