Washington Highlights: October 14,
2005
Contents
Prior Issues
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AAMC Supports Increased Funding For VA Research,
Opposes Earmarks
As a member of the Executive Committee of the Friends of VA Medical
Care and Health Research (FOVA), the AAMC Oct. 5 sent a letter to
Congress requesting FY 2006 funding of at least $412 million for
the Department of Veterans Affairs (VA) Medical and Prosthetic Research
Program during the upcoming conference on the related bills. Additionally,
FOVA encouraged the removal of the proposed House and Senate earmarks
from the final legislation.
The House provided $393 million, a 2.3 percent decrease from FY
2005 and the same as the President's budget request, of which 20
percent is dedicated to research dealing with the issues of mental
health diagnosis and treatment. The Senate approved $412 million,
which falls short of the $15 million needed to provide an inflationary
increase for the program. Of the $412 million, $15 million is devoted
this fiscal year solely to Gulf War Illness research. Earlier this
year, the AAMC and FOVA recommended $460 million, a $58 million
increase, for VA Medical and Prosthetic Research in FY 2006.
Information:
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
AAMC Urges DoD to Reject Proposed Research Contract
Clause
The AAMC Oct. 12 sent a comment letter
to the U.S. Department of Defense (DoD) concerning its proposed
rule, "Defense Federal Acquisition Regulation Supplement; Export-Controlled
Information and Technology," which amends DoD policy regarding
research contracts with universities and medical schools. The new
language would require, among other things, that the contractor
maintain "unique badging requirements for foreign nationals
and foreign persons and segregated work areas for export-controlled
information and technology."
The proposed rule comes on the heels of the U.S. Department of
Commerce's Advance Notice of Proposed Rulemaking (ANPR) defining
the use of controlled technology in fundamental research by a foreign
national as a "deemed export" that requires licensure.
The AAMC and much of the higher education community commented on
this ANPR when it was released in late March [see
Washington Highlights, April 1].
The DoD proposed rule is especially ominous in its absence of reference
to the fundamental research exclusion and in its potential for expanding
the reach of the export control regulations by contract, to the
detriment of science. The AAMC urged DoD to substitute for its proposal
a clause that simply refers the contractor to its existing responsibilities
under applicable export control law and regulations.
Information:
Susan Ehringhaus, Sr. Director & Regulatory Counsel
AAMC Biomedical Health Sciences Research
sehringhaus@aamc.org
(202) 828-0543
Senate Finance Proposal Would Cut Both Medicare
and Medicaid
Congressional Quarterly Oct. 13 reports that a budget reconciliation
proposal by Senate Finance Committee Chair Charles Grassley (R-Iowa)
includes $12 billion over 5 years in cuts to both the Medicare and
Medicaid programs, $2 billion more than currently required by the
FY 2006 budget resolution.
Of particular concern to hospitals is a proposal reportedly under
consideration that would reduce Medicare outpatient payments by
$400 million. Other provider proposals under consideration include
a home health market basket freeze and reducing the amount of bad
debt nursing homes can write off. Much of the proposal's Medicare
savings would be achieved through proposals that would affect Medicare
Advantage plans.
The proposal would avert a 4.4 percent cut to Medicare physician
payments by freezing them at 2005 levels for one year at a cost
of $6.6 billion. The proposal would also include legislation to
implement "pay for performance" programs for all providers.
Concerning Medicaid, the Finance package reportedly would revise
methodologies for prescription drug reimbursements, require drug
manufacturers to pay additional rebates, make it more difficult
for individuals to transfer their assets in order to qualify for
long-term care, and reduce managed care provider taxes.
The proposal also includes Medicaid spending for a scaled-back
version of Grassley's Katrina relief package (S.
1716) [see Washington Highlights,
Sept. 23] and legislation (S.
183) allowing middle-income families to buy in Medicaid on a
sliding premium scale to cover disabled children.
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
House Postpones Reconciliation Again, Support
for Hurricane Offsets Grows
The House GOP leadership Oct. 11 again postponed the deadlines
for budget reconciliation to provide more time for authorizing committees
to meet a new target of at least $50 billion in savings over 5 years
from mandatory spending. The authorizing committees now have until
Oct. 28 to present their spending reduction proposals to the House
Budget Committee. The House Budget Committee would then mark up
the reconciliation bill the week of Oct. 31.
Under the terms of the FY 2006 budget resolution (H.Con.Res.
95), the authorizing committees originally were to recommend
a total of $34.7 billion in spending cuts to the budget committees
by Sept. 16. In the wake of Hurricane Katrina, the congressional
leadership decided to postpone that deadline to the week of Oct.
17.
The latest delay resulted from House Speaker Dennis Hastert (R-Ill.)
Oct. 6 agreeing with a proposal by House Budget Committee Chair
Jim Nussle (R-Iowa) to amend the budget resolution to call for at
least $50 billion in mandatory spending cuts.
The Senate, which so far has rejected the idea of amending the
budget resolution, remains on schedule for an Oct. 26 markup by
its Budget Committee. Senate authorizing committees are to meet
the week of Oct. 17 to finalize their proposed spending cuts, with
the Senate Finance Committee tentatively scheduled to meet Oct.
19.
Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
House Panel Holds Hearing on Gainsharing
The House Ways and Means Subcommittee on Health Oct. 7 held a hearing
on the subject of gainsharing, arrangements in which a hospital
gives physicians a share of any reduction in the hospital's costs
attributable in part to the physicians' efforts. Current law prohibits
a majority of such arrangements. Subcommittee Chair Nancy Johnson
(R-Conn.) is supportive of better aligning physician and hospital
incentives and is currently circulating a draft legislative proposal
to allow gainsharing arrangements between physicians and hospitals
without violating current law.
Lewis Morris, Chief Counsel to the Office of the Inspector General
(OIG), U.S. Department of Health and Human Services, described how
gainsharing arrangements implicate the Civil Money Penalty (CMP)
law, federal anti-kickback statutes, and potentially physician self-referral
law.
Morris also described the guidance OIG has issued with respect
to gainsharing arrangements. Since 1999, the OIG issued approval
of 7 arrangements that fall under the following categories: product
standardization; product substitution; opening packaged items only
as needed; or limiting the use of certain supplies or devices. OIG
has approved these individual gainsharing arrangements based on
"accountability; quality controls that ensure that patient
care is not compromised and safeguards against payment for referrals."
Stated Morris, "Properly structured, gainsharing arrangements
may offer opportunities for hospitals to reduce costs without causing
inappropriate reductions in medical services or rewarding referral
of Federal health care program patients."
Upon completion of Morris' testimony, Rep. Johnson suggested that
CMP law should include medical necessity or quality of care as a
condition for evaluating whether the CMP provisions should apply.
Rep. Johnson also challenged the OIG's position that gainsharing
arrangements should be considered on a case-by-case basis.
Rep. Johnson's legislative proposal circulating for comment is
modeled after a New Jersey demonstration that was unable to be carried
forward due to legal challenges. Witness Gary Carter, President
and CEO of the New Jersey Hospital Association, recommended that
"if re-implemented in some form, hospital participation…should
remain voluntary with opportunities to opt-out at the end of year's
one and two of the project, if the participating hospital is unhappy
for any reason, is not achieving an appropriate level of physician
buy-in, quality improvement or cost saving success." Carter
also recommended that any guaranteed savings required by hospitals
be less than 2 percent of a hospital's Medicare payments (to encourage
greater hospital participation) and that such a guarantee begin
no sooner than the second year.
Echoing similar concerns, American Hospital Association representative
Stuart Fine, CEO of Grand View Hospital, Sellersville, Pa., recommended
that the panel "reach beyond demonstration projects and amend
current federal laws to eliminate inconsistent and counterproductive
provisions." Further, Fine expressed that gainsharing should
not be a substitute for "the much needed ban on physician self-referral
to limited service hospitals.
Other witness included representatives from the medical device
and consumer community. Martin Emerson, President and CEO of American
Medical Systems, testifying on behalf of the Advanced Medical Technology
Association, raised concerns that gainsharing could have a negative
impact on advances in technology development and diffusion. "If
not designed with adequate safeguards for patients, gainsharing
could easily reward cheaper treatments, not better treatments."
Andrew Imparato, President and CEO, American Association of People
with Disabilities (AAPD), cautioned that gainsharing could jeopardize
the trust between patients and physicians and suggested that patient
access to the best care could be compromised if "physicians
who have developed highly specialized skills and experience might
find themselves penalized for having a practice that produces high
per-patient costs associated with more expensive diagnostics and
care." Ways and Means Ranking Minority Member Pete Stark (D-Calif.)
echoed AAPD's concerns, suggesting that Medicare beneficiaries and
taxpayers "will suffer" and that we would "turn back
time" if Congress were to allow gainsharing.
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
Academies Warns of "Gathering Storm" in U.S. Science
and Competitiveness
As other nations improve their science, engineering, and educational
capacity, disturbing trends in U.S. education and R&D threaten
to undermine this nation's competitiveness and future prosperity,
the National Academies warned in a report,
Rising Above the Gathering Storm: Energizing and Employing America
for a Brighter Economic Future, issued Oct. 12. A distinguished
committee chaired by Norman Augustine, former Lockheed Martin Chairman
and CEO, and including three Nobel Laureates among other industry
and academic leaders, released its report in response to a request
by Senators Lamar Alexander (R-Tenn.) and Jeff Bingaman (D-N.M.).
The senators, with endorsement from Representatives Sherwood Boehlert
(R-N.Y.) and Bart Gordon (D-Tenn.), specifically asked for ten recommendations-in
priority order-that the United States should take to ensure prosperity
and security in the 21st Century.
The chief national priority, according to the Augustine Committee,
is to improve K-12 science and mathematics education by, among other
actions, annually recruiting 10,000 new teachers in these fields.
The committee also called for 25,000 new competitive four-year undergraduate
scholarships and 5,000 new graduate fellowships in science and engineering
fields for U.S. citizens. The nation should further provide automatic
visa extensions for international students receiving science and
engineering doctorates in the United States; should double federal
funding for basic research over seven years (focused particularly
on the physical and mathematical sciences); and should provide tax
incentives and reform the patent system to encourage further capital
investment in R&D.
In his remarks on release of the report, Mr. Augustine noted that
there is "no Pearl Harbor, no Sputnik" to underscore a
crisis in American science, yet the nation is now a net importer
of high technology products, and U.S. 12th graders perform below
the international average for 21 countries on a test of general
knowledge in mathematics and science. China, India and other nations
are producing science and engineering workforces that are more affordable
and "only a mouse click away" in the global labor market.
U.S. industry, meanwhile, spends more on tort litigation than on
R&D.
Information:
Stephen Heinig, Lead Science Policy Analyst
AAMC Biomedical Health Sciences Research
sheinig@aamc.org
(202) 828-0488
Congress Approves Homeland Security Appropriations,
Revises First Responder Funding
The House Oct. 6 and the Senate Oct. 7 passed the FY 2006 Homeland
Security Appropriations conference report (H.R. 2360, H. Rpt. 109-241),
clearing it to be signed by the President. Included in the $31.9
billion bill is a new distribution formula for first responder grants.
The new plan gives the Secretary of Homeland Security the flexibility
to distribute some of the funding based on risk, rather than population.
Authorizers have struggled to resolve this issue, as legislators
from less populated states pushed to retain a minimum level of funding.
Lawmakers from states that face a higher risk of terrorist attack
objected to small states receiving a higher per capita rate. While
the revamped formula only applies to FY 2006 funding, it is likely
to set a precedent to be followed in future years. Under the new
formula, 37.5 percent of total available funds are reserved for
the states (0.75 percent for each state), and the rest is distributed
based on risk as determined by the Secretary.
As amended by a Dec. 17, 2003, Presidential Directive, the definition
of first responder includes hospitals and non-emergency personnel,
making them eligible for federal first responder funding.
Information:
Erica Froyd, Director, Public Health and Research Legislative Affairs
AAMC Government Relations
efroyd@aamc.org
(202) 828-0525
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