Washington Highlights: December
23, 2005
Contents
Prior Issues
|
Senate Clears HHS Spending Bill
The Senate Dec. 21 approved the FY 2006 Labor-HHS-Education Appropriations
bill (H.R.
3010 - H. Rept. 109-337) by voice vote, clearing it for the
President's signature. Its passage follows Senate leadership's decision
not to attach the conference report to the Defense Appropriations
bill (H.R.
2863). The Labor-HHS spending bill was not brought to the Senate
floor for consideration Dec. 16 when it became apparent that the
Republican leadership could not assure its passage. At that time,
Senate Labor-HHS-Education Appropriations Subcommittee Chairman
Arlen Specter (R-Pa.) proposed attaching it to the defense measure
[see Washington Highlights, Dec.
16].
Included in the FY 2006 defense spending bill (H.R. 2863), passed
by the House Dec. 19, is a 1 percent across-the-board cut for all
discretionary programs, with the exception of programs under the
Department of Veterans Affairs [see related story].
Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
Erica Froyd, Director, Public Health and Research Legislative Affairs
AAMC Government Relations
efroyd@aamc.org
(202) 828-0525
Budget Reconciliation Awaits Final House Approval
The House and Senate Dec. 19 and 21 approved the conference version
of the "Deficit Reduction Omnibus Reconciliation Act of 2005"
(S.
1932). However, due to the passage of a Senate procedural motion
raising a point of order striking minor provisions in the bill,
the measure was sent back to the House for final approval. The House
adjourned for the year without considering the bill. The budget
deal, announced Dec. 18, would reduce mandatory spending by $40
billion over five years, including $8.3 billion in net Medicare
savings and $4.8 billion in net Medicaid savings over five years.
The House approved S. 1932 mostly along party lines by a vote of
212-206, with nine Republicans opposing the bill. In the Senate,
Vice President Dick Cheney was on hand to break the tie for a 51-50
vote.
Medicare
The net Medicare savings combines approximately $18.3 billion in
savings with $9.6 million in spending. Much of Medicare savings
comes from phasing out budget-neutrality for risk adjustment to
Medicare Advantage plans (-$6.5 billion over five years); adjusting
Part B payment rates for imaging services in physician offices (-$2.8
billion over five years); requiring durable medical equipment and
oxygen equipment to be converted to beneficiary ownership after
36 months' rental (-$2.9 billion over five years); and eliminating
the update for home health in 2006 (-$2 billion). Key provisions
of interest to teaching hospitals and physicians include:
- A zero percent update to Medicare physician payments in CY
2006 to avoid a 4.4 percent cut (an estimated cost of $7.3 billion
over five years).
- Ensuring that payment rates for imaging services conducted in
physician office do not exceed payment rates for identical imaging
services delivered in hospital outpatient departments.
- A six months extension of the Department of Health and Human
Services' (HHS) policy to suspend issuance of new provider numbers
for specialty hospitals. In that timeframe, HHS must devise a
strategic plan to address investment and care for low income and
uncompensated care.
- The codification of current regulations "clarifying"
the eligible days that can be counted for purposes of calculating
Medicare disproportionate share hospitals (DSH) payments. Under
the codification, Medicaid beneficiaries who are entitled to non-hospital
benefits under states' 1115 expansion waivers cannot be included
in the Medicare DSH calculation. The provision is estimated to
save $1.2 billion over five years.
- Extending the phase-in of the inpatient rehabilitation rule
by retaining the 60 percent threshold for 2006 and increasing
the threshold to 65 percent in 2007 and to 75 percent in 2008.
- Creation of a demonstration program to evaluate gainsharing
arrangements between hospitals and other providers at up to six
sites beginning Jan. 1, 2007.
While the original Senate provisions would have created a Medicare
value-based purchasing program for hospitals, physicians and other
providers, most of these provisions are not included in the final
agreement. However, the agreement does build upon the current quality
reporting system for hospitals and lays the foundation for a hospital
pay for performance system. Specifically, beginning in FY 2007,
hospitals that do not report quality data will have their market
basket reduced by 2 percentage points. The provisions expand the
number of measures hospitals are required to report, require hospitals
to report on existing complications and co-morbidities, and direct
the Secretary to develop a plan to implement a value-based purchasing
program beginning FY 2009.
Medicaid
The net Medicaid savings combines approximately $10.6 billion in
program reductions over five years with an estimated $5.8 billion
in new spending, including over $2.0 billion for Hurricane Katrina
relief.
Prescription drug reimbursement reforms account for $3.9 billion
of the Medicaid reductions. Increased state flexibility regarding
cost-sharing and benefit packages represents an estimated $3.2 billion
in cuts. Under the conference report, states may not impose cost-sharing
on certain populations (e.g., "mandatory" children, pregnant
women, and families earning below 100 percent of the federal poverty
level).
However, states could impose "nominal" cost-sharing on
any beneficiaries seeking non-emergency care in hospital emergency
departments. The conference report allows states to implement alternative
benefit packages for specific Medicaid populations that are currently
eligible for full benefits. About $2.4 billion in Medicaid savings
are related to changes in asset transfer policies for long-term
care benefits.
Other Medicaid provisions of interest to teaching hospitals and
physicians include:
- Reimbursement for emergency services that are provided to out-of-network
Medicaid managed care beneficiaries can not exceed fee-for-service
rates, less any payments for IME and DGME. If a state negotiates
rates for out-of-network services, but does not publicly release
the information, reimbursement may not exceed the average contract
rate for acute care hospitals or tertiary care hospitals (-$50
million over 5 years).
- Medicaid managed care provider taxes must be applied to all
managed care organizations (-$435 million over 5 years).
- States may offer Medicaid coverage for certain disabled children
($1.4 billion over 5 years).
- Children's hospitals may participate in the Section 340(B)
drug discount program (-$50 million over 5 years).
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
Higher Education Provisions Included in Budget
Reconciliation
The Senate Dec. 21 modified and passed the House-approved conference
report for budget reconciliation [see related story],
rejecting a number of the higher education provisions proposed in
the House version of the bill. The conference report cuts a net
$12.7 billion from student aid programs.
The Senate had proposed attaching all of the Higher Education Act
reauthorization, but only certain financial provisions were included
in the final agreement. A majority of these provisions are designed
to decrease mandatory spending, such as reducing lender subsidies.
Other provisions recycle savings back into student aid, such as
increasing unsubsidized loan limits for graduate borrowers from
$10,000 to $12,000.
The conference report accepts the House's proposal to reduce borrower
origination fees for both the Federal Family Education Loan (FFEL)
and Direct Loan programs. Under this proposal, both types of loans
will be incrementally reduced to a total origination fee of 1 percent
in 2010. While the origination fee for Direct Loans is 1 percent
higher during this period, the conference report requires FFEL lenders
to charge an additional 1 percent insurance premium. The final agreement
does not include any changes to consolidation origination fees,
thus allowing borrowers to continue to refinance their student loans
without initial fees.
Like the Senate proposal, the conference report makes no changes
to Stafford Loan interest rates. In July, 2006, interest rates are
scheduled to change to a fixed 6.8 percent rate, as opposed to the
current variable rate formula based on the 90-day T-bill plus 2.3
percent. The final agreement also does not make any changes to consolidation
loan interest rates, which will remain a fixed rate formula based
on the weighted average of the loans to be consolidated, not to
exceed 8.25 percent.
Additionally, the conference report eliminates a loophole that
allowed lenders to charge interest rates of 9.5 percent and, with
the House and Senate in agreement, repeals in-school consolidation.
Information:
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
Defense Appropriations Bill Includes Cuts, Flu
Money
The House Dec. 19 approved by a vote of 308-106 the conference
report for the FY 2006 Defense appropriations bill (H.R.
2863 - H. Rept. 109-359), which mandates a 1 percent across-the-board
cut to all discretionary programs and provides emergency money for
hurricane relief and pandemic flu preparedness. The Senate was unable
to defeat a filibuster that prevented a vote on the bill, so it
was forced to strip the bill of the controversial Alaska drilling
amendment and send it back to the House. The House reconvened Dec.
22 and cleared the bill to be signed by the President.
The 1 percent across-the-board cut, estimated to generate $8.5
billion in savings, applies to all discretionary programs except
for those under the Department of Veterans Affairs, including VA
medical care and research [see Washington
Highlights, Dec. 2]. The
cut will affect all other discretionary health programs, resulting
in a cut below last year's level for the National Institutes of
Health (NIH). The Agency for Healthcare Research and Quality (AHRQ),
which is funded by transfers from other public health service agencies,
will not be subject to the cut.
The defense spending bill also provides $3.8 billion for pandemic
flu preparedness, significantly less than the $7.1 billion proposed
by the President or the $8 billion proposed by Sen. Tom Harkin (D-Iowa)
[see Washington Highlights,
Nov. 4]. Included in this amount is $350 million for state and
local capacity building and $3.3 billion for the Department of Health
and Human Services to use at its discretion. Also added to the bill
is a liability provision that protects vaccine manufacturers from
lawsuits for products used to treat or prevent disease outbreaks
or bioterror attacks and compensation. Another provision provides
compensation for victims injured by countermeasures. The defense
bill also includes $29 billion for hurricane recovery efforts.
To offset the emergency spending for pandemic flu and hurricane
recovery, the bill includes $25 billion in rescissions. Not included
in the final package was an Administration proposal for $100 million
in rescissions from the Title VII and VIII health professions student
loan programs, which the AAMC urged Congress to reject in a Dec.
5 letter [see Washington Highlights,
Dec. 9].
Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
Erica Froyd, Director, Public Health and Research Legislative Affairs
AAMC Government Relations
efroyd@aamc.org
(202) 828-0525
AAMC Comments on FDA Drug Safety Communications
The AAMC Dec. 20 submitted a comment letter
to the U.S. Food and Drug Administration (FDA) regarding the agency's
Dec. 7-8 hearing on the effectiveness of its communication tools
in delivering information about drug safety to patients and physicians.
In its comments, the AAMC recognized that all medications and health
interventions are associated with risks, which in turn must be weighed
against benefits. It also recognized the strengths and weaknesses
of the FDA's communication tools. The letter noted FDA's primary
strength was its thoroughness in the amount of information conveyed.
The primary weaknesses of the communications tools were that the
information was overly cumbersome for physicians because of a lack
of prioritization, and difficult for patients because of the use
of medical and other technical language.
The AAMC enumerated the obstacles hampering effective communication,
as well as potential steps the FDA might take to overcome these
obstacles. For example, the AAMC noted that the point at which prescribers
prescribe and patients first receive their medication usually represents
the only opportunity to convey clear and simple, limited-length
safety alerts and information. This opportunity must be better used
with inserts that meet the needs of the readers.
Information:
Howard Dickler, M.D., Director
AAMC Division of Biomedical and Health Sciences Research
hdickler@aamc.org
(202) 828-0567
Kim Wittenberg, Clinical Research Associate
AAMC Division of Biomedical and Health Sciences Research
kwittenberg@aamc.org
(202) 862-6134
Congress Approves Higher Education Act Extension
The House Dec. 17 and the Senate Dec. 22 approved a bill to temporarily
extend the Higher Education Act of 1965 (HEA) through March 31,
2006. The "Second Higher Education Extension Act of 2005"
(H.R.4525)
is the third extension of HEA since its originally scheduled expiration
in 2004. Congress was expected to reauthorize the legislation this
Fall [see Washington Highlights,
Sept. 23].
Some financial provisions of the reauthorization bills (H.R.
609, S.
1614) were included in the budget reconciliation conference
report (S. 1932) to generate savings from the student aid programs
[see related story].
Information:
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
|
