Washington Highlights: February
10, 2006
Contents
Prior Issues
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Bush Releases FY 2007 Proposed Budget
President Bush Feb. 6 sent to Congress the details of his FY 2007
budget. The budget provides $871 billion for discretionary spending,
an increase of $27.3 billion (3.2 percent) over FY 2006. As in last
year's budget, the increases are targeted primarily to defense (6.9
percent increase) and homeland security (up 3.3 percent). All other
discretionary spending is slated for a 0.5 percent decrease to $398
billion. The budget proposes to cut discretionary spending within
the Department of Health and Human Services (HHS) by 2.3 percent
to $67.6 billion.
The following summarizes the budget proposals for discretionary
programs of interest to medical schools and teaching hospitals.
Please see related articles for the Administration's proposals for
Medicare, Medicaid and other health proposals.
National Institutes of Health: The President's budget assumes
a total program level for the NIH in FY 2007 of $28.587 billion,
a freeze at the FY 2006 comparable level, which is $66 million (0.2
percent) below FY 2005. NIH projects the Biomedical Research and
Development Price Index (BRDPI) for FY 2007 will be 3.5 percent.
The budget proposes small increases for the National Institute of
Allergy and Infectious Diseases and the Office of the Director;
most other institutes and centers would get cuts ranging from 0.6
percent to 0.8 percent.
NIH estimates the FY 2007 budget would support 9,337 competing
research project grants (RPGs), an increase of 275 competing RPGs
over FY 2006, but a decrease of more than 1,000 from the 10,411
competing RPGs awarded in FY 2003. In FY 2007, NIH estimates it
will fund a total of 37,671 RPGs, including Small Business Innovation
Research (SBIR) and Small Business Technology Transfer (STTR) awards.
The FY 2007 budget assumes stipends for trainees supported by the
Ruth L. Kirschstein National Research Service Award (NRSA) will
remain at the FY 2006 levels. No increases are provided for other
components of the NRSA training programs, such as tuition or health
benefits. The FY 2007 budget will support 17,499 Full-Time Training
Positions (FTTPs), approximately the same as in FY 2006.
In FY 2007, NIH will direct $443 million towards the Roadmap initiatives,
an increase of $113 million over FY 2006. Of this amount, $111 million
will be provided by the Director's Discretionary Fund, and the remaining
$332 million will be contributed by the institutes and centers (ICs).
The IC contribution to support these trans-NIH research goals is
estimated to be 1.2 percent of each individual budget request for
FY 2007.
The budget includes a total of $25 million to construct additional
BSL-3 laboratories and to renovate existing laboratories to meet
current BSL-3 standards, including providing the capacity to support
Good Laboratory Practice (GLP) research processes within selected
BSL-3 laboratories. Consistent with previous budgets, no funds are
requested for nonbiodefense extramural construction. The Administration
also repeats its proposal to reduce the salary cap on extramural
grants to Executive Level II.
Health Professions: The President's budget eliminates funding
for all Title VII programs, except for $10 million for the Scholarships
for Disadvantaged Students, which is a 79 percent cut for that program.
Title VII programs were cut by 52 percent to $145 million in the
FY 2006 budget, and the proposed FY 2007 total of $10 million represents
a 93 percent cut below FY 2006. The Title VIII nursing programs
receive level funding for FY 2007 at $150 million. Additionally,
the Administration proposes to rescind the unobligated balance of
the Health Professions Student Loan program of Title VII of the
Public Health Service Act and the Federal portion of all liquid
assets in Title VII student loan programs' revolving fund. This
is estimated to produce $106 million in savings.
Children's Hospital Graduate Medical Education: The budget
provides $99 million for Children's Hospital GME, a $198 million
(66 percent) decrease below last year, and proposes a reform to
focus funding on hospitals that treat the greatest number of uninsured
and train the most physicians.
Agency for Healthcare Research and Quality: The President's
budget includes $319 million for AHRQ, level funding with last year,
and all funding is derived from transfers from other public health
agencies. Of this, $50 million is designated for health IT, the
same level as last year.
Health Information Technology: The FY 2007 budget includes
$169 million for health IT, with $116 million directed to the Office
of the National Coordinator for Health Information Technology, (a
$55 million increase over last year), $50 million for AHRQ and $4
million for the HHS Assistant Secretary for Planning and Evaluation.
Centers for Disease Control and Prevention: The proposed
budget provides a total of $5.8 billion for CDC, which includes
$93 million for CDC's share of a new initiative for increased HIV/AIDS
testing among high-risk populations. Also included is $138 million
for injury prevention and control, a $1 million decrease below last
year. Funding for the Preventive Services Block Grant, which received
$99 million last year, is eliminated, and $31 million is provided
for public health research. The National Center for Health Statistics
is provided $109 million and its funding is derived from transfers.
Biodefense Preparedness: The budget includes $474 million
for bioterrorism hospital preparedness, level with last year, and
$12 million for bioterrorism training and curriculum development,
a $9 million (43 percent) cut below last year. The total request
for CDC biodefense activities is $1.7 billion, which includes $593
million for maintenance and bolstering of the Strategic National
Stockpile, $3 million for botulinum toxin research, $824 million
for state and local preparedness, and $136 million for upgrading
CDC capacity. The budget requests a total $1.9 billion for NIH biodefense
efforts.
Higher Education: The Administration's budget request assumes
enactment of the "Deficit Reduction Act of 2005" (S.1932),
which was signed by the President Feb. 8 and includes Higher Education
Act reauthorization provisions that make changes to student aid
programs. With these changes, in FY 2007, the Administration estimates
$66.2 billion in student aid will be available under Stafford and
Perkins loan programs, an increase of $4.5 billion (7.3 percent)
over FY 2006. S. 1932 requires that all administration of student
aid be funded through appropriations. For FY 2007, the Administration
requests $733.7 million in discretionary funds to administer the
Federal student aid programs, an increase of $615 million over the
comparable FY 2006 level.
As in the FY 2006 budget request, the Administration proposes recalling
the Federal portion of 2007 Perkins loan collections to the revolving
funds held by institutions, an estimated $664 million in FY 2007.
National Institute on Disability and Rehabilitation Research:
The Administration proposes $106.7 million for NIDDR, which is a
freeze at the FY 2006 funding level, but a $1.1 million (1.0 percent)
decrease below FY 2005.
VA Research: The Administration requests $414 million for
the VA Medical and Prosthetics Research and VA Research Information
Technology programs, a $13 million (3.2 percent) decrease from FY
2006. The President's budget estimates total resources for VA research
will remain at the FY 2006 level of $1.6 billion. However, this
estimate assumes increases in VA Medical Care support, other federal
resources (e.g., NIH), and grants from private agencies.
VA Medical Care: The Administration budget request includes
$33.1 billion for VA Medical Care, an increase of $3.6 billion (12.1
percent) over FY 2006. Legislative proposals to increase enrollment
fees and pharmacy co-pays are expected to generate additional funds
and decrease veteran enrollment.
National Science Foundation: The Administration's FY 2007
budget includes $6 billion for the NSF, an increase of $439 million
(7.9 percent). This figure includes $4.7 billion for NSF Research
and Related Activities, an increase of $334 million (7.7 percent).
The increases are in concert with the President's American Competitiveness
Initiative, which aims to strengthen research and development in
the physical sciences.
Pandemic Flu: The Administration's FY 2007 budget assumes
a future supplemental request for $2.3 billion to pursue activities
described in the Administration's National Strategy for Pandemic
Influenza, such as increasing vaccine production, augmenting stockpiles
with antivirals and supplies, and research and development on new
countermeasures. The budget proposal also includes an additional
$352 million for pandemic flu activities within CDC, the Food and
Drug Administration (FDA), NIH, and the Office of the Secretary.
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
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
Tannaz Rasouli , Legislative Analyst
AAMC Office of Governmental Relations
trasouli@aamc.org
202-828-0525
FY 2007 Medicare, Medicaid Budget Proposes
Cuts to Providers
The Administration's FY 2007 budget includes proposals to cut Medicare
and Medicaid/SCHIP funding by $36 billion and $13.6 billion, respectively,
over 5 years (2007-2011). Much of the Medicare savings result from
"more accurately" paying providers through payment freezes
or reductions. Providers would also be impacted by Medicaid proposals
that would change provider taxes, upper payment limits, intergovernmental
transfers and disproportionate share hospital payments.
Medicare: For hospitals, the proposed Medicare budget would:
- Reduce Medicare inpatient and outpatient hospital payment updates
in FY 2007 by 0.45 percent and by 0.4 percent in FYs 2008 and 2009.
This proposal is estimated to save $8.1 billion over 5 years.
- Phase out over 4 years hospital bad debt payments, a savings of $3.4
billion over 5 years.
- Adjust payments for hip and knee replacements in post acute care settings,
a savings of $2.4 billion over 5 years.
- Freeze the update to inpatient rehabilitation facilities in 2007 and
reduce payment updates by 0.4 percent in 2008 and 2009. This proposal
is estimated to save $1.6 billion in savings over 5 years.
For physicians, the Medicare budget assumes the estimated 4.6 percent
cut to payments in CY 2007. According to the CMS budget description,
"the administration supports physician payment reforms that
do not increase taxpayer, Medicare, or beneficiary costs, such as
differential updates initially for physicians that report on quality
measures and later for physicians that achieve efficient and high
quality care."
Medicare payment updates to other providers, such as home health
agencies, skilled nursing facilities, ambulance companies, and hospice
programs would also be frozen or reduced.
Medicaid/SCHIP: The proposed Medicaid/SCHIP budget includes
legislative and administrative proposals that would reduce Medicaid
spending by $13.6 billion over 5 years. Three proposals that would
be addressed through regulatory changes would impact providers directly,
including:
- Phasing down the allowable provider tax rate from 6 percent to 3 percent,
yielding an estimated savings of $2.1 billion over 5 years. HHS also
"will release regulations clarifying existing policies used to
determine what provider taxes comply with statute and regulations."
- Capping "payments to government providers to no more than the
cost of furnishing services to Medicaid beneficiaries." Such
a proposal presumably will no doubt impact intergovernmental transfers
and upper payment limits, saving $3.8 billion over 5 years;
- Clarifying provisions related to disproportionate share hospitals.
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
President's Budget Proposes Healthcare System
Reforms
Included in the President's FY 2007 budget are several proposals
to "transform the healthcare system," in an effort to
reduce healthcare costs, expands coverage options, and assures access
to services.
Among the proposals is "Health Insurance Reform," which
includes new tax credits for purchasing Health Savings Accounts
(HSAs) and increases the contribution individuals can make to such
accounts. The insurance reforms also include: the development of
Association Health Plans to increase the purchasing power of small
employers and community groups; medical liability reform; the creation
of competitive multi-state insurance markets that include strong
consumer protections; and expanded tax deductions for out-of-pocket
medical expenses.
They FY 2007 budget establishes a competitive grant program for
states to "promote insurance among the chronically ill."
While the budget does not provide details regarding the grant program,
it does identify $500 million in annual funding.
The President also proposes legislative changes to assure that
Medicaid and SCHIP beneficiaries qualify for the continuity, portability,
and accessibility of coverage afforded under the Health Insurance
Portability and Accountability Act (HIPAA). One change would establish
the determination of eligibility for Medicaid/SCHIP as a "qualifying
event" that allows access to employer-sponsored insurance,
even when an employer's open-enrollment period has expired. Another
change would support the portability of coverage by requiring SCHIP
programs to issue "Certificates of Credible Coverage"
that verify enrollment in a health plan. The HIPAA-related provisions
are budget neutral.
Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
President Signs Reconciliation Bill
President Bush Feb. 8 signed the "Deficit Reduction Act of 2005"
(S.
1932), which includes (over 5 years) $6.4 billion in Medicare
savings, $4.7 billion in Medicaid/SCHIP savings, and $11.9 billion
in net savings from changes to student loan policy. The bill was
approved by the House Feb. 1 [see Washington Highlights,
Feb. 3]. The Medicare provisions
avert the scheduled 4.4 percent reduction in Calendar Year 2006
Medicare physician payments by setting 2006 rates at 2005 levels.
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