Washington Highlights: February
17, 2006
Senate Finance Leaders Urge CMS to Improve Accuracy
of Medicare Payment System
Contents
Prior Issues
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In a Feb. 9 letter to Centers for Medicare and Medicaid Services
(CMS) Administrator Mark McClellan, M.D., Senate Finance Committee
Chair Charles Grassley (R-Iowa) and Ranking Minority Member Max
Baucus (D-Mont.) urged CMS to move forward in FY 2007 with significant
refinements to Medicare's hospital inpatient prospective payment
system (IPPS).
Citing a March 2005 Medicare Payment Advisory Commission (MedPAC)
report to Congress entitled "Physician Owned Specialty Hospitals,"
the letter lends the Senators' support "for a detailed discussion,
and adoption, if appropriate," of the report's recommendations.
Because MedPAC found that there are large differences across and
within Medicare inpatient diagnostic related groups (DRGs), the
report recommended that the Secretary of Health and Human Services
improve payment accuracy in the hospital IPPS by:
- Refining the current DRGs to capture more fully differences
in severity of illness among patients;
- Basing the DRG relative weights on the estimated costs of
providing care rather than on charges; and
- Basing the weights on the national average of hospitals relative
costs in DRG cases.
In addition, the report
recommended that Congress should amend the Medicare law to give
the Secretary authority to adjust the DRG relative weights to account
for differences in the prevalence of high cost outlier cases and
that Congress and the Secretary should implement the case mix measurement
and outlier policies over a transitional period.
The letter states, "Medicare payments should reflect what
it actually costs hospitals to provide care to beneficiaries….Any
incentives in the payment system to systematically choose one patient
over another must be removed."
Information:
AAMC Government Relations
AAMC, FOVA Comment On Proposed VA Research Cuts
The Friends of VA Medical Care and Health Research (FOVA) Feb.
14 sent a letter
to the House and Senate Committees on Veterans Affairs (VA) outlining
the negative impact of the Administration's proposed cuts for VA
research in FY 2007, such as decreases in research projects, VA
research employees, and funding for priority health research. FOVA
recommends a $460 million appropriation for VA Medical and Prosthetic
Research. The AAMC is a member of the FOVA Executive Committee.
House VA Subcommittee on Health Chair Henry E. Brown, Jr. (R-S.C.)
submitted the FOVA letter as testimony at a Feb. 14 oversight hearing
regarding the Administration's budget request for the Veterans Health
Administration (VHA) for FY 2007. The focus of the hearing turned
to committee members' concerns over the Administration's VA research
request, which includes $399 million for the VA Medical and Prosthetics
Research program, a $13 million (3.2 percent) decrease from FY 2006.
VA Under Secretary for Health Jonathan B. Perlin, M.D., Ph.D., testified
that the Administration anticipates a $17 million increase in total
VA research resources; however, this estimate assumes increases
for research funding from VA Medical Care support, other federal
resources, and grants from private agencies. Rep. Vic Snyder (D-Ark.)
was quick to point out that, even with the assumed increases in
supplementary resources, the total VA research budget request would
still be less than biomedical inflation. Dr. Perlin was asked to
respond directly to FOVA at a later date.
Senate Committee on Veterans Affairs Ranking Member Daniel Akaka
(D-Hawaii) questioned Secretary of VA Jim Nicholson about the proposed
cuts at a Feb. 16 hearing of the Senate Committee on VA. Secretary
Nicholson testified that the FY 2007 VA research budget request,
while less than the $412 million appropriated for FY 2006, is greater
than the $393 million they requested for FY 2006.
Information:
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
Clerical Error Challenges Legality of Deficit
Reduction Law
A clerical mistake has called into question the legality of the
"Deficit Reduction Act of 2005" (P.L.
109-171), which President Bush signed Feb. 8 [see Washington
Highlights, Feb. 10].
The versions of bills that the Senate and House approved, which
include (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, are not identical.
The clerical error occurred after the Senate Dec 21 narrowly approved
the bill. A Senate clerk changed the bill while it was being transmitted
to the House. The clerk mistakenly extended the period of time that
Medicare should pay for certain medical equipment, decreasing the
savings in the bill by $2 billion. The House Feb 1 passed this version
of the bill by two votes.
The Senate Feb. 8 passed a resolution (S.Con.Res.
80) stating that the legislation President Bush signed reflects
"the intention of Congress." Even if such a resolution
is approved by both chambers, the constitutional questions would
persist because resolutions are not binding. The House and Senate
may have to repeal the budget-cutting law and bring the bill up
for another vote or risk a legal challenge.
NIH Releases Revised BRDPI Update
According to a revised update
issued Feb. 14 by the National Institutes of Health (NIH), the Bureau
of Economic Analysis (BEA) in the U.S. Department of Commerce now
estimates the Biomedical Research and Development Price Index (BRDPI)
will increase by 5.5 percent for FY 2005.
The BEA estimated increase of 5.5 percent for FY 2005 is greater
than the 3.3 percent increase NIH projected last January. NIH attributes
the increase in part to growth in the general rate of inflation,
as measured by the price index for the Gross Domestic Product, which
increased by 2.8 percent rather than by the 2.0 percent increase
projected by Office of Management and Budget (OMB) in December 2004.
NIH also has revised its projected future year values for BRDPI.
The NIH now projects the BRDPI to increase by 4.1 percent for FY
2006 and 3.8 percent for FY 2007 and FY 2008.
NIH previously issued an update dated Jan. 24 and posted on the
NIH Website Feb. 6.
The BRDPI measures changes in the weighted-average of the prices
of all the inputs (e.g., personnel services, various supplies, and
equipment) purchased with the NIH budget to support research. The
annual change in the BRDPI indicates how much the NIH budget would
need to change to maintain purchasing power-to compensate for the
average increase in prices and to maintain NIH-funded research activity
at the previous year's level. The BEA developed the BRDPI in the
early 1980s and provides annual updates under an interagency agreement
with the NIH.
Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
Final CMS Occupational Mix Survey Instrument Published
The Centers for Medicare & Medicaid Services (CMS) has published
on its Website its final occupational mix survey instrument and a response to comments
on the initial proposal.
The survey collects hospitals' occupational wage data to calculate
an "occupational mix adjustment" that is applied to the
Medicare hospital wage index. The purpose is to ensure that the
wage index reflects only geographic variations in labor prices,
rather than also reflecting the "mix" of occupations employed
by the hospital. Pursuant to statute, the occupational mix data
are collected every 3 years. The data collected in the 2006 survey
will be incorporated into the federal fiscal year 2008 hospital
wage index.
The survey asks hospitals to report wage and hours data on a number
of occupational wage categories for a six-month period, from Jan.
- June, 2006. In response to comments, CMS reduced some of the occupation
categories for which data must be collected, but rejected the AAMC's,
and others, urgings to allow more than 30 days after the survey
timeframe to submit data. [see Washington
Highlights, Dec 16,
2005]
Information:
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
House Science Committee Examines Research Budgets
The House Committee on Science Feb. 15 met to hear testimony
on the President's American Competitiveness Initiative (ACI) as
it relates to the Administration's FY 2007 budget request increases
in research. Director of the Office of Science and Technology Policy,
John Marburger, III, Ph.D., assured committee members that the physical
sciences-oriented ACI does not abandon biomedical research, since
a strong base in the physical sciences yields progress in all fields.
Marburger further testified that unlike the National Institutes
of Health (NIH) budget, the budgets of the "high priority"
research institutions in ACI have not increased proportionately
with advances in the field.
Rep. Russ Carnahan (D-Mo.) expressed concerns about cutting some
science budgets to fund others, though most committee members praised
the newfound attention on the physical sciences.
Information:
Tannaz Rasouli , Legislative Analyst
AAMC Office of Governmental Relations
trasouli@aamc.org
202-828-0525
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