Washington Highlights: March 10,
2006
Contents
Prior Issues
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AAMC Opposes Medicaid and Medicare Cuts
The AAMC and other hospital associations March 6 sent a letter
to the House and Senate Budget Committee Chairs urging them to reject
the Administration's Medicaid budget proposals. Specifically, the
letter raises concern with the fact that much of the $13.6 billion
in cuts to Medicaid supplemental payments would occur "through
administrative action without Congressional input or oversight."
The letter states, "the magnitude of such would severely jeopardize
patient care and the ability of hospitals to serve on the frontlines
of care."
The letter outlines the specific Medicaid proposals that are of
concern, including capping payment to government providers, curbing
state Medicaid financing practices, and decreasing the allowable
provider tax rate. The letter also reiterates the hospital community's
opposition to the Administration's proposed Medicare cuts.
In addition to the AAMC, the letter was signed by the American
Hospital Association, the Catholic Health Association, the Federation
of American Hospitals, the National Association of Children's Hospitals,
the National Association of Public Hospitals, Premier and Voluntary
Hospital Association.
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
Senate Panel Approves FY 2007 Budget Plan
The Senate Budget Committee March 9 approved its FY 2007 budget
resolution by an 11-10 party-line vote. The committee approved the
"Chairman's
Mark" that was released by Senate Budget Committee Chair
Judd Gregg (R-N.H.) March 8 after defeating an effort by Democrats
to reinstitute a requirement for offsets for all increases in mandatory
spending programs and tax cuts. The committee also rejected amendments
by Democrats to increase funding for various programs, including
homeland security, higher education, veterans benefits, and pandemic
flu preparedness.
Chairman Gregg's mark includes the President's proposal for $873
billion in discretionary spending (as estimated by the Congressional
Budget Office) for non-emergency federal activities funded through
the annual appropriations process. This represents an increase of
$32 billion (3.7 percent) over FY 2006. As in the President's budget,
the Chairman's mark assumes a significant increase for defense spending
(5.7 percent over FY 2006).
The Chairman's mark notes that it "assumes" an increase
of $1 billion over the President's request for the National Institutes
of Health in FY 2007, for a total budget of $29.6 billion, to allow
NIH spending to keep pace with inflation. The Chairman's mark also
"assumes" a $235 million increase over the President's
request for the Health Resources and Services Administration (HRSA).
This increase is primarily intended to support rural health programs.
However, since the Chairman's mark does not provide an increase
in overall discretionary spending above the President's budget,
it is unlikely the Labor HHS-Education Appropriation Subcommittee
will receive an allocation large enough to provide these increases
to NIH and HRSA. In addition, the Chairman's mark assumes full funding
of the President's request for the Department of Energy Office of
Science and the National Science Foundation.
While the resolution does not propose cuts to the Medicare and
Medicaid programs, it does include language that would raise a point
of order against new mandatory spending proposals if Medicare falls
deeply into the red. Specifically, a point of order would be triggered
against any new Medicare spending proposal when government revenue
other than Medicare taxes and fees subsidize more than 45 percent
of the program's cost. Such spending would not be subject to a point
of order if the spending is offset or if three-fifths of the Senate
approves the proposal.
The resolution includes a reserve fund for legislation that "addresses
healthcare costs, coverage, or care for the uninsured." The
legislation must be budget neutral and target "key segments"
of the uninsured, including college students and recent graduates;
the chronically ill; and individuals without employer-sponsored
coverage. The legislation must also improve the "transparency
of the cost and quality" of medical services. Expanded coverage
may not be "obtained primarily" through premium increases
for insured individuals.
The Senate resolution also includes a budget-neutral reserve fund
for legislation that "provides incentives and support"
for the adoption of healthcare information technology. The legislation
must provide for "performance-based payments" that are
based upon "accepted clinical performance measures."
Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
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
House Republicans Oppose Medicare Cuts
Reps. John McHugh (R-N.Y.), Jim Gerlach (R-Pa.), and 60 other Republican
Members of Congress March 3 sent a letter
to House Budget Committee Chair Jim Nussle (R-Iowa) urging him to
oppose the inclusion of the President's proposed Medicare cuts in
the FY 2007 Budget Resolution [see Washington Highlights,
March 3].
Of the $36 billion in Medicare cuts over five years, "$15.9
billion, or 42 percent, comes from reductions in the inpatient,
rehabilitation, and outpatient hospital update factors" the
letter describes. "In addition, the Administration's FY 2007
budget proposes to phase out bad debt payments."
The letter states, "Unfortunately, our hospitals are already
stretching scarce resources to respond to the daily challenges of
caring for all who come through their doors. At a time when 32 percent
of hospitals have negative total margins and 7 out of 10 are losing
money on Medicare, we strongly believe now is not the time for further
reductions."
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
Senate Finance Leaders Request Investigations
of Limited Service Hospitals
Senate Finance Chairman Charles Grassley (R-Iowa) and Ranking Minority
Member Max Baucus (D-Mont.) March
6 sent separate letters to the Department of Health and Human
Services (HHS) Inspector General (IG) and the Government Accountability
Office (GAO), requesting them to review limited service hospitals'
records on patient safety, quality of care and physician investment
activity. The requests follow their Feb. 27 letter to the Medicare
Payment Advisory Commission (MedPAC) requesting further examination
of the impact of specialty hospitals on community hospitals and
a Feb. 14 request sent to HHS seeking information regarding the
administration and enforcement of the moratorium on new specialty
hospitals imposed by the Medicare Modernization Act of 2003.
In a prepared release, Grassley stated, "The two reports Senator
Baucus and I are seeking will help shed light on how these specialty
hospitals impact our communities and the health care system. We
need to know the impact so we can make educated decisions to ensure
that patients receive the highest quality care for the most cost
effective price. Patient care should always come before profit,
and these reports should help us understand these facilities better
to ensure that this is the case."
The letter to the IG requests "a thorough analysis, audit,
and evaluation of patient safety and quality of care provided to
patients at the physician-owned specialty hospitals across the country."
The letter to GAO requests a "thorough review of the arrangements
used to finance physician-owned specialty hospitals."
The Feb. 27 letter to MedPAC requests that it examine more recent
data to determine whether specific findings presented in a March
2005 MedPAC report have changed. The Senators are interested in
how have physician-owned hospitals have affected the financial condition
of community hospitals; whether it is more or less costly to treat
patients at physician-owned specialty hospitals than at full-service
community hospitals; and whether the formation of physician-owned
hospitals has caused the overall volume of procedures to increase
in markets where they operate.
The Feb.
14 letter to HHS and the Centers of Medicare and Medicaid Services
(CMS) Administrator Mark McClellan, M.D., seeks to learn whether
the federal government adequately oversees the licensing, safety
and quality of physician-owned specialty hospitals.
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
GOP Conservatives Release Budget Proposal
The Republican Study Committee (RSC), a group of over 100 socially
and fiscally conservative House Republicans, released March 8 a
plan to balance the federal budget in 5 years through large cuts
in discretionary and mandatory spending. The RSC plan, largely based
on the 1995 "Contract With America," includes a detailed
list of proposed budget cuts recycled from the House-passed FY 1995
budget resolution.
The list includes a proposal to "encourage privatization of
NIH-supported research" by reducing funding by 10 percent.
The plan notes, "NIH has funded numerous nonessential projects
in recent years, including a prostitute/masseuse study, reactions
to pornography study, and an American Indian transgender research
study." Other discretionary health proposals include the elimination
of health professions grants, reduced funding for the National Health
Service Corps and elimination of the Agency for Healthcare Research
and Quality.
The RSC proposal would reduce Medicare spending by $218 billion
over 5 years through capping overall Medicare spending growth at
an average of 5.4 percent and suggests a number of reforms that
could help control such spending. Specifically, the reforms include
modeling Medicare after the Federal Employee Health Benefits program;
increasing the Medicare Part B premium and allowing Part B means-testing
to take effect earlier; means-testing the Part D prescription drug
benefit; restructuring cost-sharing requirements; imposing a home
health co-payment; and "slow[ing] the growth in payments to
home health agencies, skilled nursing facilities, and hospitals
by one percent."
Attempting to build on "the landmark success of welfare reform,"
the RSC proposal would convert the Medicaid and the State Children's
Health Insurance Program (SCHIP) "into a system of block grants
to states." Capped at an annual growth rate of four percent,
the block grant proposal is estimated to save $92 billion over five
years. The proposal also promotes a more "effective and efficient"
Medicaid program by giving states the flexibility to "create
innovative health care programs for their low-income citizens."
While previous RSC budgets have failed to draw support from a majority
of Republican House members, House Majority Leader John Boehner
(R-Ohio) stated, "The RSC budget is a serious effort to address
a serious problem: the runaway cost of government that threatens
our children's future. This serious problem can only be solved by
making tough choices."
Although the House Budget Committee was tentatively set to mark
up its budget resolution this week, Majority Leader Boehner announced
March 7 he would delay the House Budget Committee action while leaders
continue to negotiate with members.
Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
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
CMS Updates PPAC on Pay-for-Performance
At the March 6 quarterly meeting
of Physician Payment Advisory Commission (PPAC), Centers for Medicare
and Medicaid Services (CMS) staff outlined the agency's plan for
incorporating Pay-for-Performance (P4P) into its Quality Improvement
Roadmap. P4P is one of five strategies of the quality improvement
initiative.
Currently, CMS has several demonstrations and pilot programs for
hospitals, physicians, nursing homes, home health agencies and end-stage
renal disease facilities. Initiatives for physicians include the
Physician Group Practice Demonstration, a project designed to assess
the impact of physician quality and performance measures on total
costs of care for beneficiaries; and the Physician Voluntary Reporting
Program, a claims-based self-report demonstration. CMS also is evaluating
approaches to measuring physician resource use and will release
a white paper on P4P [see Washington Highlights, Dec.
9, 2005].
CMS presented an update on the Recovery Audit Contractors (RAC).
The program, instituted by the Medicare Modernization Act, provides
claims data to third party contractors to identify potential Medicare
mispayments. Initially, contractors would have been paid contingency
fees only for identified Medicare overpayments, not underpayments.
Based on previous PPAC recommendations, CMS has modified the RAC
contracts to pay contingency fees for underpayments as well. RAC
is being implemented in the three states with the largest Medicare
beneficiary populations: California, New York, and Florida.
CMS staff also introduced two initiatives to PPAC: the Medicare
Contractor Provider Satisfaction Survey, an evaluation of the contractors
who process Medicare claims; and the Medicare Health Support, a
care coordination program to help manage beneficiaries with chronic
disease.
Information:
Denise Dodero, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
ddodero@aamc.org
(202) 828-0493
Mary Patton, Senior Specialist
AAMC Health Care Affairs
mpatton@aamc.org
(202) 862-6297
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