Washington Highlights: April 14,
2006
Contents
Prior Issues
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CMS Releases Medicare Inpatient Proposed Rule
The Centers for Medicare and Medicaid Services (CMS) April 12 released
a proposed FY 2007 Medicare inpatient
rule. Major teaching hospitals would see their Medicare per
case payments increase by significantly less than what Congress
authorized if the rule is finalized. The rule will be published
in the Federal Register April 25. According to the CMS press
release, this proposed rule begins a transition to the "first
significant revision of the Inpatient Prospective Payment System
(IPPS) since its implementation in 1983."
While current law specifies that the Medicare base per case payment
increase by 3.4 percent in FY 2007, CMS estimates that teaching
hospitals training 100 or more residents would see average per case
payments in FY 2007 that would be only 2.1 percent higher than last
year. Other teaching hospitals and nonteaching hospitals would see
increases of 2.6 percent and 4.8 percent, respectively; rural hospitals
would see an average increase of 6.7 percent.
A portion of the lower increase is due to the legislatively mandated
cut in indirect medical education (IME) payments, from 5.55 percent
to 5.35 percent. However, the reduction also is due to a proposed
significant regulatory change to the diagnosis-related group (DRG)
payment weight calculation from a charge-based method to a hospital-specific
cost-based method. According to the proposed rule, this change reduces
payments from those cases that require more ancillary services,
such as surgical cases, while medical cases would see payment increases.
The movement from a charge-based to cost-based weighting methodology
is the first of CMS's envisioned two-part transformation to the
IPPS. In FY 2008, CMS proposes to move to a new DRG system that
would better reflect severity. In theory, such a change should help
major teaching hospitals because they tend to treat the most severe
Medicare patients.
CMS has indicated it will consider comments it receives in response
to its proposal. In a press release, CMS Administrator Mark McClellan
states that "This proposed rule will be shaped by the public
comment process... We look forward to comprehensive feedback from
hospitals, suppliers, and other stakeholders that will help to refine
and improve the final version of the rule."
The rule also contains several changes to Medicare direct graduate
medical education (DGME) and IME payments [see related article].
Information:
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
CMS IPPS Rule Includes Medicare GME "Clarification"
CMS's annual inpatient prospective payment system proposed
rule, released April 12, includes "clarification"
related to Medicare direct graduate medical education (DGME) and
indirect medical education (IME) payments. It would prohibit teaching
hospitals from including time that residents spend in didactic activities
and could have an impact on both teaching hospital Medicare payments
as well graduate medical education (GME) educational activities.
The proposed rule also contains a number of other significant changes
[see related story].
The proposed rule states that resident training that occurs in
nonhospital sites must be related to patient care if a hospital
wishes to count that time for DGME and IME payment purposes. Resident
time spent in didactic activities that often may occur in associated
medical schools, such as educational conferences, journal clubs,
and seminars, would be specifically excluded. CMS noted that its
statement in a previous letter on this topic "implying that
didactic time spent in nonhospital settings could be counted for
direct GME and IME...was inaccurate." CMS noted that time
spent in these activities could be counted for DGME purposes if
they occur in a hospital; however, the counting prohibition applies
for IME payments regardless of where the educational activity occurs.
The proposed rule also contains several more minor technical changes
relating to documentation requirements, GME aggregation agreements,
and determination of per resident amounts when teaching hospitals
merge.
Information:
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
NIH Director Highlights Research Benefits before
House Panel
National Institutes of Health (NIH) Director Elias Zerhouni, M.D.,
testified
April 6 before the House Labor, Health and Human Services, and Education
Appropriations Subcommittee on the medical advances achieved as
a result of the investment in the NIH budget. Citing the decrease
in deaths due to coronary heart disease and cancer, Dr. Zerhouni
noted the substantial return on investment and improvements to both
longevity and quality of life brought about by biomedical research.
He described current progress in treating a host of diseases, ranging
from HIV/AIDS to diabetes and Parkinson's disease. He also discussed
NIH's vision to transform medicine by making it more "predictive,
personalized and preemptive."
Subcommittee Chair Ralph Regula's (R-Ohio) questions addressed
the need for interdisciplinary research, causing Dr. Zerhouni to
highlight the trans-institute initiatives on obesity and neuroscience.
Ranking Member David Obey (D-Wisc.) stated his dismay that the President's
budget proposes level funding for NIH, noting that the agency has
seen only a three-fold increase in real dollars since 1974.
Other Democratic members of the panel also focused on the proposed
level funding for the agency at $28.4 billion in FY 2007, noting
that this is insufficient to allow NIH to build upon its current
successes. Reps. Dave Weldon (R-Fla.) and Lucille Roybal-Allard
(D-Calif.) expressed concern with the administration's proposed
termination of the National Children's Study, a national longitudinal
study of environmental influences on children's health and development.
Dr. Zerhouni stated that the study is estimated to cost $3.2 billion
through 2034 and needs to be halted due to budget constraints. He
noted the related work to be supported under the recently announced
cross-institute Genes, Environment and Health Initiative.
In response to Rep. Ernest Istook's (R-Okla.) question as to why
a decrease is proposed for the Institutional Development Award Program,
which supports institutions in states not traditionally successful
at acquiring NIH grants, Dr. Zerhouni replied that the number of
grants to these states has tripled due to the program. He noted
the decrease is not an indication of lack of support, but rather
of tight budget times.
Rep. Istook also asked about the status of NIH's public access
policy, noting that the public is paying billions of dollars supporting
biomedical research but cannot afford the expensive publications
that publish the results. Dr. Zerhouni responded that the current
policy of encouraging researchers to provide their peer-reviewed
manuscripts voluntarily to the National Library of Medicine (NLM)
may not be sufficient. He said NIH has three goals with respect
to publishing research results: create a new agency-wide searchable
database; continue to improve information technology at the NLM
to ease public access to studies; and develop a uniform system for
researchers to deposit information. He emphasized it is important
that these changes do not come at the expense of the peer review
system.
Information:
Erica Froyd, Director, Public Health and Research Legislative Affairs
AAMC Government Relations
efroyd@aamc.org
(202) 828-0525
CMS Publishes "Katrina" GME Rule
The Centers for Medicare and Medicaid Services (CMS) April 12 published
an interim
final rule addressing Medicare direct graduate medical education
(DGME) and indirect medical education (IME) payments for hospitals
that took on displaced residents as a result of Hurricanes Katrina
and Rita. Unlike most other rules that are effective prospectively,
this rule has an effective date retroactive to Aug. 29, 2005, the
date of Hurricane Katrina. It also is an "interim" final
rule, which means that even though it is effective now, comments
are still being solicited.
The rule is in direct response to Medicare GME and IME payment
issues surrounding resident displacements when New Orleans hospitals
were forced to close or severely limit their operations and had
to transfer residents to hospitals throughout the country. The rule
is also meant to address future emergency situations in which teaching
hospitals are so debilitated that residents must be transferred
to other hospitals for training.
Medicare places a cap on the number of residents each teaching
hospital can claim for GME and IME payment purposes. Taking on the
displaced residents caused many hospitals to go over their caps.
In the aftermath of Katrina, CMS published a Q and A document that
allowed New Orleans hospitals to temporarily give their cap slots
to these "host" hospitals, so they could receive Medicare
reimbursement associated with the displaced residents.
However, CMS learned from hospitals and medical schools in the
area that the policy was insufficient because it only applied if
the New Orleans hospitals residency programs were completely shut
down. In many cases, training programs remained minimally open during
that period. Moreover, for those programs that had closed, they
are now starting to reopen but can only do so partially, still leaving
large numbers of displaced residents that need to train at other
hospitals.
The new rule provides significant flexibility for hospitals in
emergency situations to transfer their Medicare cap slots temporarily
to other hospitals-specifically allowing such a transfer to occur
even when the residency program is partially open.
Comments on the rule are due June 12, 2006.
Information:
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
Education Commission to Hold Open Meeting
The Secretary of Education's Commission on the Future of Higher
Education plans to hold its fifth meeting
May 18 and 19 in Washington, DC. The Commission is charged with
initiating a national dialogue about the future of higher education
and how best to improve the country's system of higher education
to ensure graduates are well prepared to meet future workforce needs.
The agenda for the May meeting includes a discussion of preliminary
findings, possible recommendations and a proposed format for the
final report, which must be submitted to the Secretary by August
2006.
The meeting will be open to the public, but individuals interested
in attending must register in advance by contacting Kristen Vetri
at kristen.vetri@ed.gov. Opportunities for public comment
and more information on the Commission are available on the Department
of Education's Web site.
Information:
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
Burr Introduces Biodefense Bill
Senator Richard Burr (R-N.C.), chair of the Health, Education,
Labor and Pensions Subcommittee on Bioterrorism and Public Health
Preparedness, introduced April 6 the Biodefense and Pandemic Vaccine
and Drug Development Act of 2006 (S.
2564). The legislation seeks to enhance and reorganize the Department
of Health and Human Services' (HHS) authority over bioterrorism
and public health preparedness by creating the Biomedical Advanced
Research and Development Authority (BARDA). BARDA would be the lead
federal office charged with supporting research and development
of medical countermeasures, including drugs and vaccines to respond
to bioterrorism and natural disease outbreaks.
The legislation is intended to build upon the existing Project
Bioshield program, created in 2004, which sets asides federal funds
to purchase bioterrorism countermeasures developed and produced
by biotech companies. S. 2564 authorizes additional funds aimed
at encouraging academic researchers and manufacturers to commit
substantial resources to bring new products to the market more quickly.
The legislation also creates a National Biodefense Science Board
to provide expert guidance to HHS on potential bioterrorist threats.
Also included is expansion of orphan drug market exclusivity to
include countermeasures, antibiotics, and antiinfectives developed
to treat a rare disease or condition caused by biological agent
or toxin. This provision allows the manufacturer exclusive patent
rights for an established period of time pending a study examining
the impact of the patent.
Information:
Erica Froyd, Director, Public Health and Research Legislative Affairs
AAMC Government Relations
efroyd@aamc.org
(202) 828-0525
House Subcommittee Holds Fourth HIT Hearing
At an April 6 House Ways and Means Subcommittee on Health hearing,
Chair Nancy Johnson (R-Conn.) expressed concern about the slow adoption
of health information technology (HIT). Stating that "additional
actions are needed by both the public and private sectors"
to achieve the President's goal of providing most Americans with
electronic health records (EHRs) by 2014, Rep. Johnson urged the
witnesses to suggest ways to expedite HIT adoption.
Among those testifying was Brent Henry, Vice President and General
Counsel for Partners HealthCare System in Boston. Mr. Henry stated
that Congress should craft a Stark law exception and an anti-kickback
safe harbor for the provision of HIT and related services. He commended
Chairwoman Johnson for introducing legislation (H.R.
4157) that would assure these exceptions. According to Lewis
Morris of the Health and Human Services (HHS) Office of the Inspector
General, his colleagues are exploring whether and how HIT exceptions/safe
harbors could assure a "balance between fostering the adoption
of beneficial [EHR] systems and preventing fraud and abuse in the
Federal health care programs."
Ken Kizer, M.D., M.P.H., Chairman and CEO of Medsphere Communications,
suggested that the federal government "support and utilize
open source software as the preferred option" whenever possible.
Open source software is non-proprietary, available at no or minimal
cost, and is designed to operate in collaboration with multiple
systems. He also testified that the use of EHRs should be a condition
of participation for Medicare providers. Ranking Member Pete Stark
(D-Calif.) supported this option, explaining that it would eliminate
the need to alter Stark and anti-kickback laws.
Also testifying at the hearing was David Brailer, M.D., Ph.D.,
HHS National Coordinator for Health Information Technology. Responding
to privacy concerns related to remote monitoring technology, Dr.
Brailer announced that HHS plans to initiate a demonstration project
evaluating remote monitoring for multiple sites.
Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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