Washington Highlights: July 14, 2006

Contents AAMC, Health Professions Groups Urge Title VII Restoration Senate to Vote on Stem Cell Bills Finance Committee Leaders Request Delay of Inpatient Rule CMS Releases Physician Work and Practice Expense Updates CMS Issues Rule on Citizen Documentation Requirements OMB Lowers Deficit Estimate CMS Revises Medicare, Medicaid Cost Projections Perlin Resigns from VA National Biosecurity Board Discusses Research Misuse Prior Issues July 7, 2006 June 30, 2006 June 23, 2006 June 16, 2006 June 9, 2006 Archive

AAMC, Health Professions Groups Urge Title VII Restoration

The AAMC July 10 joined 60 other national health and education organizations in urging Senate appropriators to fund the Title VII health professions programs at the FY 2005 level. The letter, organized by the Health Professions and Nursing Education Coalition, requests $300 million for Title VII to "restore funding lost as a result of the devastating 51.5 percent cut ($154.4 million) to Title VII in FY 2006, and provide vital support for the programs to fulfill their shared mission of improving the supply, distribution, and diversity of health professionals nationwide." The Senate Labor-HHS-Education Appropriations Subcommittee is scheduled to consider its FY 2007 spending bill July 18, with full committee consideration on July 20.

The House bill (H.R. 5647) restores geriatric training funds, maintains cuts enacted in FY 2006 to primary care and diversity programs, and eliminates the Health Careers Opportunity Program and public health, preventive medicine, and dental public health programs [see Washington Highlights, June 9]. A floor vote on the House bill is stalled indefinitely due to a contentious minimum wage amendment adopted June 13 by the House Appropriations Committee.

Information:
Tannaz Rasouli, Senior Legislative Analyst
AAMC Government Relations
trasouli@aamc.org
(202) 828-0525

Senate to Vote on Stem Cell Bills

Senate Majority Leader Bill Frist (R-Tenn.) announced July 12 that the Senate will vote on three human stem cell bills July 18 following two days of debate on the measures. Shortly before the Fourth of July recess, Senator Frist successfully obtained a "unanimous consent" agreement to move forward with a vote on a package of bills: the Stem Cell Research Enhancement Act (H.R. 810), the "Alternative Pluripotent Stem Cell Therapies Enhancement Act" (S. 2754) and the "Fetus Farming Prohibition Act of 2006" (S. 3504). Under the agreement, amendments will not be permitted and each bill will have a separate vote and will need at least 60 votes to pass.

AAMC President Darrell G. Kirch, M.D., July 12 sent a letter to all Senators urging passage of H.R. 810, which would expand the number of human embryonic stem cell lines available to federally-funded researchers. The House passed H.R. 810 on May 24, 2005. President Bush has pledged to veto H.R. 810 if passed by the Senate.

Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525

Finance Committee Leaders Request Delay of Inpatient Rule

Senate Finance Committee Chairman Charles Grassley (R-Iowa) and Ranking Member Max Baucus (D-Mont.) July 7 sent a letter to Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan requesting that he delay implementation of the changes outlined in the April 25 Medicare inpatient proposed rule. Under the proposed rule, CMS would move to a cost-based diagnosis-related group (DRG) weighting methodology in FY 2007 and consolidated severity-adjusted DRGs by FY 2008.

The letter suggests postponing both changes until FY 2008, to allow for "an open development process involving stakeholder input as well as a reasonable implementation schedule." Sens. Grassley and Baucus also urge Administrator McClellan to "implement both changes concurrently," and "avoid the 'whipsaw' effect of wide swings in hospital payments."

The letter expresses concerns that CMS' proposed changes "differ significantly" from MedPAC's recommendations to improve the inpatient payment system [see Washington Highlights, June 16]. It also questions whether providers had "access to the information and tools they need to analyze efficiently the proposed changes." The letter states, "we have heard...that stakeholders were unable to review fully and analyze the impact of the proposed rule within the 60-day comment period."

Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526

CMS Releases Physician Work and Practice Expense Updates

The Centers for Medicare and Medicaid Services (CMS) June 29 published updates for two components of the physician fee schedule payment: physician work relative value units (WRVUs) and practice expense relative value units (PERVUs). Physician WRVUs, which measure the relative time and intensity of physician work for each of more than 8,000 clinical service codes, account for approximately half of Medicare's payments to physicians. Practice expense payments, excluding professional liability insurance, account for approximately 45 percent of fee schedule payments. The remainder of payments is for professional liability insurance (PLIRVUs).

CMS is mandated to review physician work values no less than every five years and this is the third such comprehensive review. Evaluation and management (E&M) services received large increases in work RVU. The estimated impact of all new work RVUs is $4 billion. By law, proposed payment changes over $20 million must be budget neutral. To meet this requirement, CMS is proposing to implement a separate 10 percent budget neutrality adjustment to the work RVU component.

Additionally, CMS proposes to change the methodology to calculate and allocate practice expenses. The practice expense methodology also is designed to be budget neutral. CMS proposes to transition to new practice expense values over 4 years. CMS plans to release its annual Part B proposed rule later this month to address any additional changes to physician policies, excluding the work and practice expense RVU changes.

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

CMS Issues Rule on Citizen Documentation Requirements

The Centers for Medicare and Medicaid Services (CMS) published in the July 12 Federal Register an interim final rule entitled, "Medicaid Program; Citizenship Documentation Requirements." The rule is effective July 6, and comments must be received by Aug. 11.

The rule implements section 6036 of the Deficit Reduction Act of 2005 that requires states to obtain satisfactory documentation of a declaration of citizenship to receive federal matching funds for Medicaid. An exemption from this requirement has been created for those states that allow individuals to qualify for Medicaid by virtue of receiving Medicare or Supplemental Security Income. For all others, states must obtain a declaration signed under penalty of perjury from every applicant for Medicaid that the applicant is a citizen or national of the United States, or an alien with satisfactory immigration status. The individual must provide documentary evidence to verify the declaration.

Acceptable documentary evidence is arranged in a hierarchy, ranging from primary evidence (U.S. passport, certificate of naturalization, or certificate of citizenship) through a fourth level of evidence to be used only rarely (federal or state census record showing U.S. citizenship or U.S. place of birth).

Information:
Ivy Baer, Director & Regulatory Counsel
AAMC Health Care Affairs
ibaer@aamc.orc
(202) 828-0490

OMB Lowers Deficit Estimate

The White House Office of Management and Budget (OMB) July 11 released a revised projection of the federal budget deficit that is nearly one-third lower than the Administration's projection in February. In its annual mid-session review of the budget, which reflects reflect economic changes, legislative action, and other developments since February, OMB now projects the FY 2006 budget deficit will be $296 billion. This is $127 billion less than the deficit projection OMB included in the President's FY 2007 budget released Feb. 6.

The report credits a "robust economy and the resulting revenue increases," and spending restraint as the reasons for the improved deficit projections despite "significant expenditures for the Global War on Terror and Gulf Coast rebuilding efforts." OMB states the Gross Domestic Product (GDP) grew by 5.6 percent in the first quarter of 2006, faster than at any time in the past two and one-half years. The current estimate of receipts for 2006 exceeds the February budget estimate by $115 billion, with higher-than-expected collections of individual and corporation income taxes accounting for most of this increase.

OMB estimates outlays for FY 2006 will total $2.696 trillion, which is $12 billion lower than the level estimated in February. The lower estimate results primarily from reductions in the projected growth rates for Medicare and Medicaid, particularly estimates of the cost of Medicare's new prescription drug benefit program. However, in the traditional Medicare fee-for-service programs, OMB notes that projections of increased spending outstrip these savings in the long-term and as a result, total spending in the Medicare and Medicaid programs continues to grow at unsustainable rates [see related article below].

Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525

CMS Revises Medicare, Medicaid Cost Projections

The Centers for Medicare and Medicaid Services (CMS) revised its 10-year (FY 2006 - FY 2015) cost estimates for federal Medicaid spending as part of the President's mid-session budget review. According to a July 11 CMS fact sheet, federal Medicaid cost projections are 8 percent or $224 billion below initial estimates. Federal Medicaid spending is projected to grow by 4.6 percent in FY 2006 - FY 2007.

The downward adjustment reflects "a significant slowdown in Federal Medicaid spending growth in recent years," and has not resulted from "shifts in Federal to state spending." The fact sheet highlights some factors contributing to the slowdown, including steps to end states' "impermissible 'recycling'" of Medicaid funds, which "shifted costs to the federal government above allowed matching levels." According to CMS, these cost-containment initiatives "are expected to continue as a result of administrative and regulatory actions in the President's budget."

CMS also released the 5-year (FY 2006 - FY 2011) projections for Medicare Part A that are $17 billion above previous estimates, while those for Medicare Part B are $30 billion higher. CMS reports that "the substantial growth in Part A expenditures highlights the need for appropriate incremental reforms," including "a limited reduction in payment growth rates for hospitals" and "performance-based payment reforms to promote quality care with fewer costly complications..."

The "significant increase" in projected Medicare Part B expenditures reflects continued growth in volume and intensity, "combined with legislative action to eliminate the 'sustainable growth rate' reduction." The fact sheet states that CMS "is working closely with the medical community and Congress" to support "high-quality, efficient physician services without increasing overall Medicare costs."

Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526

Perlin Resigns from VA

The Department of Veterans Affairs (VA) July 12 announced that VA Under Secretary of Health Jonathan B. Perlin, M.D., Ph.D., MSHA, FACP, will resign effective Aug. 11 to take a private sector position. Dr. Perlin, who has held several positions with VA since 1999, is accepting a position as chief medical officer and senior vice president for quality at HCA, a Nashville-based health care provider.

Information:
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116

National Biosecurity Board Discusses Research Misuse

At its meeting, the board approved a set of criteria for determining if biological research projects "can be reasonably anticipated to provide knowledge, products or technologies that could be misapplied by others to pose a threat to public health, agriculture plants, animal, the environment, or materiel." In keeping with the board's repeated emphasis on developing "a culture of responsibility," NSABB also approved a document reviewing considerations for creating a code of conduct for dual use research. The board also approved a set of tools for responsibly communicating research with dual use potential.

The documents emphasize the importance of biological research for protecting public health and safety, and will be integrated within a larger framework for oversight of dual use research that is being developed by the NSABB (expected for initial release and public comment later this year).