Washington Highlights: December
15, 2006
ContentsPrior Issues  |
New Appropriations Chairs Propose Year-Long CR
The incoming chairs of the Senate and House Appropriations Committees
announced Dec. 11 that they plan to enact a continuing resolution
(CR) to fund federal programs for the duration of FY 2007. They
also announced a "moratorium" on all congressional earmarks
in FY 2007 appropriations bills.
Only two FY 2007 spending bills have been signed into law: Defense
and Homeland Security. During the final hours of the 109th Congress,
the House and Senate passed a third CR to keep federal programs
running through Feb. 15. Senator Robert Byrd (D-W.Va.) and Rep.
David Obey (D-Wis.), who will assume control of the Senate and House
Appropriations Committees in the 110th Congress, announced they
will extend that measure for the remainder of FY 2007 rather than
attempt to pass the remaining FY 2007 spending bills, either individually
or as part of an omnibus package.
Sen. Byrd and Rep. Obey said they would make "limited adjustments"
in the CR to address important policy priorities, but did not identify
specific priorities. Among the bills that have not been enacted
is the Labor-HHS-Education appropriation, which funds the National
Institutes of Health and the Title VII health professions programs.
Unless adjustments are made in the CR, programs in the Labor-HHS
bill would be funded at the FY 2006 level.
The extended CR will not include the earmarks contained in the
remaining FY 2007 spending bills. Sen. Byrd and Rep. Obey said they
were placing a "moratorium" on all earmarks until "a
reformed process is put in place." They stated, "We will
work to restore an accountable, above-board, transparent process
for funding decisions and put an end to the abuses that have harmed
the credibility of Congress."
Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
MedPAC Discusses Draft IME, Hospital Update
Recommendations
At the Dec. 8-9 meeting, the Medicare Payment Advisory Commission
(MedPAC) discussed a draft
recommendation of the Medicare indirect medical education (IME)
adjustment that, if approved at the January meeting, would be included
in the commission's March 2007 report to Congress.
The draft recommendation stated: "With the implementation
of severity adjustment to [diagnostic related groups] DRGs Congress
should reduce the IME adjustment by 1 percent, to 4.5 percent in FY 2008. The funds
obtained from reducing the IME adjustment should be used to increase
the base rates."
While not stated explicitly at the meeting, the 1 percent reduction
appears to be based on MedPAC staff's estimated increase in the
DRG payments teaching hospitals would receive if a severity adjustment
were implemented-thus, the net result would be "budget neutral."
The recommendation was somewhat unexpected because at the November
meeting the commission appeared to be leaning towards discussing
various "options" for what to do with the savings that
would result if the IME adjustment were reduced to the so-called
empirical level, but not voting on a specific recommendation [see
Washington Highlights,
Nov. 17]. However, at that meeting, MedPAC Chair Glenn Hackbarth
noted he felt strongly that a severity adjustment system should
be added to the current Medicare hospital payment methodology and
that such an inclusion would help teaching hospitals financially
because of the severe patient population they treat.
The discussion focused on the recommendation language concerning
the "savings" that would result from reducing the IME
adjustment. Previously, the commission had discussed including this
amount in either a pay for performance pool for all hospitals or
encouraging teaching hospitals to improve their residency education
activities. By the end of the meeting, there appeared to be some
consensus around the pay for performance pool. In addition, staff
agreed to modify the recommendation text to be clear that no reduction
would occur unless a severity adjustment were implemented.
MedPAC staff also proposed FY 2008 inpatient and outpatient prospective
payment updates. Despite evidence that Medicare margins have become
more negative, the draft recommendation sets both updates at the
increase in the hospital market basket less 0.65 percentage points,
which equates to half of an estimated "productivity" adjustment.
Commissioners expressed concern about not recommending a full market
basket increase given the low Medicare margins and the continuing
cost pressures hospitals are facing, particularly in the technology
arena. A final decision about the update recommendation will be
voted on at the January meeting.
Staff also presented findings indicating that access to care appears
to be stable, volume of services is increasing at a reduced rate,
quality of care is generally improving, and access to capital is
increasing. However, they did note that Medicare margins remain
low even as they seem to be stable.
Other topics addressed include:
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Medicare physician payments (see related article);
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Draft payment update recommendations for post acute facilities and
dialysis facilities; and
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Report on the impact of changes in Medicare payments for Part B drugs.
MedPAC's next meeting will be held Jan. 9-10, at which time all
of the recommendations will be finalized.
Information:
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
Congress Passes NIH Reauthorization
The House and Senate approved a revised version of the "National
Institutes of Health Reform Act of 2006" (H.R.
6164) in the last hours of the 109th Congress. The revised bill
was the result of negotiations between House Energy and Commerce
Committee Chair Joe Barton (R-Texas), author of the House-passed
version of the bill, and Senate appropriators and authorizers, including
Senators Arlen Specter (R-Pa.) and Tom Harkin (D-Iowa), the chair
and ranking member of the Senate Labor-HHS-Education Appropriations
Subcommittee, and Senators Mike Enzi (R-Wyo.) and Edward Kennedy
(D-Mass.), the chair and ranking member of the Senate Health, Education,
Labor, and Pensions (HELP) Committee.
The revised bill increases the authorization levels for NIH to
$30.3 billion in FY 2007 and $32.8 billion in FY 2008, which represent
increases of 7 percent and 8.2 percent respectively. The bill also
authorizes "such sums as may be necessary" for FY 2009.
The House passed bill authorized 5 percent increases each year for
FYs 2007 through 2009, peaking at $32.8 billion in FY 2009.
The revised bill also eliminates the formula included in the House
passed bill to direct half of all new dollars for NIH to the "common
fund." The new bill requires the NIH Director to establish
a reserve account to fund the common fund, subject to appropriations.
The revised bill also clarifies that the amount reserved for the
common fund may not be less than the percentage reserved during
the previous fiscal year and requires a report to Congress every
two years, beginning June 1, 2007, outlining the strategic plan
for funding research through the common fund.
The Senate added a provision to require the NIH Director to establish
a mechanism within the Clinical and Translational Science Award
(CTSA) program "to preserve independent funding and infrastructure
for pediatric clinical research by allowing the appointment of a
secondary principal investigator under a single CTSA with direct
authority over a separate budget and infrastructure for pediatric
research, or otherwise securing institutional independence of pediatric
clinical research centers with respect to finances, infrastructure,
resources, and research agenda." The Director is to provide
an evaluation and comparison of outcomes and effectiveness in these
programs as part of a biennial report to Congress.
The Senate added a provision to mandate each institution receiving
a training award for graduate students pursuing doctoral degrees
to submit an annual report to the NIH Director on each degree granting
program. The report should include the percentage of students admitted
for study who successfully attain a doctoral degree and the average
time between beginning graduate study and receipt of a doctoral
degree. The institutions must also provide this information to each
student applying for a graduate study program.
The new bill also clarifies that certain recommendations regarding
the organizational structure of the NIH made by the Scientific Management
Review Board are subject to Congressional review prior to implementation.
Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
AAMC Testifies on CMS Clinical Trial Policy
Bryan Soronson, Senior Administrator at the University of Maryland's
Department of Neurology, Dec. 12 testified on behalf of the AAMC before the Centers for Medicare and Medicaid
Services' (CMS) Medicare Evidence Development and Coverage Advisory
Committee on the proposed revisions and clarifications to the CMS
Clinical Trial Policy. The AAMC urged that "the goals of a revised
medical clinical trials policy should be clarity, ease of implementation,
and consistency among federal agencies that are involved in clinical
research."
The testimony also noted that "other parts of CMS must coordinate
their efforts to address issues related to clinical trials that
are outside the scope of the [Committee's] authority," especially
barriers to the enrollment of Medicare advantage beneficiaries and
the application of Medicare secondary payer rules. The Committee
will issue a proposed policy in April that will be available for
comment, with a final policy expected in July.
Information:
Ivy Baer, Director & Regulatory Counsel
AAMC Health Care Affairs
ibaer@aamc.orc
(202) 828-0490
Congress Approves Physician Fix, Health and Education
Provisions
During the last hours of the 109th Congress, the Senate Dec. 8
cleared (79-9) a House-passed comprehensive tax and trade bill (H.R.
6111) that includes provisions to
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Establish a zero percent update for CY 2007 Medicare physician payments
(without such legislation, physicians face a negative 5 percent update
to CY 2007 Medicare payments). The estimated $3.1 billion cost of
the one-year freeze appears to be covered by a reduction in the Medicare
Advantage Stabilization Fund.
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Set aside $1.35 billion for a "Physician Assistance and Quality
Initiative Fund," which the Secretary of Health and Human Services
(HHS) could use for 2008 "physician payment and quality initiatives,
which may include...update of the conversion factor."
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Initiate a short-term physician quality reporting program based on
the Physician Voluntary Reporting Program (PVRP). Under the new initiative,
physicians may qualify for "bonus payments" for services
provided from July 1 to Dec. 31, 2007. Additionally, the provision
establishes a long-term quality reporting program in CY 2008.
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Reduce the federal limit on the allowable Medicaid provider tax rate
from 6 percent to 5.5 percent from Jan.1, 2008, to Sept. 30, 2011
(the Bush Administration's FY 2007 budget had proposed a 3 percent
limit).
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Implement no sooner than 2009 a voluntary quality reporting program
for hospital outpatient departments and ambulatory surgery centers.
Facilities that do not participate in the program will face a 2 percent
reduction in their annual payment update.
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Require an HHS Office of Inspector General study of Medicare payments
for services related to "never events," as defined by the
National Quality Forum.
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Extend certain provisions established under the Medicare Modernization
Act of 2003, including a one-year extension of the one percent floor
for the work-related geographic practice costs indexes (GPCI) used
to calculate physician payments, and a 6-month extension of certain
hospital wage index reclassifications.
-
Extend through 2007 a 20 percent research and development tax credit
that applies to corporate cash expenses, including grants or contributions,
that pay for basic university research.
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Extend through 2007 a tuition tax break that allows individuals who
earn $65,000 or less a year ($130,000 for married couples filing joint
returns) to deduct up to $4,000 in higher-education expenses from
their taxable income. The maximum deduction is $2,000 for those who
earn $65,000 to $80,000 ($130,000 to $160,000 for married couples).
President Bush is expected to sign the bill into law.
Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
Congress Passes FY 2007 SCHIP Relief
Congress approved Dec. 9, as part of the "National Institutes
of Health Reform Act of 2006" (H.R.
6164), an amendment that directs the Secretary of Health and
Human Services to redistribute certain unspent State Children's
Health Insurance Program (SCHIP) allotments from FYs 2004 and 2005.
The funds will be redistributed monthly among states facing FY 2007
program shortfalls, as determined by the Secretary. Each eligible
state will begin receiving funds during the month in which it is
expected to face a shortfall.
All unspent FY 2004 allotments will be redistributed among the
"shortfall states." As for the FY 2005 allotments, if
(as of March 31, 2007) the state's total available allotments exceed
twice its projected FY 2007 expenditures, the Secretary will claim
these funds for redistribution among the shortfall states. The most
the Secretary may claim from a state is the lesser of 50 percent
of the state's unspent FY 2005 allotment, or $20 million.
Any redistributed allotments must be used for individuals who were
already eligible for SCHIP benefits as of October 1, 2006. However,
any expenditures for childless adults will receive a federal "match"
at the Medicaid level (Federal Medical Assistance Percentage or
FMAP), and not at the enhanced level used to calculate SCHIP payments.
The redistributed allotments are available until September 30,
2007, and may not be redistributed again. The amendment permits
the Secretary to make certain "retrospective adjustments"
to his redistributions. Additionally, states with Medicaid expansions
in place before the 1997 SCHIP authorization may spend up to 20
percent of their FY 2005, 2006, and 2007 SCHIP allotments on individuals
covered by such expansions.
Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
MedPAC Discusses Physician Update, Considers SGR
Replacement
At its Dec. 7-8 meeting, the Medicare Payment Advisory Commission
(MedPAC) discussed
the adequacy of physician payments and continued to evaluate alternatives
to the sustainable growth rate (SGR) methodology [see Washington
Highlights, Nov. 17].
MedPAC staff presented draft recommendations for the CY 2008 physician
update. Their recommendations included a 2 percent CY 2008 physician
update, which reflected a change in input prices (3.3 percent) minus
a productivity adjustment (1.3 percent). MedPAC Chair Glenn Hackbarth
noted that the draft recommendation is consistent with last year's
recommendation and does not "reflect any new analysis, new
thinking" and is "subject to change." Staff also
reviewed national indicators of patient access, physician supply
and beneficiary experiences, concluding that the indicators did
not suggest "current payment adequacy problems for physician
services."
The commission also continued its work on a mandated evaluation
of SGR alternatives, and staff outlined a potential timeline for
implementing a new methodology. The commissioners have reached consensus
on three elements that should be included in a new Medicare payment
structure: a geographic component to reflect high and low cost areas;
inclusion of all Medicare costs, not just physician costs; and increased
individual physician accountability. Mr. Hackbarth believes that
a phased implementation would last 5 to 10 years. The commission
also discussed attribution issues and the Department of Health and
Human Services' level of authority in determining physician payment
updates.
The report on Medicare payment policy and SGR is due to Congress
in March 2007.
The House Sept. 26 passed its version of the bill, but it is unclear
whether the House will consider the amended bill before adjournment
[see Washington Highlights,
Sept. 29].
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
Congress Clears AIDS, Biodefense Bills
Congress Dec. 9 cleared for the President a three-year reauthorization
of the Ryan White CARE Act (H.R.
6143) and a bioterrorism preparedness bill (S.
3678). Both bills were held up by House Energy and Commerce
Committee Chair Joe Barton (R-Texas), until the Senate agreed to
pass the NIH reauthorization bill. The House passed H.R. 6143 and
S. 3678 by voice vote early Dec. 9 [see Washington
Highlights, Dec. 8], and the President is expected to sign
both before the end of the year.
Information:
Erica Froyd, Director, Public Health and Research Legislative Affairs
AAMC Government Relations
efroyd@aamc.org
(202) 828-0525
Tannaz Rasouli, Senior Legislative Analyst
AAMC Government Relations
trasouli@aamc.org
(202) 828-0525
Thomas Introduces Nonprofit Provider Bill, CBO
Releases Related Reports
As one his last policy initiatives before retirement, House Ways
and Means Committee Chair William Thomas (R-Calif.) Dec. 11 introduced
legislation (H.R.
6420) that would require tax exempt hospitals and faculty practice
plans to provide a minimum level of charity care.
Specifically, the "Tax Exempt Hospital Responsibility Act"
would require 501(c)(3) organizations whose principal purpose is
the provision of medical or hospital care to provide charity care
to individuals with incomes under 100 percent of the federal poverty
level. The bill also would limit expected medical service payment
to no more than the average insured rate for individuals with incomes
under 200 percent of the federal poverty level. Further, H.R. 6420
would require affected providers to publicize their charity care
policies and a list of average prices for each procedure or service.
Providers would face a variety of penalties/excise taxes for failing
to provide charity care and publicize charity care policies and
negotiated prices.
While the bill was not considered before adjournment of the 109th
Congress, Thomas stated, "It's my hope that this bill might
serve as a discussion point in the next Congress. The Committee
has done a lot of work in this area and I think it requires further
legislative action."
The introduction of the legislation coincided with the release
of two Congressional Budget Office (CBO) reports
requested by Thomas. "Nonprofit Hospitals and the Provision
of Community Benefits" found that nonprofit hospitals provide
higher levels of uncompensated care than for-profit hospitals; however,
the provision of uncompensated care varied widely among individual
hospitals. The report also found that nonprofit hospitals were more
likely than for-profit hospitals to provide certain specialized
services, "but were found to provide care to fewer Medicaid-covered
patients as a share of their total patient population."
The second report, "Nonprofit Hospitals and Tax Arbitrage,"
examines the use of tax exempt bonds by nonprofit hospital. According
to a Thomas press release, the report "shows the federal subsidy
through tax-exempt bonds lowers the cost of capital for non-profit
hospitals and creates an incentive for them to use this subsidy
instead of spending their own investment assets on capital projects."
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
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