Washington Highlights: January
12, 2007
House Passes
Stem Cell Legislation
Contents
Prior Issues
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The House of Representatives Jan. 11 approved by
a vote of 253-174 legislation to require the Secretary of Health and Human Services
to conduct and support research that utilizes human embryonic stem cells, regardless
of the date on which the stem cells were derived from a human embryo. The "Stem
Cell Research Enhancement Act" (H.R. 3) gathered 15 more votes than an identical
bill by the same sponsors, Reps. Diana DeGette (D-Col.) and Mike Castle (R-Del.),
which was vetoed by President Bush in 2005. That is still not enough votes to
override the veto promised by the Bush Administration.
H.R. 3, introduced by
DeGette and Castle on Jan. 5, had 210 cosponsors upon introduction. An identical
bill, S. 5, was introduced in the Senate by Senators Tom Harkin (D-Iowa) and Arlen
Specter (R-Pa.), with four co-sponsors. The Senate is expected to consider the
bill later this month or in early February.
Under the bill, Federal funding
for research is limited to stem cells that: (1) are derived from human embryos
donated from in vitro fertilization clinics for the purpose of fertility treatment
and are in excess of the needs of the individuals seeking such treatment; (2)
the embryos will never be implanted in a woman and would otherwise be discarded;
and (3) such individuals donate the embryos with written informed consent and
receive no financial or other inducements.
The AAMC endorsed the bill, as
it had in the previous Congress. The AAMC is a member of the Coalition for the
Advancement of Medical Research, which led the research community's efforts in
favor of the bill. AAMC signed a CAMR-sponsored letter in favor of the bill, which
was distributed to all members of Congress. The letter was endorsed by more than
500 organizations and institutions.
Prior to final passage of the bill,
the House rejected (189-238) a procedural motion offered by Rep. Michael Burgess
(R-Texas) aimed at limiting cloning/somatic cell nuclear transfer research.
Information:
Tony Mazzaschi, Senior Director
AAMC Scientific Affairs
tmazzaschi@aamc.org
(202) 828-0059
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
MedPAC Approves IME, Hospital Update Recommendations
At its Jan. 9-10 meeting, the Medicare Payment Advisory Commission (MedPAC)
approved the payment recommendations that will be included in its March 2007 Report
to the Congress. The commission approved a recommendation that, if enacted by
Congress, would affect Medicare indirect medical education (IME) payments. MedPAC
also finalized its recommendation regarding the updates to hospital inpatient
and outpatient base payment rates as well as physician payments see following
article.
The IME recommendation reads: "Concurrent with implementation
of severity adjustment to DRGs, the Congress should reduce the IME adjustment
by one percentage point, to 4.5 percent, in FY 2008. The funds obtained from reducing
the adjustment should be used to fund a quality incentive payment system."
The recommendation passed, with Commissioner Sheila Burke voting against it.
The
recommendation culminates a series of commission discussions on the IME adjustment.
In September, staff presented data showing significant disparities in Medicare
inpatient and Medicare overall margins between major teaching and nonteaching
hospitals. They also presented analyses indicating that the IME adjustment (currently
at 5.35 percent but scheduled to be 5.5 percent in FY 2008) is significantly higher
than the "empirical" level of 2.2 percent. The empirical level is based
on regression analyses that attempt to explain the higher patient care costs of
teaching hospitals compared to nonteaching hospitals. The commission has never
expressed any views about reducing IME payments below the empirically derived
amount. Rather, the discussions focus on the IME payment amounts above the empirical
level.
Throughout the fall, it was evident that commissioners had passionate
and often varying views about IME payments, ranging from the adjustment being
too high to a sentiment that Medicare imposed no "accountability" on
teaching hospitals as to how they used the payments. However, there did seem to
be a consensus that teaching hospitals treated more severe patients and the DRG
payment system should be modified to better match Medicare payments to the higher
costs associated with these patients. Consequently, premising the potential IME
reduction on implementation of a severity adjustment was important to a number
of commissioners, since such an adjustment would increase DRG payments for most
teaching hospitals - MedPAC staff analyses indicate a severity adjustment could
increase DRG payments to teaching hospitals by about 1 percent.
In a change
from the draft recommendation presented in December [see Washington Highlights,
Dec. 15, 2006], under the final recommendation any "savings" would be
directed to a pay-for-performance pool, rather than be folded into the base payment
rates for all hospitals.
The AAMC had submitted a letter to MedPAC Commissioners
prior to the January meeting stressing the necessity of maintaining the 5.5 percent
level so that teaching hospitals can continue to meet their important missions.
The Association also expressed its concern with a recommendation that is linked
to a severity adjustment change that has not yet been proposed by CMS as well
as the potential impact on teaching hospitals of other changes that may be forthcoming
relative to the Medicare inpatient prospective payment system.
At its January
meeting, the commission also voted to recommend that in fiscal year 2008 hospitals
receive a full market basket update to their inpatient and outpatient base payment
rates, "concurrent with implementation of a quality incentive program."
The current estimate of the market basket is 3.1 percent.
MedPAC's next
meeting will be held on March 8-9. Transcripts from all of MedPAC's meetings are
available on their web site.
Information:
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
MedPAC Recommends 1.7 Percent Update for 2008 Physician
Payments; Finalizes SGR Report
At its Jan. 9-10 meeting, the Medicare
Payment Advisory Commission (MedPAC) discussed the adequacy of physician payments
and made a recommendation for a 2008 update that will be included in its March
report to Congress. MedPAC approved a recommendation to update physician payments
in 2008 by the projected change in input price (3.0 percent) minus the expected
productivity (1.3 percent) for 2008, for a projected 1.7 percent increase to physician
fees. Commissioners noted that the recommendation is based on the current data
that indicate a physician supply and beneficiary access appear adequate.
MedPAC
also finalized its work on a separate mandated report, due to Congress by March
1, that evaluates alternatives to the sustainable growth rate (SGR) for updating
physician payments. The current statutory SGR formula is a cumulative national
target that has generated negative updates for physician services since 2002 and
projects continued fee cuts for the next several years. While Congress has overridden
the fee cuts multiple times, the savings from the formula are included in the
current budget calculations. Congress directed MedPAC to evaluate other methods
for assessing volume and to review the application of volume controls at the following
levels: group practices; hospital medical staff, type of service, geographic area,
and physician outliers. In addition, MedPAC is to evaluate the administrative
feasibility of the alternatives and authority the Secretary of Health and Human
Services should have in determining payment updates.
The commissioners agreed
that the detailed payment system and incentives must be altered to change provider
behavior. The commissioners could not agree, however, whether the SGR should be
repealed outright or replaced with a different expenditure target. If another
target mechanism is used, then the consensus was the target should expand beyond
physician payments to cover all Medicare payments, should account for geographic
differences, and should allow for sharing savings for organizations that are efficient.
Regardless of whether the SGR is repealed or replaced by a different target system,
MedPAC feels Congress should make investments in CMS. MedPAC opted not to make
a formal recommendation in this report because commissioners felt the options
were too "abstract" to vote on at this time.
Other items discussed
during the meeting include:
Payment updates for hospitals and IME/DSH analysis
(see previous article);
Payment updates for other providers: dialysis, skilled
nursing facilities, home health, inpatient rehabilitation hospitals, and long
term care hospitals;
Bundling physician payments and inpatient prospective
payment system (IPPS);
Expanding the unit of payment in the outpatient prospective
payment system (OPPS); and
Home health pay-for-performance
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
AAMC Comments on Research
Misconduct Model Policy
On Dec. 21, 2006, the AAMC joined with the Association
of American Universities, the Council on Governmental Relations, and the National
Association of State Universities and Land Grant Colleges, to provide a joint
response to the HHS Office of Research Integrity (ORI) on its Proposed Model Policy
for Responding to Allegations of Research Misconduct. The response indicates that
while some of the procedural suggestions are helpful, that as an exemplar for
institutional policies, the model provides too much detail regarding the unique
features of the Public Health Service (PHS) regulations and thus fails to recognize
that institutions should be encouraged to have policies that can apply broadly
both to PHS funded research as well as to other research. Concern also is expressed
at the implication that there is a single, effective way to meet regulatory obligations
when in fact, institutions should have the freedom to meet regulatory requirements
in the manner best suited to their unique organizational and administrative structures.
The comment letter concludes with a request that ORI withdraw the document as
a Model Policy.
Information:
Susan Ehringhaus, Sr. Director & Regulatory Counsel
AAMC Biomedical Health Sciences Research
sehringhaus@aamc.org
(202) 828-0543
AAMC Outlines HEA Priorities
In
a Jan. 5 letter to members of the Senate Health, Education, Labor, and Pensions
Committee and the House Education and Workforce Committee, the AAMC outlined its
recommendations for reauthorization of the Higher Education Act (HEA) in the 110th
Congress. The AAMC's proposals included:
Increasing the annual subsidized Stafford
loan limits for graduate and professional students and the corresponding aggregate
Stafford loan limits;
Expanding need-based scholarships and loan repayment
and forgiveness programs;
Extending the Economic Hardship Deferment (HRD)
to include the duration of medical residencies or fellowships; and
Increasing
the deductibility of interest on educational loans and excluding awards from taxable
income.
Congress is expected to introduce new authorization bills before
the current authorization of HEA expires on June 30.
Information:
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
Supreme Court Rules for MedImmune
In
another high-profile patent case, the U.S. Supreme Court Jan. 9 ruled that a patent
licensee in good standing may seek a declaratory judgment to invalidate that patent
or make other challenges. The decision in MedImmune, Inc. v. Genetech, Inc. is
widely reported as a major ruling making it easier to challenge the validity of
a patent. The high court, by ruling for MedImmune, has also once again overturned
a major patent decision by the U.S. Court of Appeals for the Federal Circuit (CAFC).
That court had earlier determined, citing as precedent the 1969 case Lear v. Adkins,
that licensees honoring the terms of their agreements in effect lacked standing
for seeking declaratory judgments. The Supreme Court ruled in part that the CAFC
had over-applied Lear's precedent, and that licensees do not forfeit standing
or their rights to challenge invalid patents or seek other remedies.
The
Court's ruling was based on the conclusion that limiting freedom to challenge
faulty patents, which can impede innovation and development, was of more concern
than the possibility that the decision could encourage licensees to litigate more
freely without having to infringe the license and risk triple damages. The AAMC
had joined an amicus brief with other academic institutions specifically concerned
that such a decision could overturn the "settled expectations" that
universities enjoy when licensing technology to commercial firms. However, there
may be other strategies to resolve these concerns. The U.S. Solicitor General,
in an amicus brief supporting MedImmune's appeal, left open the possibility that
"…a licensor may be able to make the filing of a declaratory judgment
action a basis for terminating the license, changing the royalty rate to a specified
higher rate, or otherwise adjusting the pre-challenge terms." The full implications
of the Court's broad decision remain to be seen.
Information:
Stephen Heinig, Lead Science Policy Analyst
AAMC Biomedical Health Sciences Research
sheinig@aamc.org
(202) 828-0488
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