Washington Highlights: February
9, 2007
Contents
Prior Issues
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Bush Budget Cuts NIH, Title VII
President Bush Feb. 5 sent the details of his $2.9 trillion FY
2008 budget
to Congress. The Administration proposes to increase discretionary
spending to $929.8 billion in FY 2008, an increase of $57 billion
(6.5 percent) over the FY 2007 spending cap. As in previous Bush
budgets, this increase is targeted to "security" funding
- defense, homeland security, and international affairs - which
is slated to grow by $53.5 billion (10.7 percent). The remaining
domestic discretionary programs would receive a 1 percent ($3.5
billion) increase under the President's plan. The NIH would be cut
by 1.7 percent and Title VII health professions would be almost
completely eliminated under the President budget. A summary
of the Department of Health and Human Services budget is available
online.
The following summarizes the major discretionary programs of interest
to medical schools and teaching hospitals. It must be noted that
the Administration's budget documents were prepared before details
of the FY 2007 Joint Funding resolution (H.J.Res.
20) were released. Therefore, the FY 2007 estimates in the Administration
documents refer to the funding levels in the current continuing
resolution (P.L.
109-383), which is set to expire on February 15, and do not
reflect funding levels contained in H.J.Res. 20, which was passed
by the House on January 31 and is currently pending in the Senate.
National Institutes of Health: The President's budget for
NIH calls for $28.621 billion in budget authority appropriated through
the Labor-HHS subcommittee. The budget documents portray this as
an increase of $232 million over the Administration's estimate for
FY 2007. The FY 2007 Joint Funding resolution provides $28.931 billion
for NIH. This includes $99 million to be transferred to the Global
AIDS fund, for a net of $28.832 billion. Looking at the Administration's
FY 2008 request in a comparable fashion, the President's proposal
for $28.621 billion includes $300 million for the Global Aids fund,
for a net of $28.321 billion. Thus, the President's budget is $511
million (1.7 percent) below the funding level proposed in the FY
2007 Joint Funding resolution.
As in previous years, the Administration proposes to reduce the
cap on salaries on NIH, SAMHSA, and AHRQ extramural grants to Executive
Level II, which is $168,000 in 2007. This is a decrease from the
current Executive Level I rate of $186,600. The budget does not
propose any funds for extramural research facilities construction
or renovation.
NIH has posted an 8-page summary
of the President's request.
The overview
from NIH's Congressional Justification discusses NIH's past accomplishments
and current and future research endeavors and provides detailed
budget tables.
On Monday, NIH also released a report
updating the Biomedical Research and Development Price Index (BRDPI).
The U.S. Department of Commerce's Bureau of Economic Analysis (BEA)
estimates an actual 4.5 percent increase in the BRDPI for FY 2006.
The BEA staff also revised last year's preliminary estimate for
FY 2005 upwards slightly from 3.8 percent to 3.9 percent. The Office
of Portfolio Analysis and Strategic Initiatives (OPASI) within the
Office of the Director of NIH prepares estimated projections for
future year values of the BRDPI. It is projected that the BRDPI
may increase by 3.7 percent for both FY 2007 and FY 2008.
Health Professions: As in past years, the President's FY
2008 budget eliminates all Title VII funds with the exception of
the $10 million for Scholarships for Disadvantaged Students (SDS).
Unlike previous years, the Administration also proposes to cut Title
VIII nursing education programs to $105 million, a $45 million (30
percent) reduction below the FY 2006 level and the amount in the
FY 2007 Joint Funding resolution (approximately $150 million).
Title VII Student Loan Rescissions: For the second consecutive
year, the President's budget request recalls the "Federal portion
of the liquid assets" of the Title VII and VIII student loan
programs, which include the Health Professions Student Loan, Loans
for Disadvantaged Students, the Primary Care Loan, and the Nursing
Student Loan. This would require participating institutions to return
the "Federal capital contribution" of all funds that have
not yet been dedicated to students. The "Federal capital contribution"
amounts to roughly 8/9ths of institution's cash-on-hand, or as much
as $4 million from participating institutions. The Administration
estimates this rescission will recall $105 million.
Department of Education: The President's FY 2008 budget
proposes to eliminate the Perkins Loan program and to recall the
entire Federal portion of revolving funds held by participating
institutions. The Administration estimates the institutional share
of Perkins collections to be $87 million.
National Health Service Corps: The President's budget proposes
$116 million for the National Health Service Corps (NHSC), a $9
million (7.2 percent) decrease from FY 2007. This is divided between
a NHSC Field appropriation of $31 million, a $9 million (22.5 percent)
decrease, and a NHSC Recruitment appropriation of $85 million, which
is level with FY 2007 and provides for Scholarship and Loan Repayment
awards.
Children's Graduate Medical Education: The Administration's
budget funds the Children's Graduate Medical Education at $110 million,
a $187 million cut below the level in the FY 2007 Joint Funding
resolution.
Agency for Healthcare Research and Quality: The President's
budget requests $330 million for AHRQ, an increase of $11 million
(3.4 percent) over the FY 2007 Joint Funding resolution. This request
includes $34 million for patient safety, which is the same level
as last year, and $15 million directed to a new Personalized Health
Care Initiative. This initiative is designed to accelerate integration
of cutting edge innovations in personalized medicine, including
genomics, into clinical practice through an electronic network organized
by a partnership between payers and delivery systems. The budget
provides $45 million for health information technology, a $5 million
decrease below the FY 2007 Joint Funding resolution, with $26 million
of the health IT budget for the Ambulatory Patient Safety Program.
Bioterrorism and Emergency Preparedness: The budget provides
$4.3 billion overall for bioterrorism and emergency preparedness
activities in the HHS budget. Of this total, $1.5 billion is directed
to the Centers for Disease Control and Prevention (CDC), a $40 million
decrease below the FY 2007 Joint Funding resolution, for biosurveillance,
upgrading state and local capacity and bolstering the Strategic
National Stockpile. $1.7 billion is directed to the NIH for basic
and applied research on bioterrorism countermeasures, an $8 million
decrease below FY 2007. The bioterrorism hospital preparedness grants,
to be administered by the newly created HHS Assistant Secretary
for Preparedness and Response, receive a $60 million cut to $414
million. Additionally, the bioterrorism training and curriculum
grants, funded at $21 million in the FY 2007 Joint Funding resolution,
are eliminated in the President's budget. The National Disaster
Medical System, moved back to HHS from the Department of Homeland
Security, receives $53 million, a $6 million increase.
Veterans Affairs (VA) Research and Medical Care: The President's
FY 2008 budget request proposes $411 million for VA Medical and
Prosthetic Research, a decrease of approximately $1 million from
FY 2007 (and FY 2006). VA Medical Care receives $34.2 billion, a
$2.1 billion (6.42 percent) increase over FY 2007.
Rehabilitation Services and Disability Research: The President's
budget includes $106.7 million for the National Institute on Disability
and Rehabilitation Research within the Department of Education,
equal to the FY 2007 funding level.
National Science Foundation: The Administration's FY 2008
budget includes $6.429 billion for the NSF, an increase of $466.5
million (7.8 percent) over the House-passed FY 2007 Joint Funding
resolution. The administration requests $5.132 billion for Research
and Related Activities at NSF, an increase of $365.7 million (7.7
percent) over FY 2007. These figures are consistent with the President's
American Competitiveness Initiative, which proposes to double within
ten years the funding for NSF, the Department of Energy's Office
of Science, and the National Institute of Science and Technology.
Pandemic Flu: The Administration's FY 2008 budget includes
a total of $1.192 billion in funding for pandemic flu, consistent
with the President's three-year commitment of $7.1 billion. Included
in the FY 2008 request is a total of $322 million for HHS, with
$152 million for ongoing activities at CDC, $51 million for FDA,
$35 million for NIH, and $78 million for the Office of the Secretary.
There is also $870 million proposed in no-year funding for vaccines,
antivirals, and rapid diagnostics.
Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
Erica Froyd, Director, Public Health and Research Legislative Affairs
AAMC Government Relations
efroyd@aamc.org
(202) 828-0525
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
Tannaz Rasouli, Senior Legislative Analyst
AAMC Government Relations
trasouli@aamc.org
(202) 828-0525
Administration's Medicare Budget Proposes Hospital
and Other Provider Cuts
Designed to "strengthen the long term financial security of
the program," President Bush's proposed Medicare budget, released
Feb. 5, would reduce the program's average annual growth rate from
6.5 percent to 5.6 percent over 5 years, cut $76 billion over 5
years from hospitals and other providers, and increase beneficiary
cost sharing for Parts B and D by $10 billion over five years.
Of the $76 billion in cuts, $66 billion would come by way of legislative
proposals designed to "foster productivity and efficiency,"
"rationalize payments and subsidies," and "improve
program integrity." Proposals to freeze or cut provider payment
updates account for $42 billion of these proposed savings.
The following legislative proposals would have an impact on hospital
payments:
- Permanently reduce the inpatient and outpatient market basket
by 0.65 percent beginning in FY 2008 (-$17.2 billion over 5 years);
- Eliminate teaching hospitals' Medicare indirect medical education
payments associated with treating Medicare Advantage beneficiaries
(-$4.4 billion over 5 years);
- Establish payment updates for inpatient rehabilitation facilities
at zero in FY 2008 and market basket minus 0.65 percent thereafter
(-$1.9 billion over 5 years);
- Eliminate hospital payments for "never events" (-$190
million over 5 years);
- Create a budget neutral hospital value-based purchasing program;
- Phase out Medicare provider bad debt payments over 4 years
(-$7.1 billion over 5 years); and
- "Move toward site-neutral post-hospital payments to limit
inappropriate incentives for five conditions treated in skilled
nursing facilities and inpatient rehabilitation facilities"
(-$2.9 billion over 5 years).
Related to other providers, the budget proposal:
- Assumes that physicians will receive a 10 percent cut in Calendar
Year 2008 and additional cuts in the out-years. The budget summary
states, "The Administration supports reforms in physician
payments that do not increase costs for taxpayers or for Medicare
and its beneficiaries";
- Freezes payment updates for skilled nursing facilities in FY
2008 and reduces payment updates by -0.65 percent thereafter (-$9.2
billion over 5 years); and
- Freezes payment updates for home health in FYs 2008-2012 and
reduces payment updates by -0.65 percent in FY 2013 and thereafter
(-$9.7 billion over 5 years).
The budget also assumes $10.2 billion in savings over 5 years as
a result of new regulatory efforts "to strengthen program integrity
in Medicare payment systems, correct for inappropriate provider
payments and adjust payments to encourage efficiency and productivity."
No additional details were provided.
The budget also proposes a "trigger" for provider cuts
if the difference between total Medicare outlays and dedicated funding
sources (such as premiums and payroll taxes) exceeds 45 percent
of total outlays. In such cases, provider payments would be reduced
by 0.4 percent until general revenue funding is brought back to
the 45 percent level.
Information:
Lynne Davis Boyle, Assistant Vice President
AAMC Government Relations
ldavisboyle@aamc.org
(202) 828-0526
Medicaid, SCHIP Addressed in President's Budget
Proposal
The President's FY 2008 budget proposes reducing the average annual
growth in Medicaid spending over the next five years through $25.7
billion in Medicaid cuts. Regulatory changes "through either regulat[ions]
or sub-regulatory guidance" account for $12.7 billion of the savings.
Nearly $1.8 billion of the regulatory savings would come from a
"clarification" that Medicaid "will no longer be available as a
source of funding for GME." According to the HHS budget summary,
"Paying for GME is outside of Medicaid's primary purpose, which
is to provide medical care to low-income populations." No additional
details about the proposal are provided.
The President's proposal also builds upon "past CMS efforts to
curb questionable financing practices" and "cap payments to government
providers" at "no more than the cost of furnishing services" (a
combined five-year savings of $5 billion). The Administration "reproposes"
two issues outlined in the FY 2007 budget: "clarification" of provider
tax policies and "allowable DSH costs." As in the FY 2007 plan,
there are no details or savings estimates for these initiatives.
Legislative proposals represent the balance ($13 billion) of the
five-year Medicaid savings. The bulk of these changes relate to
pharmacy benefits, long-term care, and administrative services.
Also included in the legislative proposals is a $1.8 billion Medicaid
cut to partially offset the costs of reauthorizing the State Children's
Health Insurance Program (see below). However, the HHS budget summary
offers no details on how to achieve that offset. Additionally, the
President proposes that states report "Medicaid performance measures,"
and that Federal Medicaid grants reflect those measures (an estimated
savings of $330 million over five years).
The President's budget assumes a five-year reauthorization of SCHIP,
beginning in FY 2008. Totaling approximately $5.9 billion in new
spending over five years, the cost of reauthorizing SCHIP is partially
offset by a $1.8 billion cut in Medicaid spending (see above). As
part of the reauthorization, the Administration will "refocus" the
program on uninsured children at or below 200 percent of the Federal
poverty level, "as the program originally intended." The Administration
will also "seek authority" to "target SCHIP funds more efficiently
to States with the most need" (no details provided). The President's
proposal does not address anticipated shortfalls in SCHIP funding.
Starting in FY 2008, the budget proposes that states collect performance
measures on access, asthma therapy, and wellness visits (assumes
no cost/savings).
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
CMS Publishes Nonhospital Residency Training Proposed
Rule
Imbedded in a long term care hospital proposed rule published Feb.
1 in the Federal Register is a proposed rule that would modify
Centers for Medicare and Medicaid Services (CMS) policies regarding
Medicare direct graduate medical education (DGME) and indirect medical
education (IME) reimbursement for residents training in nonhospital
sites. The Medicare statute authorizes teaching hospitals to receive
DGME and IME payments associated with residents training in nonhospital
sites, such as physicians' offices, if the hospitals incur "all
or substantially all" of the training costs.
In 1999, CMS issued a regulation defining "all or substantially
all" of the training costs as the residents' stipends and benefits
plus physician supervisory costs. Since that time, CMS and the academic
medical community have diverged in their views about how to handle
"volunteer" physicians for purposes of determining whether
there are physician supervisory costs. Relying on its interpretation
of the "all or substantially all" statutory language,
CMS stated in 2005 that "the issue of concern is not volunteerism,
but whether there is a cost to the non-hospital site for supervising
the residents." The academic medical community's view has been
that if the physicians are volunteering their time, there are no
supervisory costs.
The proposed rule essentially reiterates the 2005 position regarding
volunteer physicians, stating that in situations in which a teaching
physician receives a predetermined salary that does not vary with
the number of patients he or she treats, that salary is presumed
to reflect some level of payment for supervision, which is a cost
that the hospital must incur. However, the proposed rule does modify
the regulatory definition of "all or substantially all"
of the nonhospital site training costs to be 90 percent of the residents'
stipends and benefits plus physician supervisory costs at the nonhospital
site rather than the current standard which requires hospitals to
incur 100 percent of these amounts.
In 2005, CMS also specified that the level of supervisory costs
is determined by the teaching physician's salary and the amount
of time that he or she spends on supervisory activities that do
not involve patient care. Many teaching hospitals and nonhospital
settings were frustrated with these requirements because they imposed
significant compliance difficulties in obtaining actual physician
salary data and computing the amount of physician time spent supervising
that does not involve patient care activities.
In recognition of these administrative hurdles, the proposed rule
gives hospitals the option of using actual data or proxies for physician
salary and nonpatient care-related teaching time. For example, teaching
hospitals would have the option to use national physician salary
data in the calculation of supervision costs. The proposal also
would establish a "presumptive" level of time for supervising
physician evaluation and didactic activities that hospitals and
supervising physicians could use in the calculation of supervisory
costs rather than determining actual time levels for each physician
at each site.
The proposed rule and additional information is available on the
AAMC nonhospital Web page.
Information:
Karen Fisher, Sr. Director, Health Care Affairs
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140
AAMC Comments on Human Subjects Research Guidance
AAMC Feb. 5 filed comments on the HHS Office of Human Research
Protections (OHRP) "Draft Guidance on Engagement of Institutions
in Human Subjects Research." The draft guidance focuses on
the questions of whether institutions involved in some aspects of
non-exempt human subjects research are in fact "engaged"
in human subjects research and thus required to file a Federal Wide
Assurance with OHRP.
In the comment letter,
AAMC strongly supports OHRP's effort to clarify and refine the previous
engagement guidance documents and agrees with the more precise focus
that many of the draft provisions reflect. AAMC requests clarification
of provisions relating to statistical centers and coordinating centers
for multi-site clinical trials. Additionally, the letter requests
reconsideration of OHRP's position relating to the responsibilities
of a primary recipient of an HHS award where all the activities
involving human subjects are carried out by other institutions.
Information:
Susan Ehringhaus, Sr. Director & Regulatory Counsel
AAMC Biomedical Health Sciences Research
sehringhaus@aamc.org
(202) 828-0543
AAMC Comments on Personalized Health Care
The AAMC Feb. 5 reiterated in a comment letter
to the Department of Health and Human Services (HHS) its call for
policy reforms that could help expedite advances in the development
of "personalized health care." In November, HHS requested
information from health care organizations, academic institutions,
and others about on-going research and development that could lead
to medical care that is tailored to unique needs of individual patients.
The purpose of personalized health care is to identify the most
effective treatments or preventive measures appropriate for each
patient. Increase attention on this new approach to health care
stems from research identifying variations in the human genome and
their associated physiological differences. It its letter, the AAMC
emphasized many needed reforms, including enactment of the Genetic
Information Nondiscrimination Act (S.
358), recently passed by the Senate Health, Education, Labor
and Pensions Committee [see Washington
Highlights, Feb. 2].
The AAMC also called for revisions to make Health Insurance Portability
and Accountability Act (HIPAA) privacy standards for individually
identifiable health information more consistent with the protections
provided under the common rule for human subjects research. Additionally,
AAMC recommended increasing federal support for clinical and population-health
research and developing clinical information systems that anticipate
research uses within their basic design. The letter stated that
such reforms will be vital in enabling research to link population
health data with databases on genomic variation.
Information:
Stephen Heinig, Lead Science Policy Analyst
AAMC Biomedical Health Sciences Research
sheinig@aamc.org
(202) 828-0488
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