Washington Highlights: December 14 , 2007

Contents Bipartisan Senate Bill, Letter Support Extension of Medicaid Moratorium Democrats Try to Resolve Funding Stalemate MedPAC Draft Recommendations Include IME Cut MedPAC Discusses 2009 Physician Update President Vetoes Second SCHIP Reauthorization Bill Department of Education Reaffirms No Change in Economic Hardship Deferment Governors Urge Congressional Action to Prevent Medicaid Rules NIH Director's Advisory Committee Discusses Peer Review On the Hill Prior Issues December 7, 2007 Novebmer 30, 2007 November 16, 2007 November 9, 2007 Archive

Bipartisan Senate Bill, Letter Support Extension of Medicaid Moratorium

Sens. Jeff Bingaman (D-N.M.) and Elizabeth Dole (R-N.C.) Dec. 12 introduced legislation (S. 2460) to extend by 1 year the current moratorium delaying implementation of the Medicaid proposed rule prohibiting federal matching funds for graduate medical education (the "GME Rule"). Similar to the AAMC-supported "Public and Teaching Hospital Preservation Act" (H.R. 3533), S. 2460 also extends by 1 year the current moratorium on the Medicaid final rule regarding cost limits/units of government (the "IGT Rule") [see Washington Highlights, May 25].

Upon introduction of the bill, Sen. Bingaman stated that "Major Medicaid reforms require a congressional role." He criticized the Centers for Medicare and Medicaid Services (CMS) for requiring states to "prepare for implementation" of the regulations "and expend administrative resources" before Congress could "address the key policy issues contained in the regulation."

Additionally, under S. 2460, CMS may not "finalize or otherwise implement" provisions contained in the Sept. 28 Medicaid proposed rule regarding outpatient services. Joining Sens. Bingaman and Dole as cosponsors for S. 2460 were Sens. Richard Durbin (D-Ill.), Diane Feinstein (D-Calif.), Debbie Stabenow (D-Mich.), Ken Salazar (D-Colo.), John Kerry (D-Mass.), Sherrod Brown (D-Ohio), Claire McCaskill (D-Mo.), Chuck Schumer (D-N.Y.), Barbara Boxer (D-Calif.), Carl Levin (D-Mich.), Evan Bayh (D-Ind.), Richard Burr (R-N.C.), Mel Martinez (R-Fla.), Hillary Clinton (D-N.Y.), Mark Pryor (D-Ark.), Patrick Leahy (D-Vt.), Blanche Lincoln (D-Ark.), Kay Bailey Hutchison (R-Texas), Saxby Chambliss (R-Ga.), Jay Rockefeller (D-W.V.), and Johnny Isakson (R-Ga.).

In conjunction with introduction of S. 2460, Sens. Bingaman and Dole are circulating a bipartisan sign-on letter urging Senate leadership to "include a one-year extension of the moratorium on the Medicaid public provider and graduate medical education (GME) rules...in any end-of-year legislation that you intend to pass."

Information:
Atul Grover, Assistant Vice President
AAMC Health Care Affairs/Office of Governmental Relations
agrover@aamc.org
(202) 828-0666

Christiane Mitchell, Senior Legislative Affairs Manager
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526

Democrats Try to Resolve Funding Stalemate

Democrats on Capitol Hill continue to piece together a plan to end the deadlock that has prevented completion of 11 of the 12 regular FY 2008 spending bills. Details of the plan are still being developed, and a number of issues remain in doubt, but House Majority Leader Steny Hoyer (D-Md.) stated Dec. 13 that the bill might come to the House floor as early as the evening of Dec. 17.

Meanwhile, Congress gave itself another week to try and unravel the spending dilemma by passing another continuing resolution (H.J.Res. 69) Dec.13 that will fund the federal government through Dec. 21. The House passed the continuing resolution (CR) by a 385-27 margin; the Senate passed it under unanimous consent. The current CR (P.L. 110-116) expires Dec. 14.

In crafting an omnibus spending package that will include the 11 remaining fiscal 2008 bills, Democrats reportedly have agreed to meet President Bush's demand that overall discretionary spending in FY 2008 not exceed the President's original spending request of $933 billion.

Only the Defense bill (P.L. 110-116) - which provides $459.3 billion in discretionary funding - has been signed into law. Democrats had wanted to spend $23 billion above the President's budget, which prompted veto threats from the Administration.

At present there are few details as to how Democrats will reduce the individual spending bills to meet the President's target. There are reports that Democrats will try to include $3.7 billion above the President's request for veterans' programs. The White House has agreed to the increase in veterans' funding as long as it is offset elsewhere.

The Administration and GOP leaders have reserved judgment on the proposal until they see its details, which may be available as early as Dec. 16. Among the issues that concern Republicans is the extent to which Democrats will try to add "emergency spending" above the President's overall spending limit. Democrats had proposed adding more than $7 billion in emergency spending to an early version of an omnibus bill that was being drafted last week. The Senate also is likely to add as much as $70 billion in war funding when it considers the omnibus package. Democrats, who had opposed tying funds for the war to the omnibus package, seem resigned that the final package will include funds for the war without conditions.

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

MedPAC Draft Recommendations Include IME Cut

At its Dec. 6-7 meeting, the Medicare Payment Advisory Commission (MedPAC) discussed draft recommendations on changes to the Medicare program that, if finalized at the commission's January meeting, will be included in MedPAC's March 2008 Report to the Congress: Medicare Payment Policy. Included among the hospital payment draft recommendations is a "repeat" recommendation from last year that would reduce the indirect medical education (IME) adjustment by 1 percentage point, from 5.5 percent to 4.5 percent, with the savings used to fund a hospital quality incentive program. Last year, the commission approved a similar recommendation, with then-Commissioner Sheila Burke voting against it [see Washington Highlights, Jan. 12]. A primary reason given for the recommendation last year was the potential implementation of refinements to the diagnosis-related group (DRG) system, which MedPAC estimated would increase payments to teaching hospitals.

There was little discussion by the commission on this particular recommendation at the December meeting. Although IME was not a discussion topic at commission meetings this fall, as it was last year, the draft recommendation was not totally unexpected. This past fall, Medicare-severity adjusted DRGS (MS-DRGs) were implemented, which the Centers for Medicare and Medicaid Services (CMS) estimates will increase payments to teaching hospitals, at least in the aggregate. In addition, MedPAC in the past has repeated recommendations on other topics when Congress had not acted on them.

As part of the hospital payment update presentation, staff showed results of their most recent margin analysis. The analysis showed that the aggregate overall Medicare margin for hospitals (including payments and costs for all Medicare services) had fallen to negative 4.8 percent in 2006, compared to negative 3.0 percent in 2005. At the same time, staff showed data that removing from the analysis data for one-third of hospitals that had the highest standardized costs per case caused the overall Medicare margin to increase to 5.1 percent. MedPAC staff did a site visit at 4 "lost cost" hospitals with high quality scores and found that 3 of the 4 were under financial pressure due to low non-Medicare margins, and they all tended to have "good" relations with physicians. The issue for the Commission this year is whether to recommend a full (as MedPAC did last year) or reduced market basket update for the inpatient and outpatient payments.

As it did last year, commissioners appear to struggle with whether to make an update recommendation based solely on the Medicare financial performance of all hospitals or whether to recommend updates that would put pressure on hospitals to reduce the rate of growth of their costs. As Chair Glenn Hackbarth stated, "We've got to think about how to change the cost trend. And that implies payment levels for many institutions, at least, that are below the rate of increase in costs."

During this meeting, the commission also discussed the physician payment update recommendation (see related article) as well as potential update recommendations for skilled nursing facilities, home health agencies, and other providers.

A vote on final recommendations will take place at the Jan. 10-11 meeting.

Information:
Karen Fisher, Senior Associate Vice President
AAMC Health Care Affairs
kfisher@aamc.org
(202) 862-6140

MedPAC Discusses 2009 Physician Update

The draft recommendation calls for updating physician services in 2009 by the projected change in input prices (2.7 percent) minus the expected productivity (1.5 percent), for an update of 1.2 percent. This recommendation is for calendar year 2009 and does not relate to the negative 10.1 percent update scheduled for 2008. The draft recommendation also states that Congress should pass legislation to require the Centers for Medicare and Medicaid Services (CMS) to measure physician resource use and report that information confidentially to providers. While the methodology for determining the payment update is consistent with previous MedPAC recommendations, this draft recommendation is the first to pair the update with a request for resource measurement and reporting. MedPAC had made a recommendation regarding resource measurement and reporting in its March 2005 report to Congress, but it was separate from the update recommendation.

In the ensuing discussion, Chair Glenn Hackbarth wondered if MedPAC should rethink the recommendation to report data confidentially. According to Mr. Hackbarth, recent initiatives support combining Medicare data with other private sources so that one large dataset could be used for reporting purposes. At the end of the discussion, Mr. Hackbarth summarized MedPAC's position on pay-for-performance: When the commission has performance measures they consider adequate for a provider group, they have been coupling pay-for-performance to the update recommendation for that provider group. Before the final recommendation in January, commissioners will discuss their thoughts on the current state of pay-for-performance.

During this meeting, the commission also proposed an adjustment to the IME (see related article) as well as potential update recommendations for skilled nursing facilities, home health agencies, and other providers.

MedPAC will vote on the final recommendations during its January meeting and will issue its report to Congress in March 2008.

Information:
Denise Dodero, Associate Vice President
AAMC Health Care Affairs
ddodero@aamc.org
(202) 828-0493

Mary Patton, Senior Policy Analyst
AAMC Health Care Affairs
mpatton@aamc.org
(202) 862-6297

President Vetoes Second SCHIP Reauthorization Bill

President Bush Dec.12 vetoed H.R. 3963, which would reauthorize the State Children's Health Insurance Program (SCHIP). Sent by Congress to the White House on Nov. 30, H.R. 3963 was the second SCHIP reauthorization bill presented to President Bush this year. The President criticized the new SCHIP bill for being "essentially identical to the legislation [H.R. 976] that I vetoed in October" [see Washington Highlights, Oct. 19]. President Bush called upon Congress "to extend funding under the current program to ensure no disruption of services to needy children" while he works with Congressional leaders "on a bipartisan basis to reauthorize the...program in a way that puts poor children first; moves adults out" and maintains "the bipartisan tradition" of the original SCHIP enactment. Later in the day, the House voted largely along party lines to postpone consideration of the veto message.

SCHIP currently is funded under continuing resolution at FY 2007 through Dec. 14. The House Dec. 13 voted to extend the continuing resolution (H.J. Res. 69) through Dec. 21.

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

Department of Education Reaffirms No Change in Economic Hardship Deferment

Department of Education Assistant Secretary for Postsecondary Education Diane Auer Jones sent a Dec. 3 letter to the AAMC regarding the "College Cost Reduction and Access Act" (P.L.110-84) and the economic hardship deferment [see Washington Highlights, Nov. 2]. The letter confirms that the debt-to-income ratio (20/220) qualifying pathway for economic hardship has not been changed. Furthermore, the letter notes that changes in the economic hardship poverty line requirements will expand eligibility for the program. The letter does not indicate any end date for the debt-to-income ratio pathway or the Department of Education's intentions for the upcoming round of negotiated rulemaking.

Lenders currently should be offering - and should never have stopped accepting applications for the economic hardship deferment from medical residents that qualify under the debt-to-income ratio.

Information:
Matthew Shick, Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 828-0525

Governors Urge Congressional Action to Prevent Medicaid Rules

The governors of 28 states, Puerto Rico, and the Virgin Islands signed a Dec. 12 letter to the House and Senate leadership urging "immediate congressional action" to prevent implementation of recently issued Medicaid regulations that include the elimination of federal matching payments for graduate medical education (GME). Coordinated by California Gov. Arnold Schwarzenegger (R) and New York Gov. Eliot Spitzer (D), the letter specifically requests an extension of the current moratorium prohibiting action on the Medicaid GME proposed rule and IGT final rule [see Washington Highlights, May 25]. It also seeks legislative "intervention" on Medicaid regulations regarding permissible provider taxes and certain outpatient, school-based, and rehabilitation services.

According to the letter, the governors "cannot stress enough that Congressional action is urgently needed to prevent the rules from becoming final." The letter adds that such action will "provide for a more appropriate and thoughtful review by Congress of these important policy changes." Also signing the letter were Govs. Janet Napolitano (D-Ariz.), Bill Ritter (D-Colo.), Jodi Rell (D-Conn.), Ruth Ann Minner (D-Del.), Rod Blagojevich (D-Ill.), Chester Culver (D-Iowa), Kathleen Sebelius (D-Kan.), Kathleen Blanco (D-La.), Martin O'Malley (D-Md.), Deval Patrick (D-Mass.), Jennifer Granholm (D-Mich.), John Lynch (D-N.H.), John Corzine (D-N.J.), Bill Richardson (D-N.M.), Michael Easley (D-N.C.), John Hoeven (R-N.D.), Ted Strickland (D-Ohio), Brad Henry (D-Okla.), Theodore Kulongoski (D-Ore.), Edward Rendell (D-Pa.), Anibal Aceveda Vila (D-P.R.), M. Michael Rounds (R-S.D.), James Douglas (R-Vt.), Tim Kaine (D-Va.), John DeJohng (D-V.I.), Christine Gregoire (D-Wash.), Jim Doyle (D-Wis.), and Dave Freudenthal (D-Wyo.).

Information:
Atul Grover, Assistant Vice President
AAMC Health Care Affairs/Office of Governmental Relations
agrover@aamc.org
(202) 828-0666

Christiane Mitchell, Senior Legislative Affairs Manager
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526

NIH Director's Advisory Committee Discusses Peer Review

At its Dec. 7 meeting, the National Institute of Health's (NIH) Advisory Committee to the Director (ACD) received an interim report from Larry Tabak, D.D.S., Ph.D., Director of the National Institute of Dental and Craniofacial Research, and Keith Yamamoto, Ph.D., of the University of California-San Francisco, on the proposals-or "diagnosis"-of the NIH's Working Group on Peer Review. Dr. Yamamoto reviewed a list of possible reforms that would reaffirm the "core values" of peer review.

Among proposed reforms is an "editorial" board-style review, with a preliminary assessment by external reviewers and a 1-page "prebuttal" by the applicant of technical questions in review (all to be handled by mail). Study sections might rank proposals, rather than assign numeric scores, as a means to avoid arbitrariness - and some gamesmanship - among section members. The working group also is considering dividing research applications into 2 classifications: "innovative" and "transformative." The latter, which would comprise about 1 percent of applications, would require separate review.

Dr. Yamamoto added that it was critically important that panels communicate directly to applicants if the application's central research question is fundamentally uninteresting and should not be pursued. The presenters argued, and many members of the ACD agreed, reviewers currently focus on technical criticisms to discourage a proposal that they think is inherently flawed. The result is that applicants optimistically revise their applications to address the technical issues and later experience further disappointment when better scores do not materialize. The reforms thus would focus the review on the science in the proposals and not mentorship of the applicants.

The ACD positively received the proposals, with some of the discussion focusing on the overlay between the peer review study and an earlier presentation by NIH Director Elias Zerhouni, M.D. on the aging of the NIH investigator pool and how to protect new investigators. Dr. Zerhouni was careful to note that the aging phenomenon reflects the larger demographic shift in society, and spoke in terms of developing mechanisms to continue to encourage and protect new investigators entering the investigator pool. ACD member David Botstein, Ph.D., of Princeton University, however, went further and said he was not afraid to use the word "young," and spoke of the historical advantages of youth in changing science. Ideas from young scientists, Dr. Botstein argued, are more likely to lead to a Nobel Prize.

Information:
Stephen Heinig, Senior Research Fellow
AAMC Biomedical Health Sciences Research
sheinig@aamc.org
(202) 828-0488

On the Hill

Rep. Jim McCrery (R-La.) announced Dec. 10 that he will not seek reelection. Rep. McCrery currently serves as ranking member of the House Committee on Ways and Means.

Rep. Bob Latta (R-Ohio) Dec. 13 was sworn in to the House of Representatives, after winning a Dec. 11 special election to succeed Rep. Paul Gillmor (R-Ohio). Rep. Gillmor died in September.

Rep. Rob Wittman (R-Va.) also was sworn in Dec. 13. Rep. Wittman will finish the term of Rep. Jo Ann Davis (R-Va.), who died of breast cancer in October.