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Washington Highlights: March 7, 2008

AAMC Testifies at Senate Panel Hearing on Value-based Purchasing

President of Brigham and Women's Hospital Gary Gottlieb, M.D., March 6 represented the AAMC at a Senate Finance Committee roundtable hearing on value-based purchasing (VBP), the Centers for Medicare and Medicaid Services (CMS)'s proposed plan to link payment more directly to the quality and efficiency of care [see Washington Highlights, Nov. 30]. Dr. Gottlieb's testimony reflected the unique role and contributions of teaching hospitals, and presented some of the challenges they will face if the plan moves forward, while expressing support for the concept of value-based purchasing.

The panel also heard the teaching hospital community's views of incentives, performance standards, and implementation plans through the testimony of other hospital association and health care leaders, including AAMC Immediate Past Chair and Cedars-Sinai Medical Center President and CEO Tom Priselac, M.P.H, and former CMS Administrator Mark McClellan, M.D., Ph.D. Most participants suggested that a 5 percent incentive payment pool would be too much, too soon, and many expressed a belief that Congress should invest more in CMS's efforts to successfully implement VBP. Dr. Gottlieb and several other witnesses recognized the need for improved risk adjustment and additional support for safety net hospitals. Realignment of hospital incentives with physician incentives also was repeatedly suggested as necessary to make any progress on VBP.

Additional materials, including full written testimony of all roundtable participants, can be found on the Senate Finance Committee's website.

Information:
Atul Grover, M.D., Ph.D., Chief Advocacy Officer
AAMC Government Relations
agrover@aamc.org
(202) 828-0410

House, Senate Panels Consider FY 2009 Budgets

The budget season began in earnest March 6 as the House and Senate Budget Committees approved their respective budget resolutions for FY 2009.

The budget resolution is non-binding, but it sets the conditions for spending and revenue bills to be considered later in the year.

As expected, both the House and Senate Budget Committees added funds for discretionary spending (for programs funded through the annual appropriations process) above the President's FY 2009 request. The House Budget Committee's plan calls for $22 billion above the President while the Senate budget adds about $18 billion more than the President.

The House budget plan also includes reconciliation instructions for the House Ways and Means Committee. It directs the committee to report by Sept. 12 a reconciliation bill that reduces direct spending by $750 million for FYs 2008 - 2013. Additionally, the committee must identify by July 15 a yet to be disclosed amount in decreased revenue for FY 2009 and increased revenue for FYs 2010 - 2013.

The House budget resolution establishes several non-binding deficit-neutral reserve funds in support of:

  • Legislation to prevent implementation of the Administration's recent rules affecting Medicaid and the State Children's Health Insurance Program (SCHIP)

  • SCHIP legislation to expand children's coverage (up to $50 billion over five years)

  • Legislation that "improves the Medicare program for beneficiaries and protects access to care," including physician payment increases that do not raise beneficiary premiums

  • "Provides incentives and other support" for health information technology (HIT) adoption

  • New Federal or public-private comparative effectiveness research initiatives.

The House budget resolution also includes a non-binding budget-neutral "Sense of the House" that calls for legislation to make health insurance more affordable and accessible. The Sense of the House suggests a particular focus on covering individuals employed by small businesses, encouraging integration of HIT "tools" in the practice of medicine, and promoting improvements in disease management and prevention.

While the Senate budget materials available at press time do not specifically address reconciliation instructions, the documents do state that the budget resolution "provides $1.325 billion in Medicare savings in 2013," to allow for legislation to avert activation of the "Medicaid trigger." According to the budget summary, the savings could come from "changes" in the Medicare Advantage or traditional fee-for-service program.

The Senate budget materials also state that the resolution establishes non-binding deficit-neutral reserve funds for:

  • Increasing Medicare physician reimbursement

  • "Medicare improvements," including, for example efforts to: "encourage physicians to train in primary care residencies;" attract physicians to states with provider shortages; and reduce cost-sharing for preventative benefits

  • Expanding SCHIP and Medicaid enrollment

  • Covering the cost of extending the Medicaid moratoria "on several Medicaid regulations" and the August 17 "SCHIP Directive"

  • A comparative effectiveness research fund to establish federal or public-private research initiatives

A discretionary cap adjustment of up to $70 million in FY 2009 to allow for a larger AHRQ appropriation in support of comparative effectiveness research.

Reacting to the congressional plans, Office of Management and Budget Director Jim Nussle expressed serious concerns. In a March 3 letter to the Chairs and Ranking Members of the House and Senate Budget and Appropriations committees, Nussle reiterated the veto threats on spending bills that exceed the President's request. Nussle's letter also stated, "As the President said in his State of the Union Address, he will veto any appropriations bill that does not reduce the number and cost of earmarks in half from its FY 2008 level."

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

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

House Oversight Committee Report Features Impact of Medicaid Rules

House Oversight and Government Reform Committee Chair Henry Waxman (D-Calif.) March 3 released a report detailing the state-by-state impact of the Bush Administration's recently issued Medicaid rules. The report includes data related to the Medicaid GME proposed rule and IGT final rule.

According to the survey findings, the Administration significantly underestimated the fiscal impact of the regulatory changes. While the Centers for Medicare and Medicaid Services (CMS) has projected that the rules will reduce federal Medicaid support by $15 billion over 5 years, the Committee report estimates a nearly $50 billion loss over 5 years. According to the Committee's findings, all but 2 of the responding states (Rhode Island and North Dakota) will lose federal Medicaid funding under the GME proposed rule. While the Office of Management and Budget (OMB) has estimated that the GME rule will reduce federal funding by $1.8 billion over 5 years, the report indicates a $9.8 billion loss.

The data was collected from the State Medicaid Directors of 43 states and the District of Columbia (Wyoming, Nebraska, Arkansas, Mississippi, Alabama, West Virginia, and Vermont did not respond). In the report, several Medicaid Directors express strong concern that the GME proposed rule will exacerbate physician shortages, discourage hospitals from maintaining teaching programs, and reduce funding for critical members of the nation's healthcare safety net. A Jan. 16 letter from Chairman Waxman to the Medicaid Directors had requested delivery of the information by Feb. 15.

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

Department of Education Intends to Eliminate 20/220 Pathway

The Department of Education March 4 announced plans to eliminate the debt-to-income ratio pathway of the economic hardship deferment. The decision was announced at the March 4-6 meeting of the Negotiated Rulemaking Committee on student loan issues, charged with incorporating the "College Cost Reduction and Access Act of 2007" (CCRAA, P.L. 110-84) in regulation. Shortly following the CCRAA's Sept. 27, 2007 enactment, the Department announced that they would use the Secretary's authority to retain the 20/220 pathway in regulation [see Washington Highlights, Nov. 2, 2007], but reversed this decision citing cost.

The committee will meet again in March before the Department publishes draft regulations in the Federal Register for public comment. Carrie Steere-Salazar, chair of the AAMC Committee on Student Financial Assistance, represents the AAMC and the graduate/professional education community on the committee.

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

House Acts to Address Specialty Hospital Concerns

The House of Representatives March 5 passed (268-148) mental health parity legislation (H.R. 1424) that includes provisions limiting self-referrals to physician-owned hospitals. The legislation also limits the expansion of such facilities. The House now must conference H.R. 1424 with the Senate-passed mental health parity legislation (S. 558), which does not contain specialty hospital provisions.

Also in the House, Reps. Jason Altmire (D-Penn.), Ron Klein (D-Fla.), and 31 other freshmen House Democrats Feb. 28 sent House Speaker Nancy Pelosi (D-Calif.) a letter urging the inclusion of specialty hospital provisions in the Medicare package anticipated later this spring. The letter specifically asks for the inclusion of Sec. 651 of the House-passed "Children's Health and Medicare Protection (CHAMP) Act" (H.R. 3162), which limits self-referrals to physician-owned hospitals [see Washington Highlights, Aug. 3, 2007].

The letter observes that "physician ownership and self-referral does not lead to improved outcomes." Instead, self-referral to physician-owned hospitals "encourages the selection of healthier, less complex, and insured patients for higher reimbursement." The letter adds that such behavior "shifts patient care away from full service community hospitals and harms the safety net for more vulnerable populations." It advises that, "The end result threatens patient safety, limits access to care, promotes overutilization, and further erodes the Medicare Trust Fund."

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

MedPAC Discusses Bundled Hospital/Physician Payments, Changes to Primary Care Payment

The Medicare Payment Advisory Commission (MedPAC) March 5-6 discussed draft recommendations on bundled physician and hospital payments, increasing payments to primary care, and a medical home pilot. The recommendations, if approved, will appear in MedPAC's June annual Report to Congress.

MedPAC staff presented 2 draft recommendations on bundled hospital and physician payments. The first recommendation is a multi-step plan to move towards "virtual bundling" payment. All services around a hospitalization episode of care would be consolidated for resource measurement. Hospitals and inpatient physicians with relatively high resource use would experience a cut in their respective payments. Providers with high quality service and with relatively low resource use may receive a bonus. The recommendation calls for 2 years of data reporting where the Centers for Medicare and Medicaid Services (CMS) would share confidential feedback to providers on their resource use before implementing the virtual bundling payment system. The second recommendation proposes a voluntary pilot program, to be executed concurrently with the virtual bundling program described above, to explore issues in implementing an actual bundled payment for hospital and physician services around a hospitalization.

MedPAC also presented 2 initiatives to address concerns in primary care: changing the payments for primary care services and creating a pilot program for medical homes. The first recommendation is for increased payments for services provided by primary care practitioners. The adjustment would be budget neutral, or paid for by reducing payments for other physician services. A related recommendation states CMS should determine the specialties that can receive this payment adjustment. Staff noted that paying differentially by specialty for the same service is a shift in Medicare payment policy.

The medical home draft recommendation suggested initiating a pilot program where the medical home must "furnish primary care, use health information technology, conduct case management, maintain 24-hour patient communication and access, keep up-to-date records of patients' advance directives, and be accredited/certified from an external crediting body." The pilot would include a physician pay-for performance program.

Other items discussed at the meeting include:

  • Producing comparative-effectiveness information

  • Public reporting of physicians' relationship with drug and device manufacturers, hospitals, and Ambulatory Surgical Centers (ASC)

  • Part D and performance measures

  • Fee-for-service benefit design

  • Skilled Nursing Facility refinements

Hospice cost and payments.

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

House Appropriations Panel Explores Health Issues and Opportunities

The House Labor, Health and Human Services (HHS), and Education Appropriations Subcommittee March 5 heard testimony from 4 HHS agency heads on "Health Issues and Opportunities Lost." Witnesses included National Institutes of Health (NIH) Director Elias Zerhouni, M.D., Centers for Disease Control and Prevention (CDC) Director Julie Gerberding, M.D., MPH, Agency for Healthcare Research and Quality (AHRQ) Administrator Carolyn Clancy, M.D., and Substance Abuse and Mental Health Services Administration (SAMHSA) Administrator Terry Cline, Ph.D.

Committee Chair David Obey (D-Wis.) asked witnesses to describe the costs associated with a lack of investment in certain areas including biomedical research, health services research, and prevention, and predicted "we would be more inclined to invest more money in some of these research efforts, in some of the public health efforts, and a number of other areas if we gave as much attention to what it costs us not to proceed as it does to proceed." Chairman Obey also noted that the country will lose approximately 6,000 scientists under the Administration's FY 2009 budget proposal, which freezes the NIH budget at FY 2008 levels.

In his testimony, Dr. Zerhouni characterized a paradigm shift from acute to chronic diseases as the most pressing challenge of this century. According to Dr. Zerhouni, this changing landscape of disease will necessitate a comprehensive research portfolio to better understand the most effective prevention and treatment strategies and new generations of scientists to propel such research and interventions forward. Dr. Zerhouni indicated that "nothing keeps [him] awake at night more than the fate of early-career scientists who get discouraged from entering science, at a time when the nation needs more scientists, more engineers from all walks of science to be able to meet those challenges."

Highlighting AHRQ's successes in comparative effectiveness research, health information technology, and patient safety, Dr. Clancy emphasized AHRQ's role in translating research investments into accessible improvements to health care services.

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

Biosecurity Board Discusses Outreach to the Research Community

The National Institutes of Health's National Science Advisory Board for Biosecurity (NSABB) Feb. 27 and 28 met to consider, among other topics, outreach activities to heighten awareness and educate scientists about "dual use" research, or biological research that could be used inadvertently by others to harm society. Representatives from scientific societies and academic associations, including the AAMC, provided an overview on their organizations and activities focused on this issue, or how they might assist such outreach.

Presenters generally reported that current awareness of dual use in the research community broadly was low, and perhaps has declined since the limited but intentional release of anthrax in 2001. However, certain segments of the community clearly remain focused on it. Ronald Atlas, Ph.D., of the University of Kentucky described major ongoing efforts by the American Society for Microbiology to address dual use concerns. In other sessions, Mark Frankel, Ph.D., of the American Association for the Advancement of Science described a strategy for framing dual use issues in ways that resonate with the concerns of working scientists. Robert Cook-Deegan, M.D., of Duke University reported progress of the Southeast Regional Center for Excellence for Emerging Infections and Biodefense (SERCEB), which may serve as a model for local evaluation and management of dual use concerns. Michael Stebbins, Ph.D., of the Federation of American Scientists reported on his organization's development of surveys and tool kits to advance outreach and dissemination.

Several NSABB members and presenters noted that outreach activities could be more focused if the federal government better defined and described what investigators should look out for and how subsequently to respond. Toward that end, the NSABB developed and last year released a draft framework document for review by federal agencies [see Washington Highlights, April 27, 2007]. Ken Staley, M.D., M.P.H., of the White House Homeland Security Council, described how that document is now under review by the Administration.

Information:
Stephen Heinig, Lead Science Policy Analyst
AAMC Biomedical Health Sciences Research
sheinig@aamc.org
(202) 828-0488

House Panel Urges Greater Investment in Science, Competitiveness Initiatives

The House Committee on Science and Technology Feb. 28 released its views and estimates on the FY 2009 budget for the National Science Foundation (NSF) and other federal science agencies under their jurisdiction. The committee recommends $7.06 billion for NSF in FY 2009, compared to $6.86 billion, as proposed by the President and supported by Republicans on the committee.

In the document, which includes additional and minority views, the majority stresses its disappointment that the President's budget request does not fund fully two major competitiveness initiatives: the "America COMPETES Act" (P.L. 110-69) and the "Energy Independence and Security Act of 2007" (P.L. 110-140). Both were approved by Congress and signed by President Bush last year. While the committee acknowledges that the President's budget request proposes increases for physical sciences research programs, there are several core initiatives for which increases are not proposed or lag far behind legislated authorization levels, including science, technology, engineering and mathematics (STEM) education programs at NSF. The minority views fault appropriators for providing inadequate funding in FY 2008.

For COMPETES initiatives overall, the President has proposed a $1.4 billion increase over FY 2008 funding levels. However, the President's budget proposal remains $1.3 billion below the amount authorized for FY 2009. The Administration's budget request is $148 million below the authorization level for NSF research activities. Both the majority and the minority views point out that the President's proposal also is $103 million below the authorized level for the Robert Noyce Teacher Scholarships, which provide incentives for undergraduate STEM majors to teach, and $60 million below the level authorized for the NSF Math and Science Education Partnership program.

Information:
Abigail Schopick, Legislative Analyst
AAMC Government Relations
aschopick@aamc.org
(202) 828-0525