Washington Highlights: January 16,
2009
House Panel Unveils Recovery Package
Contents
Prior Issues
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The House Appropriations Committee Jan. 15 released its version
of an economic recovery package
that appropriators describe
is designed to create and preserve jobs, invest in infrastructure,
energy efficiency, and science, and provide state and local fiscal
relief.
The "American Recovery and Reinvestment Act of 2009"
(ARRA) adopts many of the funding recommendations outlined by the
AAMC in an Oct. 29 letter
to Congressional leadership. The committee may vote on the package
as early as Jan. 21, and the full House may consider it Jan. 28,
with a goal of completing the bill by Feb. 13.
A Jan. 15 press
release from the House Ways and Means Committee suggests that
Medicare and Medicaid provisions will be included in separate legislation.
A summary
prepared by the Appropriations Committee references an extension
of moratoria on unspecified Medicare and Medicaid regulations and
"Medicaid aid to states."
The ARRA provides $1.5 billion to the National Institutes of Health
(NIH) Office of the Director for research grants. Half of this funding
($750 million) becomes available Oct. 1. The funds provided in FY
2010 will provide the second year of support for the new research
grants supported with the FY 2009 funding. The bill specifies that
funds are to be transferred to the NIH institutes and centers and
the common fund "in proportion to the appropriations otherwise
made to such Institutes, Centers, and Common Fund for fiscal year
2009."
The bill also provides $1.5 billion to the NIH's National Center
for Research Resources (NCRR) to renovate or repair existing non-Federal
research facilities or for "shared instrumentation and other
capital research equipment." NCRR is to give priority to applications
"that are expected to generate demonstrable energy-saving or
beneficial environmental effects." An additional $500 million
is provided to update buildings on the NIH campus.
In addition to the funding provided directly to NIH, the bill also
provides $700 million to the Agency for Healthcare Research and
Quality (AHRQ) for comparative effectiveness research. The bill
directs AHRQ to transfer $400 million of this funding to the NIH
Office of the Director to be distributed among the NIH institutes
and centers and the common fund for comparative effectiveness research.
The bill also provides an additional $400 million for comparative
effectiveness research, to be allocated at the discretion of the
Secretary of Health and Human Services. In total, the bill provides
$1.1 billion for comparative effectiveness research.
The bill also provides $430 million to the Public Health and Social
Services Emergency Fund for the Biomedical Advanced Research and
Development Authority (BARDA) and an additional $420 million for
pandemic influenza preparedness and response activities.
The ARRA provides $600 million (half of which becomes available
Oct. 1, 2009) to the Health Resources and Services Administration
(HRSA) for "primary care training." Though the bill does
not specify specific funding levels, it directs HRSA to provide
the funding for "the training of nurses and primary care physicians
and dentists" through Title VII and VIII health professions
programs, the National Health Service Corps, and the patient navigator
program authorized under Title III of the Public Health Service
Act.
The National Science Foundation (NSF) also receives a boost in
the package. The bill provides $3 billion for NSF, including $2.5
billion for research and related activities.
The bill directs $2 billion to the Department of Energy's Office
of Science.
The Centers for Disease Control and Prevention (CDC) receives $462
million for "equipment, construction, and renovation of facilities."
Information:
Dave Moore, Senior Director
AAMC Government Relations
dbmoore@aamc.org
(202) 828-0525
Tannaz Rasouli, Senior Legislative Analyst
AAMC Government Relations
trasouli@aamc.org
(202) 828-0525
Matthew Shick, Senior Legislative Analyst
AAMC Government Relations
mshick@aamc.org
(202) 862-6116
Christiane Mitchell, Director, Federal Affairs
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
MedPAC Approves IME Payment Reduction, Hospital
and Physician Payment Update Recommendations
The Medicare Payment Advisory Commission (MedPAC) Jan. 8-9 recommended
a reduction in the Medicare hospital operating indirect medical
education (IME) add-on payment from 5.5 percent to 4.5 percent in
2010, with the savings to fund a quality incentive payment program.
The commission also made this recommendation in 2007 and 2008. The
recommendation would represent a 21.6 percent cut in operating IME
payments to teaching hospitals, about $1 billion annually. Congress
must act upon MedPAC's recommendation before the cut can be implemented,
MedPAC staff presented the result of an analysis included in MedPAC's
2007 Report to Congress showing that the IME adjustment is higher
than what they believe is 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 non-teaching hospitals. Staff also noted that Medicare
margin analyses indicate that in 2007, while the overall Medicare
margin for major teaching hospitals was only 1.1 percent, it was
still 10 percentage points higher than for non-teaching hospitals.
The commission justified the recommendation for reducing the IME
adjustment by 1 percentage point to help finance the quality incentive
program and to reduce the disparity in financial performance under
Medicare between the teaching hospitals and non-teaching hospitals.
Commissioner Peter Butler, executive vice president and chief operating
officer of Rush University Medical Center, however, emphasized that
the actual reduction in IME payments is 20 percent, which, combined
with the recommended market basket update, would translate into
no increase in payments for 2010 and would likely result in negative
Medicare margins.
The commission also approved a recommendation to update payment
rates for hospital inpatient and outpatient services by the market
basket update for 2010, concurrent with the implementation of a
quality incentive program. Chair Glenn Hackbarth clarified that
this recommendation means that the standardized payment amount would
not be updated by a full market basket update, but rather the market
basket update minus 1 to 2 percentage points with the difference
going into the pay for performance pool. However, hospitals could
ultimately get the full market basket update or more depending on
how well they perform on the quality measures.
In accordance with a statutory mandate, which requires that MedPAC
make payment update recommendations based on "efficient"
hospitals, the commission has been trying to determine some of the
factors that make a hospital efficient. In their analyses, staff
defined a "relatively efficient" hospital based on specific
criteria indicating strong quality metrics and a low cost per unit
of service. MedPAC staff noted that the relatively efficient hospitals
have higher Medicare overall margins because they have lower costs
due to high pressure (i.e., limited financial resources) from private
payers. Conversely, hospitals that have low Medicare margins have
higher cost structures as a result of a low private payer pressure.
The 2007 Medicare margin for the "relatively efficient"
hospitals was 0.5 percent while that of other hospitals was negative
7.4 percent.
Following the staff presentation, commissioners discussed other
factors that may need to be considered in future analyses of relatively
efficient hospitals. In response to commissioner Karen Borman's
question about the distribution of hospitals based on the degree
of private payer pressure by teaching status, MedPAC staff noted
that while only 30 percent of non-teaching hospitals are under high
pressure, half of major teaching hospitals are under high pressure
from private payers.
MedPAC also recommended that Congress update payment rates for
physician services by 1.1 percent for calendar year 2010. The update
reflects an estimated 2.4 percent change in input prices minus a
1.3 percent productivity adjustment. Some commissioners were concerned
about including a productivity adjustment in the update recommendation,
so the commission altered the recommendation to reflect the update
value rather than the formula. To emphasize the commissioners' concern
about primary care payments, they repeated their recommendation
from the June 2008 report to Congress to increase the value of primary
care services [see Washington
Highlights, April
11, 2008]. The commission also approved a recommendation that
would reduce physician practice expense weights for costly imaging
equipment, with savings from this recommendation to be redistributed
to other physician services.
The commission also discussed a mandated managed care advantage
report and made update recommendations for ambulatory surgical centers,
dialysis services, skilled nursing facilities, home health agencies,
inpatient rehabilitation services, long-term care hospitals and
hospice services.
The recommendations will appear in MedPAC's March report to Congress.
Information:
Diana Mayes, Specialist
AAMC Health Care Affairs
dmayes@aamc.org
(202) 828-0498
Mary Patton, Senior Specialist
AAMC Health Care Affairs
mpatton@aamc.org
(202) 862-6297
Congress Takes Up CHIP Reauthorization Legislation
The House of Representatives Jan. 14 voted to pass (289-139) the
AAMC-supported "Children's Health Insurance Program Reauthorization
Act of 2009" (H.R.
2), which would reauthorize the Children's Health Insurance
Program (CHIP) through Sept. 30, 2013. Without Congressional action,
CHIP expires March 31, 2009.
According to House Energy and Commerce Committee Chair Henry Waxman
(D-Calif.), H.R. 2 is expected
to expand health care coverage to an additional 4 million uninsured
children. In anticipation of the House vote, the AAMC, American
Hospital Association, National Association of Children's Hospitals,
National Association of Public Hospitals and Health Systems, Catholic
Health Association of the United States, and Federation of American
Hospitals sent a Jan. 13 hospital group letter
to all Members of Congress urging passage of H.R. 2.
According to Congressional Budget Office (CBO) estimates,
H.R. 2 would cost $32.3 billion over 5 years and $65.4 billion over
10 years. The bill is funded by increasing federal taxes on tobacco
products and creating a prospective prohibition on self-referrals
to physician-owned hospitals. The AAMC supports the ban for addressing
inherent conflicts of interest, protecting patient access, and ensuring
fair competition in the health care marketplace.
On Jan. 15, the Senate Finance Committee approved (12-7) similar
CHIP
reauthorization legislation. However, the Finance Committee
bill does not contain language regarding self-referrals to physician-owned
hospitals.
Upon passage of H.R. 2, House Speaker Nancy Pelosi (D-Calif.) stated
that "We look forward to bringing this legislation to President
Obama's desk as one of the first bills that he will sign."
According to a press
release from Finance Committee Chair Max Baucus (D-Mont.), the
Finance Committee's bill "is expected to be considered by the
full Senate this month so that final legislation may be negotiated
with the House of Representatives."
Information:
Christiane Mitchell, Director, Federal Affairs
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
CMS Issues Two Final HIPAA Transaction and Code
Set Rules
The Centers for Medicare and Medicaid Services (CMS) Jan. 16 issued
two final rules related to HIPAA code sets. The rules are designed
to facilitate the transition to an electronic health care environment.
One
rule revises standards for electronic transactions (such as
health care claims and enrollment and disenrollment in a health
plan) and the code sets to be used in those transactions. The rule
requires covered entities to comply with Version 5010 on Jan. 1,
2012.
The second
rule adopts ICD-10, the International Classification of Diseases,
Tenth Revision, Clinical Modification (ICD-10-CM) for diagnosis
and coding, and the International Classification of Diseases, Tenth
Revision, Procedure Coding System (ICD-10-PCS) for inpatient hospital
procedure coding. These code sets are used by providers that transmit
any electronic health information in connection with a transaction
for which the Department of Health and Human Services has adopted
a standard. Compliance with the ICD-10 code sets rule begins Oct.
1, 2013.
Information:
Ivy Baer, Director & Regulatory Counsel
AAMC Health Care Affairs
ibaer@aamc.org
(202) 828-0490
AHRQ Examines Impact of Payment Policies on Clinical
Trials
The Agency for Healthcare Research and Quality (AHRQ) Jan. 9 posted
a draft paper on its website, "Horizon Scan: To What Extent Do Changes in Third-Party Payment Affect Clinical Trials and the Evidence Base?" The report's purpose is to determine if and how payment
policies impact recruitment and retention of participants in clinical
trials. Among the conclusions are that "payment policies do
affect evidence development, in that their impact on clinical trial
enrollment results in slower accrual, longer time to completion
of studies, and sometimes early termination of studies due to lack
of sufficient sample size." Further, the reports suggest that
"better coordination among government agencies and between
government, third-party payors, sponsors, and sites is necessary."
Comments on the report must be submitted to AHRQ by Jan. 23.
Information:
Ivy Baer, Director & Regulatory Counsel
AAMC Health Care Affairs
ibaer@aamc.org
(202) 828-0490
On the Hill...
Two new Senators took the oath of office this week. Vice President
Dick Cheney Jan. 15 swore in Sen. Roland Burris (D-Ill.) to fill
the seat vacated by President-elect Barack Obama. Sen. Ted Kaufman
(D-Del.) was sworn in Jan. 16, after Vice President-elect Joe Biden
resigned his Senate seat a day earlier.
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