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Second Opinion

Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

AAMC Comments on FY 2017 IPPS Proposed Rule

June 24, 2016— The AAMC June 17 submitted a comment letter to the Centers for Medicare and Medicaid Services (CMS) on the fiscal year (FY) 2017 Hospital Inpatient Prospective Payment System (IPPS) proposed rule.

The AAMC’s comments focus on the changes that would affect Medicare disproportionate share hospital (DSH) uncompensated care payments, especially the movement to Worksheet S-10; changes to payment rates based on incorrect reductions from 2014-2016 that were attributed to an increase in inpatient admissions; short inpatient hospital stays; an expansion in the number of years that an urban hospital has to build a cap for a rural training track; and revisions to the hospital quality programs.

The rule includes a proposal to rescind the 0.2 percent reduction implemented in FY 2014 based on estimates that the number of inpatient admissions would increase after implementation of the Two Midnight rule [see Washington Highlights, April 22]. The AAMC strongly opposed the 0.2 percent reduction and applauds CMS’s proposal. Additionally, the AAMC supports CMS’s proposal to implement a one-time increase of 0.6 percent to offset cuts made in FYs 2014-2016.

The AAMC continues to express concerns about the projections and estimates CMS uses as a basis for reducing the uncompensated care payment (UCP) pool and urges CMS to make the projections and estimates transparent and verifiable. The AAMC supports CMS’s proposal to use three cost reporting periods to calculate Factor 3 of the UCP in FY 2017. However, the association has a number of concerns related to the transition to the Worksheet S-10 starting in 2018 to calculate the UCP and requests that CMS delay the transition until all concerns are addressed and the S-10 data are audited. The letter also urges CMS to include direct graduate medical education (DGME) costs in the cost-to-charge ratio and audit the data for accuracy before using the Worksheet S-10 as a proxy.

Additionally, the AAMC expresses concern that the proposed negative 1.5 percent adjustment, an additional 0.7 percent from initial estimates in FY 2014, does not comply with Congress’s intent under the American Taxpayers Relief Act (ATRA, P.L. 112-240) and the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, P.L. 114-10). The letter states, “Congress made clear that it did not intend for the recoupment provision to result in a permanent 0.7 percentage point reduction to IPPS rates.”

The association supports CMS’s proposal to expand from three to five years the amount of time an urban hospital with a rural training track has to build its FTE cap. This proposal will give urban hospitals with rural training tracks enough time to reflect the amount of residents that will train in the program once the program is established.

Furthermore, the AAMC commented on the hospital performance and reporting programs, including proposed changes to the value-based purchasing program (VBP), hospital acquired conditions reduction program (HACRP), hospital readmissions reduction program (HRRP), and the inpatient quality reporting (IQR) program. As an overarching comment, the AAMC notes its concerns that the three performance programs do not contain an adjustment for sociodemographic factors, thereby disproportionately penalizing teaching hospitals.

The AAMC strongly recommends that CMS not finalize inclusion of the modified PSI-90 composite in the HACRP for FY 2018. The modified PSI-90 measure has not yet been finalized for the IQR program, nor has the measure been publicly reported for at least one year, criteria the association holds must be met before including any measure in a performance program. The AAMC objects to the CMS proposal to shorten the PSI-90 performance period to 15 months, as such a short period would significantly reduce the reliability of the measure. The comment letter also cites concerns with two proposed efficiency measures for the VBP program, noting lack of sociodemographic adjustment and overlap with the Medicare Spending Per Beneficiary Measure.

The letter further addresses proposals to written requirements under the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE, P.L. 114-42).

Ayeisha A. Cox, J.D.
Hospital Policy & Regulatory Specialist
Telephone: 202-828-0482

Scott Wetzel, M.P.P.
Senior Specialist, Health Care Affairs
Telephone: 202-828-0495


AAMC Signs Letter to Address Gun Violence

June 24, 2016—The AAMC joined 57 national public health, medical, and research organizations in a June 19 letter  urging the Senate to approve two amendments to address gun violence.

The letter, organized by the American Academy of Pediatrics, asked senators to vote for two amendments to the fiscal year (FY) 2017 Commerce-Justice-Science spending bill (H.R. 2578).

The amendments, which the letter said “represent critical steps to protect the public health,” were S.Amdt. 4750, offered by Sen. Christopher Murphy (D-Conn.), to expand background checks on all gun purchases, and S.Amdt. 4720, offered by Sen. Dianne Feinstein (D-Calif.), to make it more difficult for known or suspected terrorists to purchase firearms.  

The Senate June 20 rejected both proposals, which needed 60 votes for passage.

The letter also stated, “In addition to passing these two amendments, we would welcome the opportunity to work with you in the future to support funding for gun violence prevention research and public health surveillance, including $10 million to support gun violence prevention research at the CDC.”


Tannaz Rasouli
Sr. Director, Public Policy & Strategic Outreach
Telephone: 202-828-0525


Supreme Court Rules Universities May Continue to Consider Race in Holistic Admissions

June 24, 2016— In a 4-3 decision in Fisher v. University of Texas at Austin, the Supreme Court June 23 upheld the constitutionality of the University’s admissions process, stating that, “Considerable deference is owed to a university in defining those intangible characteristics, like student body diversity, that are central to its identity and educational mission.” This ruling continues to allow universities and other institutions of higher education to consider race as one of many factors in a holistic review of applications for admission.

In response to the ruling, AAMC President and CEO Darrell G. Kirch, M.D., said, “The AAMC is pleased that the Supreme Court has closed this eight-year chapter by upholding the constitutionality of the University of Texas at Austin’s admissions process. The court’s decision re-affirms the educational benefits of diversity and defers to the good-faith judgments of educators who strive to achieve those benefits for their students and for society as a whole. The decision embraces the notion of diversity as multi-dimensional, and bolsters the use of individualized, holistic review in admissions, based on each school’s mission and circumstances.”

Justice Kennedy’s decision re-affirms that an institution of higher education may use a race-conscious admissions policy provided that it is necessary and narrowly tailored to meet the institution’s compelling interest in the educational benefits of a diverse student body, as set forth in the 2003 decision, Grutter v. Bollinger. The decision also states that the University has an “ongoing obligation to engage in constant deliberation and continued reflection regarding its admission policies.”

When the case was accepted by the Court, the AAMC, joined by 32 organizations representing a range of health professional education groups, filed an amicus brief  highlighting the continued prevalence of health disparities and reinforcing the importance of student diversity in health professional education settings [see Washington Highlights, Nov. 5, 2015].


Frank Trinity, J.D.
Chief Legal Officer
Telephone: 202-828-0540


AAMC, Friends of VA Urge Higher VA Research Appropriation

June 24, 2016— The Friends of VA Medical Care and Health Research (FOVA), which includes the AAMC, sent a June 21 letter to House Appropriations Chair Hal Rogers (R-Ky.) urging adoption of the Senate-passed $675 million for Department of Veterans Affairs (VA) Medical and Prosthetic Research. Members of the conference committee for the Military Construction, Veterans Affairs, and Related Agencies (MilCon-VA) Appropriations Act, 2017 finalized the conference agreement (H. Rept. 114-129) on June 23, and provided the Senate-recommended level of $675 million.

The letter notes, “While this amount falls short of the $740 million recommended by FOVA, it will help offset the reprioritization of designated VA research areas caused by chronic underfunding and new budget stressors.” It goes on to outline the numerous research priorities identified by the House Appropriations Committee despite the proposed cuts to similar designated research areas under the administration’s reprioritization to fund the Million Veteran Program (MVP).

The House and Senate appropriations committees each approved versions of the fiscal year (FY) 2017 MilCon-VA spending bills in April, sending the bills to a conference committee to resolve the differences [see Washington Highlights, April 15]. The Senate bill provides $675 million for VA research, a $44 million (7 percent) increase over FY 2016, exceeding the House and president’s budget recommendations of $663 million. For the first time, the administration proposed dedicating $65 million of VA research funding to MVP in support of the president's Precision Medicine Initiative. Without a corresponding increase in funding, the VA plans to reprioritize program spending, including a decrease in investigator-riven projects.

AAMC is a member of the FOVA executive committee.


Matthew Shick, J.D.
Director, Gov't Relations & Regulatory Counsel
Telephone: 202-828-0526


AAMC Submits Comments to NIH on Approaches to Team Science

June 24, 2016— The AAMC June 16 submitted comments to the National Institutes of Health (NIH) National Institute of General Medical Sciences (NIGMS) in response to a Request for Information on approaches to support team science in the biomedical research community.

In its request, the NIGMS notes, “Team science allows for a level of collaboration that has the potential to achieve scientific breakthroughs or new understandings of phenomena that would not be attainable either by an individual or by simply additive efforts of two or more scientists.” The AAMC supports this view, recognizing in its letter the advantages of team science in addressing complex, transdisciplinary scientific questions. 

The AAMC also presents a number of recommendations to NIGMS on the organization, composition, and assessment of team science, including:

  • Ensuring that study sections are educated to be unbiased against multi-institutional teams during grant review;

  • Supporting research facilitating the development of software, models, templates or other tools to support the engagement and management of research teams in collaboration with the research community;

  • Urging training program grant reviewers to consider the value of training as a team member and promote programs with a team-based focus;

  • Facilitating collection and dissemination of curricula and tools to facilitate collaboration; and

  • Creating a collaborative proposal (modelled after the National Science Foundation), where investigators from two or more organizations collaborate on a unified research project and submit one single, focused proposal, to avoid difficulties that arise around subcontracting


Jodi B. (Lubetsky) Yellin, Ph.D.
Director, Science Policy
Telephone: 202-828-0485

Stephen Heinig
Director, Science Policy
Telephone: 202-828-0488


House Passes Zika Conference Report Despite Democrats’ Objections

June 24, 2016— The House of Representatives June 23 approved, on a party-line vote of 239-171, the fiscal year (FY) 2017 Military Construction-VA and Transportation-HUD appropriations bill (H. Rept. 114-129), which included the House Zika conference report that provides $1.1 billion in funding through Sept. 30, 2017, to address the Zika virus.

House and Senate Democrats have already voiced their strong concerns with the bill due to its offsets and inclusion of controversial provisions, and the administration June 23 announced that the president would veto the bill in its current form. Specifically, the bill restricts some funding for family planning services in Zika-affected areas. The bill also prohibits funds from being used to study the impact that pollution in lakes and streams has on physical and mental diseases.

The House partially-offset the $1.1 billion cost by reallocating $107 million in unused funds appropriated to the State Department to address the Ebola virus outbreak, as well as $100 million in “unused administrative funding” from the nonrecurring expenses fund at the Department of Health and Human Services. Further, the bill uses $543 million in unused Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) funds originally intended for U.S. territories to set up their health care exchanges, according to the House Appropriations Committee summary.

The House-approved conference report includes:

  • $230 million for the NIH’s National Institute of Allergy and Infectious Diseases to use for vaccines and research to address the Zika virus;

  • $476 million to the Centers for Disease Control (CDC) for its response to the Zika virus. Specifically, $88 million of the provided amount can be used to reimburse accounts that the CDC has had to reallocate funds from to respond to the Zika virus;

  • $227 million for the Public Health and Social Services Emergency Fund to respond to Zika virus, including $40 million to expand primary care services through the National Health Services Corps in Puerto Rico and other territories;

  • $145 million for global health programs for assistance and research to respond to the Zika virus;

  • $14.5 million for the State Department’s response efforts related to the Zika virus; and

  • $10 million for USAID efforts to respond to Zika virus.

The AAMC has joined several efforts to advocate for robust funding to address the Zika virus [see Washington Highlights, June 10]. The AAMC joined 60 organizations in a May 18 letter to House members urging them to provide funding at the administration’s requested levels and to reject proposals that would cut other public health programs. The AAMC also signed on to a letter to appropriators with more than 50 other organizations in support of the White House’s request. Additionally, the association joined a June 6 community letter to House Conferees urging them to provide the highest possible level of funding to fight the Zika virus, and to provide new funding rather than repurpose funds from other high priority public health programs.


Clayton Crabtree
Legislative Analyst
Telephone: 202-739-2995


AAMC Submits Letters to Party Platform Committees

June 24, 2016— The AAMC June 17 submitted letters to both the Democratic and Republican party platform committees for inclusion in their respective platforms during their national conventions later this summer.

The letters state, “The nation’s medical schools and teaching hospitals lay the foundation for the best medical care in the world by educating and training tomorrow’s doctors, finding tomorrow’s cures, and providing quality care to all in need,” and urge the parties to “promote policies that strengthen their core missions of medical education, patient care, and medical research.”

Additionally, the letters encourage the government to “continue its partnership with the nation’s medical schools and teaching hospitals through its investments in Medicare graduate medical education to support key residency training and the specialized care and services provided by teaching hospitals, as well as through the National Institutes of Health and other federal agencies that promote medical research.”


Jason Kleinman
Sr. Program & Policy Specialist, Govt Relations
Telephone: 202-903-0806


House GOP Releases Health Reform Plan to Replace ACA

June 24, 2016— The House Republicans June 22 unveiled, “A Better Way: Our Vision for a Confident America,” their health reform alternative to the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152).

The plan would repeal major functions of the ACA, including individual and employer mandates, Medicaid expansion, tax-subsidies provided to low-income Americans to gain insurance coverage, and the ban on physician-owned hospitals.

The House Republican proposal would repeal the fiscal year (FY) 2018 and 2019 Medicare Disproportionate Share Hospital (DSH) cuts, the 2018 through 2020 Medicaid DSH cuts, and create a “combined national pool of uncompensated care funds” in 2021. The policy would require the Health and Human Services Secretary to distribute funds from the uncompensated care pool to DSH hospitals based on the use of certain federally collected data.

Additionally, the plan suggests repealing two programs passed through the ACA – the Independent Payment Advisory Board (IPAB), a 15-member board tasked with proposing cuts to Medicare if spending exceeds set targets, and the Centers for Medicare and Medicaid Innovation (CMMI), which tests and evaluates payment and care delivery models – and repeals the Medicare Advantage benchmark caps.

Although the proposal repeals major components of the ACA, it does keep some policies, including insurance coverage for those with pre-existing conditions and allowing young adults to stay on their parents’ health plan until the age of 26.

The plan transforms Medicare into a “premium support” model, allowing seniors to choose private health plans alongside the traditional Medicare fee-for-service program, and combines Medicare Parts A and B with a unified deductible and sets an annual maximum out-of-pocket cap on beneficiary costs. It also reforms the Medicaid program with a per-capita allotment to “reduce federal spending, but just as importantly, this Medicaid financing reform helps modernize the program by improving the incentives for states, plans, and providers to better manage dollars as they help provide care to vulnerable patients.”


Len Marquez
Director, Government Relations
Telephone: 202-862-6281

Courtney Summers
Senior Legislative Analyst
Telephone: 202-862-6042


CMS Issues Final Rule on Medicare Payment Rates for Clinical Lab Tests

June 24, 2016— The Centers for Medicare and Medicaid Services (CMS) June 17 issued a final rule that would require certain laboratories performing clinical diagnostic lab tests to report to CMS the amounts paid by private insurers for the lab tests. Beginning January 2018, Medicare will use the private insurer rates to calculate Medicare payment rates for laboratory services paid under the Clinical Laboratory Fee Schedule (CLFS).

If an applicable laboratory receives at least $12,500 in Medicare revenues from laboratory service paid under the CLFS and more than 50 percent of its Medicare revenues are from laboratory and physician services, the entity would be required to report the private payer rates. This would mean that most physician office laboratories, smaller independent labs, and hospital laboratories will not be required to report the private payer rates for these tests. Although they would not report the payer rates, they would be paid based on the new rates in 2018 for any tests billed under the CLFS.

For the system’s first year, laboratories will collect private payer data from Jan. 1, 2016 through June 30, 2016, and report it to CMS between Jan. 1, 2017, and March 31, 2017. A special category of tests, advanced diagnostic laboratory tests (ADLTs), will be paid at the actual list charge for three calendar quarters.


Gayle Lee
Director, Regulatory Counsel
Telephone: 202-741-6429


NIH Releases Final Policy on the Use of a Single Institutional Review Board for Multi-Site Research

June 24, 2016— The National Institutes of Health (NIH) June 21 released a final policy requiring the use of a single Institutional Review Board (IRB) of record for all domestic sites participating in agency-funded multi-site clinical trials.

Under the policy, a single IRB (sIRB) of record will be accountable for conducting the initial and continuing ethical review of NIH-funded non-exempt human subjects research carried out at more than one clinical trial site in the United States. Participating sites remain responsible for meeting other regulatory requirements with respect to research conducted at their own institutions, such as obtaining informed consent, overseeing implementation of approved protocols, and communicating with the IRB of record.

This policy is “intended to enhance and streamline the process of IRB review and reduce inefficiencies so that research can proceed as expeditiously as possible without compromising ethical principles and protections for human research participants.”

The AAMC submitted a comment letter to NIH in response to the draft policy [see Washington Highlights, Jan. 30, 2015]. While recognizing the potential benefits of single IRB review for multi-site trials, the AAMC noted that implementation of the policy as drafted could “increase costs, shift administrative burdens, and encourage the development of ‘shadow’ IRB reviews to fill in the gaps led by insufficient guidance on how to create many simultaneous reliance agreements and relationships.”

According to NIH, “The policy will begin a paradigm shift in IRB review” and therefore, the final policy will take effect on May 25, 2017. In the interim, NIH has provided guidance materials and resources to assist the research community with implementation of the policy. Additional materials will be added when available.


Heather Pierce, J.D., M.P.H.
Sr. Director, Science Policy & Regulatory Counsel
Telephone: 202-478-9926


Medicare Board of Trustees Releases 2016 Report

June 24, 2016— The Medicare Board of Trustees June 22 released its annual report to Congress on the financial and actuarial status of the Hospital Insurance (HI) and Supplementary Medical Insurance (SMI) trust funds.

The report estimates that the HI trust fund will be depleted by 2028, which is two years earlier than in last year’s report. Similar to previous reports, the trustees determined the fund is not adequately financed over the next ten years.

According to the report, the SMI trust fund will remain in financial balance for all future years because beneficiary premiums and general revenue transfers will be set at a level to meet expected costs each year. However, SMI costs are projected to increase significantly as a share of the gross domestic product (GDP) over the next 75 years, from 2.1 percent to 3.8 percent due to the aging population and rising health care costs.

The report also includes an overview of the Medicare program from last year. In 2015, Medicare covered 55.3 million people and total expenditures were $647.6 billion. The trustees project expenditures will increase in most future years at a somewhat faster pace than the economy due to the number of beneficiaries increasing more rapidly than the number of workers, coupled with a continued increase in the volume and intensity of services delivered.


Jason Kleinman
Sr. Program & Policy Specialist, Govt Relations
Telephone: 202-903-0806


HHS Inspector General Releases Mid-Year Report on Work Plan

June 24, 2016— The Department of Health and Human Services (HHS) Office of Inspector General (OIG) June 7 released its mid-year update of its work plan for fiscal year (FY) 2016. The work plan, last updated October 2015, includes current and new projects that OIG will undertake in the coming year. The OIG continues to focus its Medicare oversight efforts on identifying and offering recommendations to reduce improper payments, prevent and deter fraud, and foster economical payment policies. 

Among the new projects for FY 2016 are:

  • A review of potential savings if hospital outpatient stays were ineligible for an outlier payment;

  • A review of compliance with the skilled nursing facility (SNF) prospective payment system related to the requirement that a beneficiary be an inpatient for at least three consecutive days before discharge; and

  • A review of the Medicare Shared Savings Program (MSSP) to determine whether CMS properly assigned beneficiaries to accountable care organizations (ACOs) and ensure there is no duplication of payments for those beneficiaries by other savings programs or initiatives.

The mid-year plan also includes studies of medical research programs at the National Institutes of Health (NIH) and other HHS agencies. Among the listed projects is an assessment of academic institutions’ control over the subcontracting on NIH grants and contracts. The OIG plan states, “We will determine whether colleges and universities effectively monitor the services subcontracted to other organizations and ensure that Federal funds are spent on allowable goods and services in compliance with selected cost principles and the terms and conditions [of award].” 

The OIG notes they conduct the review of “selected organizations” based on input from NIH and the volume of federally sponsored research performed by the organizations.


Ayeisha Cox, J.D.
Hospital Policy & Regulatory Specialist
Telephone: 202-282-0482

Stephen Heinig
Director, Science Policy
Telephone: 202-828-0488

On The Hill

Rep. Chaka Fattah (D-Pa.) June 22 submitted his letter of resignation effective immediately after being found guilty on federal corruption charges.

On The Agenda

June 28: Senate Finance Hearing on Part B Drug Demonstration
10 a.m.; 215 Dirksen Senate Office Building, Washington, D.C.
The Senate Finance Committee will hold a hearing to examine the proposed Medicare Part B Drug demonstration. Centers for Medicare and Medicaid Services Acting Principal Deputy Administrator for Innovation Patrick Conway, M.D., will testify.

June 28: ACTPCMD Meeting
TBD; Teleconference
The Advisory Committee on Training in Primary Care Medicine and Dentistry will hold a meeting to make policy recommendations to the Health and Human Services Secretary regarding family medicine, general internal medicine, general pediatrics, general dentistry, pediatric dentistry and physician assistant programs.

June 29: Senate VA Committee Hearing on Pending Health Care Legislation
2:30 p.m.; SR-418 Russel Senate Office Building, Washington, D.C.
The Senate Veterans Affairs (VA) Committee will hold a hearing to discuss various pieces of pending health care legislation.

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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

For More Information

Dave Moore
Senior Director, Government Relations
Telephone: 202-828-0559