WASHINGTON WIRE
July 28, 2006
Issue 106
In this issue, you'll find:
- McClellan Responds to Congressional Requests to Delay Medicare Payment Revisions
- House Passes Health Information Technology Bill
- Medicare Physician Payment Bill Introduced in the House
- CMS Announces "Money Follows the Person" Grant Program
- Hearings
Top Story
McClellan Responds to Congressional Requests to Delay Medicare Payment Revisions
On
Thursday, July 20, 2006, Centers for Medicare and Medicaid Services
(CMS) Administrator Mark McClellan, M.D., Ph.D., responded to letters
received early this month from various House and Senate members asking
for a one-year implementation delay of the new diagnosis-related group
(DRG) changes to the Medicare inpatient hospital payment system.
In response to the request for delay from more than 240 lawmakers, including Ways & Means Health Subcommittee Chairwoman Nancy Johnson (R-CT) and Senate Finance Committee Chairman Charles Grassley (R-IA) and Ranking Member Max Baucus (D-MT), McClellan stated that CMS might delay the start of an overhaul to the hospital payment system to avoid financial disruptions to the industry. However, the delay probably will not be for the requested full one-year. McClellan also stated that the final rule would be modified to offer a smooth and effective implementation.
Currently, Medicare hospital payments are primarily based on what hospitals charge for procedures. However, in an April 2006 proposed rule, CMS outlined proposed changes that would base payment on "cost-based payment weights" (the actual costs to treat a patient rather than what the hospital charges) and "severity-adjusted payments" (payments based on the patient's severity of illness).
McClellan also confirmed that the final rule will be published on August 1, 2006.
Health Care News
House Passes Health Information Technology Bill
On Thursday, July 27, 2006, the House passed HR 4157, the Better Health Information System Act of 2006 by a vote of 270-148.
The bill would codify the Office of the National Coordinator for Health Information Technology within the Department of Health and Human Services. The bill would also implement a new system for national interoperability of data and implement a new set of 120,000 diagnosis codes (ICD-10 codes) by 2011 for insurers and providers to use for payment and record keeping.
Late Wednesday, July 26, the Rules Committee striped the bill of a hospital-opposed transparency provision that would have forced hospitals to share data on pricing for private group health insurance coverage, public group plan coverage, including Medicare and Medicaid, self pay plans, and any other insurance coverage.
The
House now waits for the Senate to begin debate on their health IT bill,
S. 1418, the Wired for Health Care Act, sponsored by Majority Leader
Bill Frist (R-TN), Health, Education, Labor, and Pensions (HELP)
Committee Chairman Mike Enzi (R-WY), HELP Committee Ranking Member
Edward Kennedy (D-MA) and Senator Hillary Clinton (D-NY). According to
Democrats, the Senate bill is very different from the House passed
bill.
Medicare Physician Payment Bill Introduced in the House
On
Monday, July 24, 2006, Congressman Michael Burgess (R-TX) introduced
the Medicare Physician Payment Reform and Quality Improvement Act that
would change Medicare physician payments.
The legislation would implement a new system for physician reimbursement payments. The Medicare payments would be calculated using the Medicare Economic Index (MEI)-an index measuring inflation and health care costs-minus one point rather than the Sustained Growth Rate (SGR) formula currently used. This change would give Medicare physician reimbursement rates for 2007 a 2.7% increase. The Medicare Payment Advisory Committee (MedPAC) recommended a 2.8% increase in payments next year after adjusting for improved productivity in providing care.
Currently, Medicare physician payments are based on the Sustainable Growth Rate (SGR) formula. Each year, the SGR formula determines a target for Medicare spending. However, in most years, that target is exceeded. Due to this overspending, Congress had to reduce the physician reimbursement rate by 5% for nine years.
The legislation would also allow physicians to submit data voluntarily to Medicare Quality Improvement Organizations (QIOs) on quality of care measures. In addition, physicians that report quality data would be allowed to bill high-income Medicare patients a higher fee, a practice known as "balance billing," which is currently illegal under Medicare law.
While the Congressional Budget Office (CBO) has not released a score for the cost of the bill yet, Congressman Burgess has recommended ways to help pay for the bill by eliminating the Medicare stabilization fund established under the 2003 Medicare Part D prescription drug bill to help Medicare Advantage plans. Other provisions to help pay for the bill were redacted shortly before the bill was introduced since they involved cuts to other provider payments.
Both
the House and Senate have mentioned possible short-term revisions to
Medicare physician payments could be made before the end of the year.
CMS Announces "Money Follows the Person" Grant Program
On
Wednesday, July 26, 2006, the Centers for Medicare and Medicaid
Services (CMS) announced a new $1.75 billion competitive grant program,
"Money Follows the Person," as set forth in the Deficit Reduction Act
of 2005 (DRA). The initiative would award states grants to transition
people with disabilities and senior citizens from institutionalized
care to home or community-based services. Medicaid recipients would
have more options for long-term care services and an opportunity to
return to their home or community.
States may submit proposals, due by November 1, 2006 to CMS outlining plans to transition Medicare recipients residing in an institutional setting for at least six months into a home and community-based setting. States could receive 75 to 90 percent of the costs of transitioning individuals out of institutionalized care with an increased federal match rate.
The
deadline for first year state applications is November 1, 2006. The
competitive grants will be awarded from January 1, 2007 through
September 30, 2011. CMS will host a conference call for interested
applicants on August 22, 2006.
Upcoming Events
Hearings
Monday, July 31, 2006
HIV/AIDS Coordinator Nomination
Senate Foreign Relations Committee
Full Committee Confirmation Hearing
3 p.m., 419 Dirksen Bldg.
Tuesday, August 1, 2006
Labor and HHS Nominations Vote
Senate Health, Education, Labor and Pensions Committee
Full Committee Markup
Time TBA, 430 Dirksen Bldg.
Labor and HHS Nominations
Senate Health, Education, Labor and Pensions Committee
Full Committee Confirmation Hearing
10 a.m., 430 Dirksen Bldg.
For More Information
For further information on any topics discussed or publications listed, or to get copies of anything mentioned in this alert, please call (202) 466-6550 and ask for the Legislative Practice Group.
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