WASHINGTON WIRE

In this issue, you'll find:

• House Appropriators Approve Labor-HHS Spending Bill; Floor Action Delayed
• CMS Releases Medicaid Citizenship Guidelines
• House Committees Approve Health IT Bills
• Johnson Sends Letter to CMS on Hospital Payments
• Hearings

Top Story

House Appropriators Approve Labor-HHS Spending Bill; Floor Action Delayed

On Tuesday, June 13, 2006, the House Appropriations Committee approved a $605 billion Labor, Health and Human Services, Education and Related Services ("Labor-HHS") Appropriations bill. The legislation would allocate $454.6 billion to mandatory programs (e.g. Medicare and Medicaid) and $141.9 billion to discretionary programs.

The House restored funding to many of the programs cut in the Bush Administration's proposed budget in February, 2006. The Centers for Disease Control and Prevention ("CDC") received $6.2 billion under the House's proposed bill, $400 million more than under the President's proposal. The National Institutes of Health ("NIH") would receive $28.3 billion, overall, the same as it received in FY 2006. However, the Office of the Director would receive $140 million more than in last year's budget.

During the Committee mark-up, Congresswoman JoAnn Emerson's (R-MO) successfully offered an amendment that would prevent states from using appropriated funds in the budget to reduce Medicaid provider taxes below 6 percent. This was seen as an attempt to postpone potential regulations that would create federal Medicaid savings by limiting states' use of these provider taxes.

And rather surprisingly, Minority Whip Steny Hoyer (D-MD) successfully offered an amendment that would raise minimum wage by $2.10 over the next two years to a rate $7.25 per hour.

Although House Appropriations Chairman Jerry Lewis (R-CA) had hoped to finish all 11 appropriations bills by the July 4th recess, it now appears that the Labor-HHS spending bill may not make it to the House floor as scheduled. Historically, the Labor-HHS bill has been the most difficult appropriations bill to pass.

In other news, the President signed into law a FY 2006 emergency supplemental appropriations bill to fund the Iraq and Afghanistan wars, Hurricane Katrina Relief, and pandemic flu preparedness. The legislation included a provision that placed an $873 billion cap on FY 2007 discretionary spending.

Health Care News

CMS Releases Medicaid Citizenship Guidelines

On Friday, June 9, 2006, the Centers for Medicare and Medicaid Services ("CMS") released its new Medicaid citizenship guidelines as required under the Deficit Reduction Act of 2005 ("DRA"). Previous law simply states that Medicaid recipients must be U.S. citizens; however, the new requirement seeks documentation proving citizenship.

Beginning July 1, 2006, all new applicants and current beneficiaries seeking renewal will be required to submit the proper documentation to state Medicaid offices. Applicants will not have to provide the information upon the next renewal unless data raises a question.

The guidelines list four tiers of acceptable documentation. The first tier, referred to as primary documents, includes a U.S. passport, a certificate of naturalization, or a certificate of U.S. citizenship. Primary documents prove both citizenship and identity. If an applicant cannot produce primary documents in a timely manner, they may use secondary documentation such as a U.S. birth certificate or an adoption decree. However, if the applicant uses documentation, he/she must provide proof of identity, such as a driver's license or school ID. If an applicant cannot provide any of the documentation listed under the first three tiers, he/she may use a written affidavit to provide the necessary documentation.

Critics of the new guidelines fear that many of the approved documents are not readily available to applicants, especially older Medicaid recipients or recipients with disabilities. In addition, critics believe that the documentation guidelines may place undue financial burden on low-income Americans who may have to pay for obtaining these documents.

House Committees Approve Health IT Bills

On Thursday, June 15, 2006, the House Energy and Commerce Committee and the Ways and Means Committee separately approved their respective versions of a health information technology ("HIT") act, H.R. 4157.

Both bills would codify the Office of the National Coordinator for Health Information Technology within the Department of Health and Human Services and require national standards be put in place for the storage and sharing of patient data.

However, major differences exist between the two bills. Most notably the Ways and Means Committee bill includes changes in the procedure and billing codes to be implemented by 2009. The Energy and Commerce bill does not include such a provision.

Additionally, the Ways and Means Committee's bill would change the Health Insurance Portability and Accountability Act (HIPAA) to preempt state privacy laws, much to the dislike of privacy advocates. However, the Energy and Commerce Committee legislation does not contains such a provision.

The House Committees must now reconcile the two bills before the legislation can be brought to the House floor. Additionally, the Senate passed very different HIT legislation last year, indicating that conferencing a HIT bill will prove difficult.

Johnson Sends Letter to CMS on Hospital Payments

On Monday, June 12, 2006, House Ways and Means Health Subcommittee Chairwoman Nancy Johnson (R-CT) sent a letter to Centers for Medicare and Medicaid Services ("CMS") Administrator Mark McClellan stressing the need for a transition period while switching Medicare's inpatient payment system.

Medicare's recommended changes to the payment system 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).

Congresswoman Johnson disagreed with Ways and Means Committee Chairman Bill Thomas (R-CA), who would like to see the new system start this fall. While both agree that the new components should start at the same time, Congresswoman Johnson urged that CMS should use the new system to only measure part of the payment for now.

The Medicare Payment Advisory Committee ("MedPAC") also recommended a phase-in of the new payment rates. MedPAC stated that hospitals need time to adapt to the new system. Critics of the change in payment have asked for a one-year delay in implementation. CMS's proposal would implement the cost-based component first in October 2006, followed by the severity component in October 2007.

Upcoming Events

Hearings

Tuesday, June 20, 2006

Line-Item Veto and Other Budget Process Revisions
Senate Budget Committee
Full Committee Markup
10 a.m., 608 Dirksen Bldg.

Wednesday, June 21, 2006

VA Data Security
House Veterans' Affairs - Subcommittee on Health
Subcommittee Hearing
10 a.m., 334 Cannon Bldg.

Accelerating the Adoption of Health Information Technology
Senate Commerce, Science and Transportation - Subcommittee on Technology, Innovation, and Competitiveness
Subcommittee Hearing
2:30 p.m., 562 Dirksen Bldg.

Thursday, June 22, 2006

Medical Liability
Senate Health, Education, Labor and Pensions Committee
Full Committee 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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