WASHINGTON WIRE

In this issue, you'll find:

• Senate Passes $2.8 Trillion Budget
• Johnson Expresses Concern Over Medicare Cuts to Long Term Care Hospitals
• Senate HELP Committee Passes Small Business Health Insurance Legislation
• Congress is in Recess March 17 - 27, 2006

Top Story

Senate Passes $2.8 Trillion Budget

Late Thursday, March 16, 2006, the Senate passed a $2.8 trillion budget by a slim vote of 51-49. The budget contains an $11.5 billion increase in energy, education, and health and human services spending. Overall, the Senate-passed bill is an increase of $16 billion over President Bush's proposed FY 2007 budget.

The Senate passed a series of health-related amendments on Thursday before the final vote. By a 73-27 vote, the Senate added an amendment introduced by Labor, Health and Human Services, and Education (L-HHS) Appropriations Subcommittee Chair Arlen Specter (R-PA) and Ranking Member Tom Harkin (D-IA) that would increase L-HHS Appropriations by $7 billion. Additionally, the Senate passed an amendment that would increase the limit on federal debt to nearly $9 trillion.

Also included in the Senate's budget legislation is an amendment that would give Health and Human Services (HHS) Secretary Michael Leavitt authority to extend the deadline for enrollment in the Medicare Part D prescription drug plan. Currently, beneficiaries must enroll in Part D by May 15, 2006, to avoid a late enrollment penalty. While the amendment gives Secretary Leavitt permission to extend the deadline, it does not make an extension mandatory. The Senate also passed an amendment that would give HHS Secretary Leavitt permission to negotiate Part D drug prices with pharmaceutical companies. Any savings incurred would be applied to decreasing the budget deficit or to improving the Part D prescription drug benefit.

It is looking increasingly unlikely that the Senate and House will agree on a budget resolution, in part because of the increased amount of spending approved by the Senate. The House is expected to introduce its budget resolution after the March recess.

Health Care News

Johnson Expresses Concern Over Medicare Cuts to Long Term Care Hospitals

On Wednesday, March 15, 2006, House Ways & Means Health Subcommittee Chair Nancy Johnson (R-CT) expressed concern over a Centers for Medicare and Medicaid Services (CMS) proposed regulation that would cut federal payments to long-term care hospitals (LTCHs) for certain patients by 11% over the next 12 months beginning July 1, 2006. Generally, LTCHs are hospitals where an individual stays for 25 days or more. Such hospitals provide extensive medical and rehabilitative care to patients with multiple acute or complex conditions.

Earlier this year, CMS proposed payment revisions for "short-stay outliers" (SSO), stating that such changes will lead to a more efficient payment system and provide savings to the Medicare program. However, given that this patient-type represents approximately 37 percent of LTCH-PPS discharges, the budgetary impact on the hospitals could be substantial.

Herb Kuhn, Director of the Center for Medicare Management at CMS stated that many short term stay patients treated at LTCHs could be served in acute care hospitals or skilled nursing facilities (SNFs). Congresswoman Johnson recommended that CMS use predetermined criteria when deciding if a patient needs treatment in a LTCH. Kuhn responded that in addition to criteria, payment revisions may be necessary to ensure the appropriate patients are admitted. Kuhn estimated that 60% of SSOs stay less than 14 days. Congresswoman Johnson countered that the recommended proposal targets one-sixth of all LTCH patients with the shortest stay and not just those patients admitted for less than 14 days.

The Medicare Payment Advisory Commission, MedPAC, has recommended a zero percent update for LTCHs in 2007.

Senate HELP Committee Passes Small Business Health Insurance Legislation

On Wednesday, March 15, 2006, the Senate Health, Education, Labor, and Pensions (HELP) Committee passed the "Health Insurance Marketplace Modernization and Affordability Act of 2005," S. 1955, along a party line vote of 11-9. The legislation allows small businesses to pool insurance risk between companies when designing health insurance plans and also gives health insurance companies permission to bypass state coverage mandates. The legislation does require insurers to offer a plan matching the benefits offered by the five largest states in the country. The legislation protects higher-risk beneficiaries by prohibiting insurance companies from separating sick patients from healthy patients.

The legislation now moves to the full Senate where it is expected to face severe opposition.

Upcoming Events

Congress is in Recess March 17 - 27, 2006

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