WASHINGTON WIRE

October 14, 2005
Issue 76

In this issue, you'll find:

Congress in Recess
Committees Consider Medicaid Cuts
Hearings

Top Story

Congress in Recess

Due to this week's Congressional recess, we are publishing a condensed version of the Weekly Washington Wire specifically highlighting activity around reconciliation legislation and potential Medicare and Medicaid cuts.

Health Care News

Committees Consider Medicaid Cuts

Members of Congress are scheduled to return to Washington, D.C. on Monday, October 17, 2005 to begin finalizing Congressional budget reconciliation packages postponed due to Hurricane Katrina-related legislative priorities. In April, Congress passed a fiscal year (FY) 2005 budget that mandated the Senate Finance and House Energy & Commerce and House Ways & Means Committees generate between $10 billion and $14 billion in savings from mandatory programs within their jurisdiction. With few details available, outside observers continue to speculate as to the contents of each committee’s final package.

Senate Finance Committee Chairman Charles Grassley (R-IA) is expected to discuss his proposals with Committee members on Monday, October 17, with a possible mark-up hearing on October 19, assuming he is assured enough votes to pass his proposal and stave off unwanted amendments. Currently, it appears the Chairman’s proposal will include larger cuts to Medicare and smaller cuts to Medicaid than previously indicated. With regards to Medicare, Chairman Grassley will likely propose a payment reduction to hospitals for outpatient care ($400 million in savings), a reduction in the amount of debt skilled nursing facilities can write off to 75% from the current 100% ($500 million in savings), and a freeze on home health care payments ($2.1 billion in savings over 5 years). In addition, it appears Chairman Grassley might eliminate the managed care stabilization fund created by the MMA to entice private health plans to participate in Medicare ($6.8 billion over 5 years)—a fund the Bush Administration strongly supports. However it is possible that the markup would also include the adoption of the Bush Administration’s risk adjustment plan ($5.4 billion over 5 years) and a freeze in the physician payment fee schedule for one year ($6.6 billion over 5 years). Currently a 4.3% physician payment reduction is scheduled for 2006.

To ensure that he can get the votes needed for his reconciliation package from Finance Committee Members Olympia Snowe (R-ME) and Gordon Smith (R-OR), Chairman Grassley is apparently considering smaller than expected cuts to the Medicaid program that include basing prescription drug payments on the “average manufacturer’s price” (AMP) ($5 billion over 5 years), tightening asset transfers for people attempting to qualify for nursing home care ($1.5 to $2 billion over 5 years), requiring drug companies to offer $1.5 billion in additional drug rebates, and taxing managed care plans to generate $1 billion.

The Chairman has stated that his Katrina relief package will be included in the reconciliation package if the relief bill cannot be passed separately in committee. In addition, Chairman Grassley will attempt to include the Family Opportunity Act in reconciliation legislation, which would allow some families of disabled children to buy into the Medicaid program. The reconciliation package accounts for the additional costs of these bill, producing a net savings of $12 billion over five years.

The House Energy & Commerce Committee will address many of the same Medicaid adjustments as proposed by the Senate Finance Committee. Additionally, the Energy & Commerce Committee will likely include a cost-sharing proposal requiring all beneficiaries to pay co-payments based on their federal poverty level ($2 billion over 5 years). The House is also considering allowing states to modify Medicaid benefits packages to resemble state employee health plans and possibly finding means to prevent states from increasing their federal Medicaid payments by utilizing transfers between managed care organizations and the state. Other proposals that may be included are Medicaid health savings accounts, increased certification of eligible beneficiaries, and waiver reforms.

The earliest the House Energy & Commerce Committee is expected to begin reconciliation is the week of October 24, 2005, a week after the Senate Finance Committee. However, timing in the House could depend on how smooth the process is in the Senate.

Upcoming Events

Hearings

Wednesday, October 19, 2005

Committee on Appropriations - Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
9:30AM
138 Dirksen Senate Office Building
The Potential of Stem Cell and Nuclear Transplantation Research

Committee on Health, Education, Labor, and Pensions - Subcommittee on Bioterrorism and Public Health Preparedness
10:00AM
430 Dirksen Senate Office Building
Bioterrorism and Public Health Preparedness Subcommittee hearing on biosurveillance

Committee on Armed Services -Subcommittee on Military Personnel
2:00PM
2118 Rayburn House Office Building
Hearing
Defense Health Program Overview

Thursday, October 20, 2005

Committee on Homeland Security - Subcommittee on Economic Security, Infrastructure Protection, and Cybersecurity
9:00AM
311 Cannon House Office Building
Military and National Guard Roles in Disaster Response
(Joint Hearing with the Homeland Security Emergency Preparedness, Science and Technology Subcommittee)

Committee on Energy and Commerce -Subcommittee on Environment and Hazardous Materials
10:00AM
2123 Rayburn House Office Building
Comprehensively Combating Methamphetamines: Impacts on Health and the Environment

Committee on Veterans Affairs - Disability Assistance and Memorial Affairs
10:30AM
340 Cannon House Office Building
Disability Compensation Claims Decisions Made by the VA Regional Offices

Committee on Homeland Security - Subcommittee on Prevention of Nuclear and Biological Attack
1:00PM
TBA
Mitigating Catastrophic Events Through Effective Medical Response

Committee on Veterans Affairs
2:00PM
334 Cannon House Office Building
"The Department of Veterans Affairs Medical Facilities Act of 2005" & "The Department of Veterans Affairs Information Technology Management Improvement Act of 2005"

Committee on Health, Education, Labor, and Pensions
2:00PM
216 Hart Senate Office Building
Opportunities for Too Few? Oversight of Federal Employment Programs for Persons with Disabilities

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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