WASHINGTON WIRE

In this issue, you'll find:

• Finance Leaders Face Opposition to Medicaid Hurricane Relief Bill
• Lester Crawford Resigns from FDA
• Study Finds Medicare Rule Limits Access to Inpatient Rehabiliation
• HHS Announces Part D Plans
• Medicare Part B Premiums to Increase 13% in 2006
• Hearings

Top Story

Finance Leaders Face Opposition to Medicaid Hurricane Relief Bill

Legislation to provide full federal Medicaid funding for Hurricane Katrina victims is facing significant opposition from the Administration and Congress.

Senate Finance Leaders Charles Grassley (R-IA) and Max Baucus (D-MT) hoped to bring their Medicaid relief bill to the floor early this week. However, some Senate Republicans, backed by the Bush Administration, are blocking floor consideration citing concerns over the costs of the bill as well as its coverage expansion provisions.

The legislation, which would cost the federal government approximately $8.7 billion over five years, provides fully funded Medicaid coverage for 16 months to impacted states and areas and expands and funds Medicaid services for evacuees in other states. The bill would also assist hurricane victims with their private health insurance premiums and eliminate copayments and deductibles for displaced Medicare beneficiaries. Finally, the bill would postpone the implementation of Medicare Part D for those eligible for both Medicare and Medicaid coverage.

Senate Republicans and the Administration have been working to reduce federal mandatory spending, most recently through the reconciliation process, and fiscal conservatives fear that the Grassley-Baucus bill would expand the Medicaid program in a way that might prove hard to reverse in the future. Instead of such actions, the Administration is suggesting that those hurricane survivors who do not qualify for Medicaid but lack other forms of insurance obtain no-cost care at hospital emergency rooms. Additionally, as an alternative to a legislative fix, the Centers for Medicare and Medicaid Services (CMS) is negotiating Medicaid waivers state-by-state, a process the agency has stated is quicker than the more complicated legislative process. Mississippi was granted a Medicaid waiver earlier this week which is reportedly similar to a Texas waiver approved earlier.

The Grassley-Baucus Medicaid relief bill is scheduled to be considered by the full Senate on Monday, September 26, 2005.

Health Care News

Lester Crawford Resigns from FDA

Lester Crawford resigned today as Commissioner of the Food and Drug Administration (FDA). Crawford was confirmed as head of the FDA just two months ago. As FDA Commissioner, Crawford has faced criticism regarding the agency's drug safety regulations and policies around access to emergency contraception. Further details on Crawford's resignation will be included in next week's publication.

Study Finds Medicare Rule Limits Access to Inpatient Rehabiliation

On Thursday, September 22, 2005, the Federation of American Hospitals and the American Hospital Association released a report by the Moran Company that finds full implementation of Medicare's 75% Rule could significantly affect access to inpatient rehabilitation services.

The report entitled "New Estimates of the Impact of Enforcement of the '75% Rule' on Inpatient Rehabilitation Services Volume," examines the impact of the Medicare rule which requires that 75% of admissions at inpatient rehabilitation facilities have one of thirteen qualifying conditions. The report finds that 30,000 fewer Medicare beneficiaries received care at inpatient rehabilitation facilities during the first year of the rule's phase-in period. Currently the percentage of required admissions stands at 60%, with the rule set to be fully implemented at the 75% level by 2007.

The report also finds that the rule is having a far greater impact on admissions than originally predicted by CMS. The agency had estimated that approximately 1,200 patients would be affected by the rule's implementation; however this study finds that approximately 40,000 patients are being impacted.

Patient and provider groups are rallying around legislation, the "Preserving Patient Access to Inpatient Rehabilitation Hospitals Act," that would halt the implementation of the 75% Rule at the 50% level, providing an opportunity to better study the rule's impact. On Thursday, leaders in the disability and rehabilitation communities held a "Rehabilitation Policy Roundtable" to discuss current and pending threats to access to rehabilitation services. The 75% Rule proved to be high on the group's list of priorities.

HHS Announces Part D Plans

On Friday, September 23, 2005, the Department of Health and Human Services (HHS) announced the approval of Medicare prescription drug plans and Medicare Advantage plans to offer prescription drug coverage.

The announcement is a major piece of the implementation of Medicare's new prescription drug benefit to take effect January 1, 2006. With between 11 and 20 organizations set to offer prescription drug plans in each region, these plans may begin marketing to Medicare consumers on October 1, 2005.

In 44 states, Medicare Advantage plans offering prescription drug coverage will be available to Medicare beneficiaries and in 37 states, beneficiaries will be able to choose a Preferred Provider Organization (PPO) that offers drug coverage.

More information on this announcement can be found at http://www.hhs.gov/news/press/2005pres/20050923.html.

Medicare Part B Premiums to Increase 13% in 2006

On Friday, September 16, 2005, CMS announced that Medicare beneficiaries would encounter a 13.2 percent increase in Part B premiums in 2006, rising from $78.20 to $88.50.

CMS attributes the premium increase to growth seen in physician office visits, laboratory tests and other medical services. Approximately 2.5 percent of the increase is attributed to projected expenditures under the physician fee schedule despite a pay cut scheduled in 2006. Higher reimbursement for Medicare Advantage (MA) plans and increased enrollment account for 2.9 percent of the increase in premiums despite an overestimate in the cost of risk adjusted payments from CMS. Projections estimate that overall disbursements for durable medical equipment will be reduced by 2.9 percent because of rate freezes and the start of competitive bidding.

Despite the increase, CMS states that beneficiary costs will actually be lower in 2006 as a result of savings realized through the new Medicare prescription drug benefit

Upcoming Events

Hearings

Tuesday, September 27, 2005

Committee on Ways and Means - Subcommittee on Social Security
4:00PM
1100 Longworth House Office Building
Commissioner of Social Security's Proposed Improvements to the Disability Determination Process
(Joint Hearing with Human Resources Subcommittee)

Wednesday, September 28, 2005

Committee on Homeland Security and Governmental Affairs
9:30AM
342 Dirksen Senate Office Building
Recovering from Hurricane Katrina: Responding to the Needs of Those Displaced, Today

Committee on Energy and Commerce - Subcommittee on Oversight and Investigations
10:00AM
2123 Rayburn House Office Building
Guarding Against Waste, Fraud, and Abuse in Post-Katrina Relief and Recovery: The Plans of Inspectors General

Thursday, September 29, 2005

Special Committee on Aging
10:00AM
216 Hart Senate Office Building
The Impact of Direct-to-Consumer Drug Advertising on Seniors' Health and Health Care Costs

Committee on Ways and Means -Subcommittee on Health
3:00PM
1100 Longworth House Office Building
HR 3617 - Medicare Pay-For-Performance legislation

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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