WASHINGTON WIRE

May 19, 2006
Issue 98

In this issue, you'll find:

House Finally Votes on FY 2007 Budget Proposal
Senate Finance Holds Hearing on Physician-Owned Specialty Hospitals
Part D Open Enrollment Closes; Most Seniors Covered
Hearings

Top Story

House Finally Votes on FY 2007 Budget Proposal

In a somewhat surprising move, the House voted early Thursday, May 18, 2006 to approve a $2.8 trillion fiscal year (FY) 2007 budget proposal. At this late date on the Congressional calendar, many observers did not expect House leaders to bring a budget resolution to the floor.

House Majority Leader John Boehner (R-OH) has been negotiating with moderate Republicans for many weeks, seeking support of the budget proposal. Moderate Republicans, led by Michael Castle (R-DE), were seeking additional funding for social programs.

Late Wednesday, agreement was reached to add an additional $3.1 billion for labor, health and human services (HHS), and education programs. However, unlike the successful $7 billion amendment offered during the Senate budget debate, the House budget would find that additional funding from other current programs, most likely unspent Iraqi rebuilding funds and other foreign aid contributions.

This funding shift allows the newly elected Majority Leader to keep the House's budget resolution within the $873 billion discretionary cap suggested by the President's budget in February and prevents this year from being the first time the House would have failed to pass a budget resolution in more than 30 years.

It remains extremely unlikely that the House and Senate will conference a final budget resolution this year. Instead, the House and Senate will likely continue their appropriations work under the spending limits laid out in their respective budgets. As a result, conferencing of the 12 appropriations bills, and particularly the Labor-HHS-Education spending bill, will prove a difficult task.

Health Care News

Senate Finance Holds Hearing on Physician-Owned Specialty Hospitals

On Thursday, May 17, 2006, the Senate Finance Committee held a hearing on physician-owned specialty hospitals. These hospitals are inpatient facilities that focus on one type of surgical procedure in which a physician has partial ownership.

Finance Committee Chairman Charles E. Grassley (R-IA) recommended that CMS consider publishing a regulation on disclosure whereby the doctor would fully inform the patient of the doctor's financial interests in the specialty hospital, especially when referring the patient for treatment. In addition, the Senators alluded to the necessity of establishing regulations that would require certain medical services on site to ensure patient safety.

CMS Administrator, Mark McClellan, stated that moving toward a performance-based payment system (a reference to "pay-for-performance" measures) would address many of the concerns that Chairman Grassley and Ranking Member Max Baucus (D-MT) have regarding quality of care and patient safety in these facilities. McClellan stated that hospitals would not receive payment for "never events," or extreme medical errors (e.g., surgery on the wrong body part, transfusing the wrong blood type, etc.).

Currently there is a moratorium, enacted under the Deficit Reduction Act of 2005, which temporarily halted new Medicare enrollment for physician-owned specialty hospitals and called for a report from CMS generating guidance and regulations for specialty hospitals. The moratorium on physician-owned specialty hospitals ends August 8, 2006 and the report is due to Congress at the same time.

Part D Open Enrollment Closes; Most Seniors Covered

Monday, May 15, 2006 was the last day of open enrollment for the Medicare Part D prescription drug plan. Seniors who enroll after May 15 will face a 1 percent penalty for each month they wait to sign up for the plan.

Many Congressional and consumer advocates continue to seek elimination of the penalty. On Tuesday, May 16, 2006, Senate Finance Committee Chairman Charles Grassley (R-IA) introduced legislation that would eliminate the 1 percent penalty for those who delay Part D enrollment. The Senate could vote on the measure soon. On Thursday, May 18, House Ways & Means Health Subcommittee Chairwoman Nancy Johnson (R-CT) also introduced legislation in the House to remove the penalty.

The Centers for Medicare and Medicaid Services (CMS) stated this week that many senior citizens signed up for the drug plan on Monday. CMS also found that with the addition of Part D, more than 90 percent of seniors have prescription drug coverage, up from only 27 percent in 2002. Many senior citizens who are not enrolled in Part D have coverage from their retirement benefits or through a current employer. CMS has not released the exact number of seniors with Part D coverage.

Upcoming Events

Hearings

Tuesday, May 23, 2006

Biodefense and Pandemic Influenza Preparedness
Senate Appropriations - Subcommittee on Homeland Security
Subcommittee Hearing
10:30 a.m., 192 Dirksen Bldg

Improving Child Protective Services
House Ways and Means - Subcommittee on Human Resources
Subcommittee Hearing
2 p.m., B-318 Rayburn Bldg.

Wednesday, May 24, 2006

Emergency Medicine
American College of Emergency Physicians
News Conference/Briefing
8 a.m., 325 Russell Bldg.

Thursday, May 25, 2006

VA Oversight on Patient Safety
House Veterans' Affairs - Subcommittee on Oversight and Investigations
Subcommittee Oversight Hearing
10 a.m., 334 Cannon 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.

Powers Pyles Sutter & Verville P.C. is a full service law firm specializing in health care and education law and located at 1875 Eye St., NW 12^th Floor, Washington DC 20006