WASHINGTON WIRE

In this issue, you'll find:

• Medicare to Change Payments for Long-Term Care Hospitals
• Medicare Trustees Release Report; Medicare Part A Bankrupt in 2018
• House Subcommittee Holds Hearings on Medicare Part D
• Medical Malpractice Legislation Introduced for Senate Health Week
• Hearings and Events

Top Story

Medicare to Change Payments for Long-Term Care Hospitals

On Tuesday, May 2, 2006, the Centers for Medicare and Medicaid Services (CMS) announced that federal Medicare payments to long-term care hospitals (LTCH) would remain $38,086.04 per discharge for another year. 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.

Additionally, CMS revised payments for short-stay outliers (SSO). Short-stay outliers are high-cost patients who do not meet the minimum stay requirement. Currently Medicare reimburses hospitals the lowest of 120 percent of patient costs, 120 percent of per diem of the long-term care diagnosis related group (“LTC DRG”), or the full LTC DRG. The new payment would reimburse hospitals for SSOs under current criteria but reduce payment from 120 percent to 100 percent. The rule also adds a fourth option, blending the per diem of the LTC DRG with a comparable inpatient prospective payment reimbursement rate.

Analysts predict that Medicare will spend $5.3 billion in rate year 2007 (running from July 1, 2006 through June 30, 2007) in reimbursements to LTCHs. Therefore it was little surprise that CMS also announced a new method of calculating future payment updates. CMS will begin using the Rehabilitation, Psychiatric and Long-Term Care (“RPL”) market basket.

This week, CMS also announced that inpatient psychiatric facilities would receive a 4 percent average increase in Medicare payments.

The final rules will be published in the Federal Register on May 12, 2006.

Health Care News

Medicare Trustees Release Report; Medicare Part A Bankrupt in 2018

On Monday, May 1, 2006, the Department of Health and Human Services (HHS) Medicare Trustees released a report predicting that in 2018 Medicare Part A will run out of funding, two years earlier than last year’s report.

By 2010, Medicare spending will exceed income in the Part A fund and that by 2018, all the funds will be spent. The report also showed that by 2012, general contributions would exceed 45 percent of total spending over the following seven years.

Because of language written into the Medicare Modernization Act of 2003, if the trustees report a 45 percent threshold again in next year’s report, the President is required to propose legislation cutting Medicare spending and Congress is required to make that legislation its top priority.

On a positive note, projections show that the cost of the Medicare Part D prescription drug benefit decreased from last year’s 75-year scope.

House Subcommittee Holds Hearings on Medicare Part D

On Wednesday, May 3, 2006 and Thursday, May 4, 2006, the House Ways & Means Subcommittee on Health held a hearing to discuss the Medicare Part D prescription drug benefit.

The Centers for Medicare and Medicaid (CMS) Administrator, Dr. Mark McClellan, told the committee that the program was a success and that there was no need to extend the May 15, 2006 Part D enrollment deadline. He went on to state that for potential beneficiaries to receive the most cost-savings, it was in their best interest to sign up sooner rather than later. McClellan spent a great deal of the hearing rebutting a report released that same day by the Government Accountability Office (GAO). The GAO report said that communication between CMS and beneficiaries was lacking and needed to be improved to avoid further confusion.

More discussion occurred on Thursday from various sides of the debate. Joyce Larkin, Vice President of Public Affairs and Community Relations at Ovations, a division of UnitedHealth Group, stated that while there were initial problems in the beginning, her company has been working with CMS, pharmacists, and senior citizens to resolve these setbacks. Others, such as Vicki Gottlich, Senior Policy Advisor for the Centers for Medicare Advocacy stated that since the implementation of Part D, dual eligibles (i.e., beneficiaries who are eligible for both Medicare and Medicaid) have experienced problems obtaining their prescription drugs. They are also paying higher co-pays than when Medicaid provided their drugs.

This was an oversight hearing and no legislation or recommendations were produced.

Medical Malpractice Legislation Introduced for Senate Health Week

On Wednesday, May 3, 2006, Senate Republicans introduced two medical malpractice bills as part of the upcoming Senate "Health Week."

Senator John Ensign (R-NV) introduced S. 22, the “Medical Care Access Protection Act of 2006,” the more general malpractice legislation that would cap non-economic damages at $750,000. S. 22 would also protect states’ rights and maintains current medical liability laws, allowing states to replace any new federal caps on damages. Senator Rick Santorum (R-PA) introduced S. 23, the “Healthy Mothers and Healthy Babies Act,” which specifically addresses the high medical malpractice insurance premiums paid by obstetricians and gynecologists. It is highly unlikely that the legislation will pass the Senate, but Senate Republicans wanted to bring attention to the great need for medical malpractice reform just in time for Senate Health Week.

The Democrats have their own agenda for Senate Health Week. They have asked Majority Leader Bill Frist (R-TN) to bring a host of stem cell bills to the floor. It is highly unlikely that Senator Frist will honor their request during Health Week.

Upcoming Events

Hearings and Events

Tuesday, May 9, 2006

Anthrax Protection Update
House Government Reform - Subcommittee on National Security, Emerging Threats and International Relations
Subcommittee Hearing
2 p.m., 2154 Rayburn Bldg.

Wednesday, May 10, 2006

Health Information Tools
Joint Economic Committee
Full Committee Hearing
10 a.m., 106 Dirksen Bldg.

Fetal Down Syndrome
Congressional Biomedical Research Caucus
News Conference/Briefing
Noon, Capitol Hill Club, 300 First St. S.E.

Thursday, May 11, 2006

Veterans' Health Care
Senate Veterans' Affairs Committee
Full Committee Hearing
10 a.m., 418 Russell Bldg.

Continuity of Pandemic Flu Planning
House Government Reform Committee
Full Committee Hearing
10 a.m., 2154 Rayburn Bldg.

Efforts to Detect and Respond to Avian Flu in the U.S.
Senate Agriculture, Nutrition and Forestry Committee
Full Committee Hearing
10:30 a.m., 106 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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