WASHINGTON WIRE

June 30, 2006
Issue 103

In this issue, you'll find:

Governors Try to Stop President's Medicaid Plans
House Democrats Seek to Amend Medicare Part D
Senate to Vote on Stem Cell Research in July
GAO: Lack of Oversight in Clinical Labs
Congress in Recess Until July 10, 2006

Top Story

Governors Try to Stop President's Medicaid Plans

On Tuesday, June 27, 2006, the National Governors Association (NGA) submitted a letter to Health and Human Services (HHS) Secretary Michael Leavitt asking the Bush Administration to abandon its reforms to the Medicaid program recommended in the President's fiscal year (FY) 2007 budget proposal. NGA stated its opposition to additional policy changes outside of those currently being implemented under the Deficit Reduction Act of 2005 (DRA).

The Administration's proposals include changing the reimbursement policy for rehabilitation services, reducing the allowable provider tax, and limiting payments to government providers. The budget proposal would also cap payments to providers at the cost of the service to the beneficiary, potentially saving the federal government $3.8 billion over five years.

According to the NGA, the changes would shift more costs to the states and likely weaken already established state funding mechanisms. NGA and the National Conference of State Legislatures worry that since Congress is not acting to implement reforms to Medicaid, the Administration will begin to take action administratively.

On Friday, June 30, 2006, a bipartisan group of forty-five Senators submitted a letter to HHS, also asking officials to stop the recommended reforms to the Medicaid program. The group stated that Congress chose not to include the changes in the DRA and that the changes should not be implemented now either.

Health Care News

House Democrats Seek to Amend Medicare Part D

On Tuesday, June 27, 2006, House Democrats announced a new initiative to revise the Medicare Part D prescription drug plan. The Democrats' plan, "Prescription for Change," focuses on three issues: affordability, simplicity, and reliability.

The plan would seek to make Medicare Part D, implemented earlier this year, more affordable for beneficiaries by devising ways to close the "donut hole," which results in out of pocket costs between $2,250 and $5,100. The bill would take savings from drug price negotiations and apply it to this donut hole.

In addition, the plan would strive to simplify the enrollment process, which many beneficiaries stated was very confusing. Democrats would like to see the plans managed directly by Medicare as well as an extension of the penalty-free enrollment deadline to December 31, 2006.

Lastly, the Democrats state their proposal would ensure that beneficiaries receive their medications without interruption or delay. Democrats stated that drug plans should not increase their co-payments during the year, as it prevents beneficiaries from getting the drugs they need due to rising costs.

Senate to Vote on Stem Cell Research in July

Late Thursday, June 29, 2006, the Senate unanimously agreed to vote on three different stem-cell research bills following the July 4th recess. However, due to Senate procedural rules, each bill will require 60 votes to pass.

The bills include a House-passed bill that would allow the use of federal funds for research conducted with embryonic stem cells (taken from donated frozen embryos obtained through in-vitro fertilization). If the bill passes the Senate, it would undo a 2001 policy implemented by President Bush that limits the lines of stem cells that can receive federal funding.

Another bill, sponsored by Senator Sam Brownback (R-KS) and Senator Rick Santorum (R-PA), would ban the use of tissue from fetuses specifically created for stem-cell research, also referred to as "fetus farming." The final bill, sponsored by Senator Santorum and Senator Arlen Specter (R-PA), would allocate federal funding for "pluripotent" stem-cell research. Pluripotent stem cells are not taken from embryos and can be developed into any type of tissue.

The decision to bring the bills to the Senate floor comes just two days after an official from the National Institutes of Health (NIH) testified before the Senate Labor, Health and Human Services and Education Appropriations Subcommittee. The official stated that NIH did not need legislation to authorize the Institute's work in finding new methods of obtaining stem cells.

GAO: Lack of Oversight in Clinical Labs

On Tuesday, June 27, 2006, members of the House Government Reform Criminal Justice Subcommittee released a Government Accountability Office (GAO) study that found a need for improved oversight of clinical laboratories as well as serious weaknesses in the federal government's inspection process for these facilities.

The GAO study noted that many lab sites know in advance of an upcoming inspection, which may give the lab the time needed to prepare for the inspection. In addition, clinical lab employees are afraid to file complaints due to possible retaliation from their supervisors or coworkers. As a result, the Centers for Medicare and Medicaid Services (CMS) no longer warns sites of upcoming inspections and tries to educate employees on how to file complaints about lab quality.

Despite CMS efforts to improve, Subcommittee Ranking Member Elijah Cummings (D-MD) called for Congressional action. He introduced legislation that would implement the recommendations called for in the GAO report. Subcommittee Chairman Mark Souder (R-IN) stated that he believed the panel should investigate the matter further before recommending any legislation.

Upcoming Events

Congress in Recess Until July 10, 2006

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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