WASHINGTON WIRE

In this issue, you'll find:

• Congress Considers MedPAC Recommendations on Medicare Payment Policies
• AMA Clarifies Medicare Physician Payment Agreement
• Medicare Prescription Drug Plan Debate Continues
• Hearings and Events

Top Story

Congress Considers MedPAC Recommendations on Medicare Payment Policies

On March 1, 2006, the House Ways & Means Health Subcommittee held a hearing to review the new March 2006 Medicare Payment Advisory Commission (MedPAC) Report to Congress. MedPAC Chairman Hackbarth was the first witness to testify. The hearing’s second panel consisted of four witnesses representing physicians, hospitals, skilled nursing facilities and dialysis provider’s views of the new MedPAC report.

MedPAC Chairman Hackbarth started by stating that the Commission’s goal is to create Medicare payment policy that reimburses providers fairly and accurately for the services they provide. Hackbarth maintained MedPAC is focused on the need to better calibrate provider payments and reward efficiency, including focusing on efficient facilities rather than total facilities when adjusting payments.

Chairwoman Johnson’s (R-CT) questions centered on providing sufficient hospital payments and how to ensure sufficient funding for the adoption Health Information Technology. In response, Hackbarth noted that industry consolidation and a backlash against managed care has given hospitals more leverage in their price negotiations with private payers, resulting in more favorable payment rates and that hospitals that are losing money under Medicare have higher costs than other institutions. By giving hospitals a fiscal 2007 Medicare payment update of less than full marketbasket, "I fear we are going to discourage the very thing" hospitals need to improve, such as the adoption of new technology, Johnson told Hackbarth.

Subcommittee Ranking Minority Member Fortney "Pete" Stark (D-CA) disputed Johnson's statements, however, noting that only "a few dozen" of the nation's 6,000 hospitals close every year, and he questioned whether Medicare "should be bailing out poorly performing hospitals." More hospitals are opening than closing every year, Stark said, adding that hospitals are finding ways to prosper in the current competitive environment.

Other than Representative Stark's discussions of hospital payments with Chairwoman Johnson, Democrats focused mainly on questioning the need for the Medicare Advantage (MA) stabilization fund and other previously discussed MA budget cuts. A number of Republican members addressed dialysis issues and the need for annual updates to the ESRD payment system.

Health Care News

AMA Clarifies Medicare Physician Payment Agreement

On Thursday, February 27, 2006, the American Medical Association (AMA) released a statement clarifying an agreement made with lawmakers in December 2005 regarding physician participation in a quality reporting initiative.

In December, 2005 the AMA signed an agreement with Senator Charles Grassley (R-IA) and Congressmen Bill Thomas (R-CA) and Nathan Deal (R-GA) to develop a voluntary physician-reporting program. The AMA agreed to develop performance measures covering 34 specialty areas over the next year. Many specialty groups were outraged at the move claiming the AMA did not consult them before establishing the agreement. In a memo issued to specialty societies and state medical associations last Thursday, the AMA stated that they did not agree to a “pay for performance” system without lawmakers changing the Medicare reimbursement rates.

Medicare Prescription Drug Plan Debate Continues

On Wednesday, March 1, 2006, the House Energy & Commerce Health Subcommittee held a hearing where the Centers for Medicare and Medicaid Services (CMS) Administrator Mark McClellan, M.D. testified on the success and trials of the first two months of Medicare Part D Prescription Drug Plan.

Committee Republicans emphasized access to choice in plans and the cost savings to beneficiaries and stated that most of the programs glitches have been solved. Democrats, however, focused on the complicated enrollment process and the penalty for enrolling after the May 15, 2006 deadline, stating that it is unfair and should be extended. Congressman Michael Bilirakis (R-FL) agreed that the penalty-free enrollment period might need an extension.

Some members of Congress also expressed concern over low-income beneficiaries waiting for the Social Security Administration to decide if they qualify for special subsidies.

Both parties agreed that pharmacies were spending too much of their own time and money trying to fix the problems associated with Part D. There is also concern over the question of whether beneficiaries will receive the correct medications when the ninety-day transition period is over, especially if they are enrolled in more than one drug plan or receive medications through Medicare Part B or Medicaid. A suggestion was offered that there may be a need for unified health records to monitor the interaction of a beneficiary’s medications, especially if that beneficiary is receiving medications from various specialists.

Several members suggested that CMS standardize forms and processes across prescription drug plans to ease the paperwork burden of pharmacies and physicians. Dr. McClellan agreed and stated that CMS is in the process of organizing a group to examine making forms and processes uniform. Other improvements to the Part D plan were mentioned, including an improvement to the slow and complicated appeals process. Dr. McClellan stated that plans should be following the guidelines outlined in their contracts. If a beneficiary does not believe the plan is fulfilling its contract, a complaint should be filed with CMS.

Dr. McClellan offered no definitive solutions to the Subcommittee’s questions and concerns but stated that the agency is considering various improvements to the program.

Upcoming Events

Hearings and Events

Monday, March 6, 2006

Improving Quality of Life for People Living with Paralysis
Christopher Reeve Foundation
News Conference/Briefing
12:00 p.m., 2105 Rayburn Bldg.

Tuesday, March 7, 2006

Human Cloning and Stem Cell Research
House Government Reform - Subcommittee on Criminal Justice, Drug Policy and Human Resources
Subcommittee Hearing
2 p.m., 2247 Rayburn Bldg.

Wednesday, March 8, 2006

Health Care Tax Policy
Senate Finance Committee
Full Committee Hearing
10 a.m., 215 Dirksen Bldg.

Fiscal 2007 Appropriations: Labor, HHS and Education
House Appropriations - Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
Subcommittee Hearing
March 8, 10:15 a.m., 2358 Rayburn Bldg.

Thursday, March 9, 2006

Long-Term Care Financing
Senate Special Aging Committee
Full Committee Hearing
10 a.m., G-50 Dirksen Bldg.

Coordinating Veterans' Training and Rehabilitation Programs
House Veterans' Affairs - Subcommittee on Economic Opportunity
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.

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