WASHINGTON WIRE

November 18, 2005
Issue 81

In this issue, you'll find:

House Defeats Labor-HHS Spending Bill
House Approves Reconciliation Bill
Medicare Opens Part D Enrollment
Bush Administration Backs Physician Payment Fix with Full Offset
Hearings - Congress in Recess

Top Story

House Defeats Labor-HHS Spending Bill

On Thursday, November 17, 2005, the House failed to pass the Fiscal Year (FY) 2006 Labor, Health and Human Services (HHS), and Education Appropriations Conference Report.

The surprising vote followed a contentious conference negotiation where, despite opposition from several members including Senate Appropriations Subcommittee Chairman Arlen Specter (R-PA), all earmarks were stripped from the conference report and $1.4 billion in spending reductions were proposed.

The $142.5 billion House spending bill went down by a vote of 224-209 as 22 Republicans joined all Democrats in opposing the legislation. A number of moderate Republicans voted against the proposed cuts to social and health care programs while others opposed the bill's unusual ban on earmarks.

While the fate of the Labor-HHS-Education spending bill remained unclear, the Senate today voted 66-28 to instruct conferees to take $2 billion from the in the Low Income Home Energy Assistance Program (LIHEAP) to restore more than $1 billion in earmarks to the bill. Many still suspect a year-long continuing resolution (CR) is possible which would maintain funding at FY 2005 levels. Both chambers approved a CR through December 17, 2005.

Health Care News

House Approves Reconciliation Bill

Early Friday, November 18, 2005, the House approved a slightly scaled-down $49.98 billion reconciliation package (H.R. 4241). The Senate has already approved 52 to 47 its five-year reconciliation package that would find approximately $35 billion in savings from mandatory programs, including Medicaid.

Last week, it seemed that the removal of a controversial provision allowing drilling in the Alaska National Wildlife Refuge (ANWR) would garner the moderate Republican votes needed for passage of H.R. 4241. However, last Thursday it became clear that it was going to take more than the removal of ANWR to please some of the moderate Republicans including decreased cuts to programs for the poor (i.e. Medicaid, food stamps). In contrast, conservatives were hesitant to go along with a less austere bill.

Changes made to the reconciliation bill from last week include removing a $2 increase in the co-payments required of Medicaid beneficiaries below the Federal Poverty Level (FPL) and an increase in the allowable assets to quality for long-term care under Medicaid.

Generally, the House bill cuts Medicaid spending by more than $11 billion over five years and adds about $1 billion in new spending. Approximately $8.5 billion in Medicaid savings would come from a reduction in Medicaid benefits, imposing new cost-sharing requirements on recipients and/or restrictions on asset transfers. About $2.1 billion in savings would come from a reduction in the price Medicaid pays for prescription drugs.

The House and Senate bills will head to a conference committee to reconcile their significant differences.

Medicare Opens Part D Enrollment

On Tuesday, November 15, 2005, Medicare opened its long-anticipated enrollment period for the new Part D prescription drug benefit. Senior citizens are able to enroll in the Part D benefit through May 15, 2006 without a late enrollment penalty.

The average beneficiary currently has 45 plans from which to choose and many beneficiaries have reported being overwhelmed by the vast number of options. The Medicare website (www.medicare.gov) detailing the drug plans debuted on November 7, 2005 and is the primary information source for individuals researching their plan options.

Advocacy groups and State Medicaid program director are concerned that despite government and private outreach, some individuals considered dually eligible for Medicare and Medicaid (“dual eligibles”) and which currently receive their prescription drug coverage through Medicaid, may not be transitioned to a Part D plan by the January, 2006 deadline.

CMS is currently working on a plan to make sure that dual eligibles will be able to receive their medications with proof of Medicare or Medicaid enrollment but not Plan D enrollment. CMS is taking steps to prevent an interruption in coverage and denial of medications by auto-enrolling 5.5 million of the 6.4 million dual eligibles into a randomly selected Part D plan.

Bush Administration Backs Physician Payment Fix with Full Offset

On Thursday, November 17, 2005, before the House Ways and Means Subcommittee on Health, CMS Administrator Mark McClellan testified that the Bush Administration would back a Congressional fix to the scheduled FY 2006 and 2007 physician payment decrease.

Although Administrative backing for a payment fix is good news to physicians, Dr. McClellan was clear that the estimated $20 billion fix should be fully offset by a pay-for-performance or quality-based payment system where "differential updates" are given to physicians who report "valid consensus-based quality measures." Most physician groups not only recognize that the immediate implementation of such a system will be a massive administrative burden, but will also be impossible to implement should the Sustainable Growth Rate (SGR) formula remain in tact.

Additionally, Dr. McClellan plainly stated that the payment increase should be included in the current reconciliation bill which uniquely requires only a simple majority for passage. The Senate approved reconciliation legislation included a physician payment update as well as the Medicare "Value Based Purchasing" program, similar to the type of system suggested by the Administration.

Many influential member of Congress remain committed to at least preventing a reduction in physician payments in the coming year and will likely push for inclusion of such a fix in the reconciliation conference report or other legislative vehicles.

Upcoming Events

Hearings - Congress in Recess

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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