WASHINGTON WIRE

In this issue, you'll find:

• HHS Waives Application of Stark Law In States Impacted by Hurricane
• House Committee Examines Impact of "Gainsharing" Proposals
• Reconciliation Legislation As Possible Vehicle for Hurricane Relief
• Medicare Handbook Contains Errors On Part D Subsidies
• Congress, Administration Examine Options for Avian Flu Preparedness
• House Approves Extension of Medicare Premium Assistance Legislation
• Congress In Recess October 10 - 14th

Top Story

HHS Waives Application of Stark Law In States Impacted by Hurricane

The Department of Health and Human Services (HHS) has granted a waiver from the Stark Law for areas affected by Hurricane Katrina. The states affected include not only Louisiana, Mississippi, and Alabama but also Texas, Florida, Colorado, Georgia, North Carolina, Oklahoma, Tennessee, West Virginia, Utah and Arkansas. The waiver will allow hospitals and other DHS providers to furnish financial support to physicians to the extent necessary to ensure that sufficient health care items and services are available to meet the needs of Medicare, Medicaid and SCHIP enrollees. The waiver is subject to a "good faith" requirement. A copy of the waiver can be obtained by contacting PPSV care of Mark.fitzgerald@ppsv.com

House Committee Examines Impact of "Gainsharing" Proposals

On Friday, October 7, 2005, the House Ways and Means Committee, Subcommittee on Health held a hearing to examine the potential outcomes associated with gainsharing under Medicare.

Gainsharing is an arrangement between hospitals and physicians under which the hospital provides a physician a share of any reduction in the hospital's cost for patient care attributable to the physician's efforts.

The concept elicits mixed responses from lawmakers, hospitals, providers and consumers as evidenced during Friday's hearing. Subcommittee Chairwoman Nancy Johnson (R-CT) remained supportive of gainsharing proposals throughout the hearing, promoting a physician-driven system as essential to reducing medical costs. However, other Members, such as Ranking Member Stark (D-CA), stated that such policies could provide incentives to physicians to use the least costly, not most effective, methods of treatment. Congressman Stark's concerns were addressed by witness Lewis Morris from the Office of Inspector General, U.S. Department of Health and Human Services, who stated that successful implementation of gainsharing depends on proper oversight, accountability, and insurance against fraud and abuse.

Congressman Ramstad (R-MN) also expressed concerns later echoed by representatives from the American Association of People with Disabilities and AdvaMed, regarding advancements in technology and the impact gainsharing would have on physician incentives to promote and use new technology.

Renewed interest in gainsharing under Medicare stems from a recommendation earlier this year from the Medicare Payment Advisory Commission (MedPAC) which encouraged lawmakers to examine such a system as a means to reducing Medicare costs. Earlier this week, consumer groups, including the American Association of People with Disabilities, sent a letter to Congress opposing gainsharing under the program due to its potential negative impact on patient care.

Health Care News

Reconciliation Legislation As Possible Vehicle for Hurricane Relief

It appears that Hurricane Relief Medicaid legislation may be considered as part of reconciliation legislation.

Legislation sponsored by Senate Finance Committee Chairman Charles Grassley (R-IA) and Ranking Member Max Baucus (D-MT) that aims to streamline Medicaid coverage to Hurricane victims has faced significant opposition from Members of Congress and the Administration who have taken issue with its $9 billion price-tag.

Earlier this week, Chairman Grassley admitted temporary defeat stating that the bill may be dying but he would attempt to incorporate the issue into reconciliation legislation later this month. However, House Energy and Commerce Committee Chairman Joe Barton (R-TX) does not appear to share the Finance Chairman's interest in incorporating this bill into reconciliation, which could prove to be a significant roadblock in the legislation's passage.

In related news, Senate Finance Committee members participated in a series of meetings this week with Senate Majority Leader Bill Frist (R-TN) to discuss potential cuts to the Medicare and Medicaid programs through reconciliation legislation. It appears that Chairman Grassley presented them a proposal to cut $12 billion from Medicaid over the next five years, $2 billion more than is required by the fiscal year (FY) 2006 budget resolution.

Meanwhile, in an attempt to offset some of the hurricane relief spending, House Budget Committee Chairman Jim Nussle (R-IA) is asking Congress to amend the FY 2006 Budget Resolution approved in April with an additional two percent cut to all discretionary programs, producing $16.8 billion in savings. Additionally, Chairman Nussle would like to increase required cuts to mandatory programs to $50 billion over the next five years. Currently, the budget resolution instructs Congress to find $35 billion in savings from mandatory programs over the next five years.

Medicare Handbook Contains Errors On Part D Subsidies

On Wednesday, October 5, 2005, the Centers for Medicare and Medicaid Services (CMS) stated that the Medicare prescription drug benefit handbook sent earlier this week to nearly 40 million Medicare beneficiaries contains errors regarding subsidies available to low-income beneficiaries.

The "Medicare and You" handbook states that full premium subsidies are available to low-income beneficiaries for all drug plans in every region. However, only beneficiaries enrolled in plans where the monthly costs fall at or below the regional average will qualify for full premium subsidies. Additionally, it appears that the current handbook fails to state that dual-eligibles (beneficiaries qualifying for both Medicare and Medicaid) who currently receive their prescription drugs under Medicaid, are permitted to switch from plans in which they were auto-enrolled to other plans that might provide more appropriate coverage.

The latest version of the Medicare handbook follows several revisions and CMS stated that in order to remedy this mistake it will be providing corrected information to the drug plan and others who will likely field questions from beneficiaries. Additionally, the correct information will be posted on the agency's website.

Congress, Administration Examine Options for Avian Flu Preparedness

In response to the looming threat of the Avian flu, Senators Hillary Clinton (D-NY) and Pat Robert (R-KS) have introduced legislation aimed at improving the current flu vaccine system as well as reducing liability threats to drug manufactures with regard to flu vaccines. Additionally, Senate Minority Leader Harry Reid (D-NV) has sponsored legislation that would create a "Director of Pandemic Preparedness and Response" in the office of the president, earmark $4 billion toward preparedness, allow the federal government to guarantee a market for flu vaccines, and provide funding to control the avian flu abroad.

As Congress considers legislative options, President Bush on Friday met with some of the country's largest pharmaceutical manufacturers to discuss vaccine development and stockpiling and the associated liability threats the vaccine producers might face. The President is expected to announce an avian flu strategy following the meeting.

House Approves Extension of Medicare Premium Assistance Legislation

On Tuesday, October 6, 2005, the House voted to approve legislation that would extend the Qualified Individual Medicare Savings Program (QI-1) which provides Medicare premium assistance to low income beneficiaries.

The Senate voted to approve such legislation late last week after the QI program expired on September 30, 2005. The cost of the House legislation - $600 million - would be offset by a provision preventing Medicare and Medicaid from covering erectile dysfunction (ED) treatments.

Upcoming Events

Congress In Recess October 10 - 14th

For More Information

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