WASHINGTON WIRE

September 16, 2005
Issue 70

In this issue, you'll find:

Finance Committee Leaders Introduce Medicaid Legislation for Hurricane Victims
Reconciliation Postponed Until October
Studies, Committee Examine Savings Associated with Health Information Technology
Hearings

Top Story

Finance Committee Leaders Introduce Medicaid Legislation for Hurricane Victims

Late Thursday, September 15, 2005, Senate Finance Committee Chairman Charles Grassley (R–IA) and Ranking Member Max Baucus (D–MT) introduced legislation for an emergency relief package for survivors of Hurricane Katrina.

The "Emergency Health Care Relief Act of 2005" (S.1716) would ease current Medicaid restrictions and eligibility requirements for hurricane survivors from Louisiana, Mississippi, and counties in Alabama. The coverage would extend to all adults at or below 100% of the Federal Poverty Limit (FPL) and to children and pregnant women at 200% of the FPL. The Disaster Relief Medicaid (DRM) would cover 100% of incurred Medicaid expenses for those individuals for a period of five months, with an option to extend the coverage for an additional 5 months if the President or Secretary of Health and Human Services (HHS) deem it necessary. The DRM would also provide Medicaid coverage to those living outside of the disaster areas but who have lost their jobs from a business located inside the disaster areas and who require assistance with health care costs and coverage.

In addition to assisting survivors of the hurricane, the legislative package offers relief to the states directly affected by the hurricane and those who are currently housing evacuees. Louisiana, Mississippi, and counties in Alabama would receive 100% of the Federal Medical Assistance Percentage (FMAP) from August 28, 2005 through December 31, 2006. Currently, these states receive up to 80% FMAP but are obligated to fund the other 20% of Medicaid costs. Other states hosting evacuees would receive 100% FMAP for only those Medicaid beneficiaries displaced by the hurricane. The relief package would also postpone the scheduled 2006 decrease in FMAP for all states—not just those affected by the hurricane.

The proposed legislation would also create a Disaster Relief Fund (DRF). Providers could qualify for assistance from the DRF if they can show a significant increase services provided to Medicaid beneficiaries or a rise in the amount of unpaid care. The DRF would also assist those currently covered under private insurance to pay health insurance premiums or other incurred health care costs.

The Grassley-Baucus legislation would waive the penalty for late enrollment of Medicare Part B for those who cannot submit an application in the beginning enrollment period. The legislation also calls for a report from HHS by October 7, 2005, outlining how the Centers for Medicare and Medicaid Services will shift dual-eligibles to the new Medicare prescription drug plan effective January 1, 2006.

The Grassley-Baucus legislation is expected to move quickly through the Senate, overshadowing other proposed Medicaid relief packages. The bill is expected to be voted on early next week.

Health Care News

Reconciliation Postponed Until October

On Monday, September 12, 2005, the Senate leadership announced a new deadline of October 26, 2005 for the Senate Budget Committee to report on reconciliation legislation. The House is expected to follow a similar schedule.

House and Senate committees with jurisdiction over mandatory programs were originally expected to submit their reconciliation language to the Budget Committees by today, September 16, 2005; however, as the Congressional agenda shifted to relief efforts around Hurricane Katrina as well as the confirmation hearings of Judge John Roberts, the reconciliation deadline seemed unfeasible. Authorizing committees now have until October 19, 2005 to submit their recommendations for the cuts to mandatory programs in an effort to find savings of $35 billion over the next five years.

Because specific restrictions govern reconciliation legislation, many feared that postponement would negate a rule which protects such legislation from a filibuster. However, the Senate parliamentarian has indicated that such rules would still apply.

In a related story, Senate Finance Committee Chair Charles Grassley continues to fight an uphill battle in terms of getting his reconciliation language through committee. Instructed to find $10 billion in savings over the next five years, it has been debated but assumed that most of the $10 billion would come from the Medicaid program. However, two Finance Committee Republicans, Senators Smith (R-OR) and Snowe (R-ME), are now promoting an indefinite delay to the reconciliation process stating their opposition to cutting programs for the poor, such as Medicaid, as the country deals with the devastation of Hurricane Katrina. While Congressional leaders maintain that they will proceed with reconciliation, Senate Majority Leader Bill Frist (R-TN) stated earlier this week that he is in favor of cuts aimed at increasing Medicaid efficiency by eliminating waste, fraud and abuse in the system. However, cuts aimed at reducing care, the Majority Leader stated, would be the wrong things to do at this time.

Studies, Committee Examine Savings Associated with Health Information Technology

In two studies released Wednesday, September 14, 2005 in Health Affairs, the RAND Corporation found that widespread adoption of health information technology (HIT), including electronic medical records (EMRs), could save the country's health system up to $162 billion per year.

The studies state that adoption of HIT would improve the management of medical care, reduce medical errors, lower death rates from chronic disease, and reduce employee sick days. However, researchers point to significant barriers associated with HIT implementation including high initial costs, leaving it up to the federal government to provide incentives for such changes.

The Centers for Medicare and Medicaid Services (CMS) appears to agree that HIT could potentially save money to the health care industry. CMS has begun an "e-prescribing" pilot program in Florida, noting that since its implementation, drug costs have been lowered and fraud has been dissuaded.

Additionally, on Tuesday, September 13, 2005, the Department of Health and Human Services (HHS) announced the 16 appointees to the new federal panel, the American Health Information Community (“The Community”). The panel, consisting of government and private physicians and representatives from hospitals, insurers, clinics, and software vendors, was created as a part of the Bush Administration's efforts to implement a national electronic health records and information network by 2014. It will be chaired by HHS Secretary Michael Leavitt and could meet up to twelve times a year.

The Community will be responsible for making recommendations on how to create an HIT system that will ensure privacy, security and compliance of EMRs and other health care information. In addition, the panel will construct a plan blending old health record standards with new HIT standards while also synchronizing various industry standards. The Community’s first meeting will take place October 7, 2005 in Washington, DC and is open to the public.

Upcoming Events

Hearings

Tuesday, September 20, 2005

Committee on Commerce, Science, and Transportation - Subcommittee on Disaster Prevention and Prediction
2:30 PM
562 Dirksen Senate Office Building
Review the prediction of Hurricane Katrina and the work of the National Hurricane Center

Thursday, September 22, 2005

Select Committee on Intelligence
2:30PM
219 Hart Senate Office Building
Mark Up - HR 2475
A bill to authorize appropriations for FY 2006 for intelligence and intelligence-related activities of the United States Government, the Community Management Account, and the Central Intelligence Agency Retirement and Disability System, and for other purposes.

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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