WASHINGTON WIRE

In this issue, you'll find:

• Senate Confirms Crawford As FDA Commissioner
• Outpatient Hospital Departments Receive Proposed Increases, Drug Reimbursement Altered
• Senate Committee Approves Reimportation Legislation
• Congress Aims to Halt Implementation of 75% Rule
• House Committee Examines Potential Changes at NIH
• Hearings and Events

Top Story

Senate Confirms Crawford As FDA Commissioner

On Monday, July 18, 2005 the Senate voted 78 to 16 to confirm Lester Crawford as Commissioner of the Food and Drug Administration (FDA). The vote followed decisions by several Senators to lift their holds on the confirmation process.

Senators Clinton (D-NY) and Murray (D-WA) had put a hold on the vote in response to the FDA's delay in making a decision on the sale of emergency birth control pill - "Plan B." However, the Senators agreed to the vote after Health and Human Services (HHS) Secretary Michael Leavitt stated an FDA decision would be made by September 1, 2005 on the sale of Plan B. Senators Clinton and Murray voted against the confirmation of Crawford.

Additionally, Senator Coburn (R-OK) lifted his hold on the Crawford confirmation although refrained from the actual vote. Senator Coburn had held up the confirmation because of concern that the FDA has not required warning labels on condoms regarding their inability to protect against certain sexually transmitted diseases.

Fourteen Senators voted against confirming Crawford as Commissioner including Chairman of the Finance Committee Charles Grassley (R-IA). Senator Grassley, referring to the FDA's recent controversy over drug safety, stated that Mr. Crawford has not proven to be the "leader to fix the FDA."

The Chairman and Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee, Michael Enzi (R-WY) and Edward Kennedy (D-MA), voted to confirm Crawford, stating that the public needs a full-fledged commissioner during this vital time for the agency.

Health Care News

Outpatient Hospital Departments Receive Proposed Increases, Drug Reimbursement Altered

On July 18, 2005, the Centers for Medicare and Medicaid Services (CMS) released the Hospital Outpatient Department Prospective Payment System proposed rule, which sets reimbursement for 4,200 hospital outpatient departments. Overall, payments would rise 3.2 percent in calendar year 2006. The payment increases and other reimbursement changes would give outpatient departments $27.5 billion in Medicare reimbursement in 2006, up from $26.1 billion in 2005.

The proposal will also continue to reduce Medicare beneficiaries' coinsurance rates for hospital outpatient services. The coinsurance rate will decline to 40 percent of a hospital's Medicare payment for treating the beneficiary. The rate, once as high as 50 percent, is gradually being reduced to 20 percent. CMS also said that under the proposed rule it would reimburse physicians for Part B drugs, biologicals, and radiopharmaceuticals at 106 percent of the manufacturer's average sales price, a similar methodology for drugs currently reimbursed through physician offices. The current reimbursement rate is 83 percent of the average wholesale price. Under the rule, CMS also would pay providers an additional 2 percent over the price of a drug to cover pharmacy costs. The agency would begin collecting claims data in 2006 to set exact payment rates for this service beginning in 2008.

Senate Committee Approves Reimportation Legislation

On Thursday, July 21, 2005, by a 14 to 8 vote, the Senate Commerce Committee approved legislation that would allow for the reimportation of prescription drugs.

The legislation would allow licensed pharmacists and wholesalers to import FDA-approved medications from FDA-approved pharmacies in specified countries. Seemingly frustrated by mark-up delays, Senators Olympia Snowe (R-ME) and Byron Dorgan (D-ND) bypassed the Senate HELP Committee and attached the legislation to a bill reauthorizing the Federal Trade Commission.

Congress Aims to Halt Implementation of 75% Rule

Senators Rick Santorum (R-PA) and Bill Nelson (D-NE) and Representatives Frank LoBiondo (R-NJ), Nita Lowey (D-NY) and John Tanner (D-TN) have introduced legislation in the Senate and House respectively that aims to halt further implementation of Medicare's so-called "75 percent rule" on inpatient rehabilitation facilities.

Adopted by CMS in 2004, the 75 percent rule states that rehabilitation hospitals must admit a percentage of patients who fall in one of 13 diagnostic categories in order to be reimbursed as an inpatient rehabilitation facility under Medicare. CMS plans to increase the necessary percentage of patients with one of the 13 conditions from the current 50 percent to 75 percent over the next four years.

Opponents of the 75 percent rule state that further implementation will not only threaten access for those who do not have one of the 13 diagnoses, but will also threaten the long-term stability of the rehabilitation hospital system. Both the Senate and House legislation would freeze the compliance rate of the 75 percent rule at 50 percent as well as create a National Advisory Council on Medical Rehabilitation to advise HHS in the future.

House Committee Examines Potential Changes at NIH

On Thursday, July 19, 2005, the House Energy and Commerce Committee, Subcommittee on Health, held a hearing to examine the pending reauthorization of the National Institutes of Health (NIH).

Committee Chairman, Joe Barton (R-TX), stated his interest in creating a more consolidated agency by reducing the NIH's 27 institutes and centers into just four appropriations areas. While the Chairman described his proposed legislation as a means to improve the agency's management, other members of the committee expressed fear that such a change would instead have the opposite effect.

During the subcommittee hearing, Dr. Elias A. Zerhouni, Director of the NIH, stated that he did not support increased centralization of his agency but did recognize a need for greater coordination. He stated his interest in the establishment of a system of checks and balances within the agency as Congress moves forward with reauthorization.

Upcoming Events

Hearings and Events

Monday, July 25, 2005

Committee on Small Business
10:00AM
2360 Rayburn House Office Building
To Explore the Impact on Small Pharmacies When Governments Compel Pharmacists to Dispense Drugs to Which They May be Morally Opposed

Tuesday, July 26, 2005

Committee on Armed Services - Subcommittee on Military Personnel
10:00AM
2118 Rayburn House Office Building
Military Mental Health Services

Committee on Appropriations- -Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies
1:30PM
2362-A Rayburn House Office Building
Food and Drug Administration FY 2006 Appropriations

Wednesday, July 27, 2005

Medicaid Advisory Commission Meeting
9:00AM
Renaissance Hotel, 999 9th Street, NW, Washington, DC

Committee on Ways and Means - Subcommittee on Health
10:00AM
1100 Longworth House Office Building
Health Care Information Technology

Committee on Finance
10:00AM
215 Dirksen Senate Office Building
Improving Quality in Medicare: The Role of Value-Based Purchasing

Committee on Government Reform - Subcommittee on Federal Workforce and Agency Organization
2:00PM
2154 Rayburn House Office Building
Using Information Technology to Improve Healthcare

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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