WASHINGTON WIRE

September 10, 2004
Issue 29

In this issue, you'll find:

Labor HHS Passes House, Controversial Amendments Stall Consideration
Frist Statement Dooms Vote on Drug Reimportation
Medicare Premiums up 17%, Private Health Care Premiums up 11%
GAO: Scully Broke the Law, Must Return Salary
Hearings
Words of the Week

Top Story

Labor HHS Passes House, Controversial Amendments Stall Consideration

Late Thursday, September 9, the House of Representatives passed the Labor, HHS, and Education Appropriations bill by a vote of 388-13 (H.R. 5006, House Report 108-636). A series of controversial amendments and negotiations delayed consideration of the bill, which was originally slated for consideration on Tuesday. This spending bill remains substantially unchanged from the version which was approved by the full Appropriations Committee on July 14, 2004. But amendments added to the bill on the floor impact several key health care and labor issues.

Included in the bill was a modified version of an amendment adopted in full committee markup that would effectively block implementation of the “75% Rule.” The 75% Rule, which took effect on July 1, would require that 75% of the diagnoses in an inpatient rehabilitation facility (IRF) must be one of ten conditions in order to be reimbursed under Medicare's Prospective Payment System (PPS). There is widespread bipartisan support to stop the now-implemented rule because it may unduly restrict access to inpatient rehabilitation care. Though CMS and some powerful leaders in Congress disagree, there appears to be sufficient momentum in Congress to see this amendment through the Senate and into a final bill.

Prior to final passage of the bill, Democrats celebrated a rare victory with the passage of an amendment, by a vote of 223-193, which would block implementation of the Bush Administration’s controversial overtime regulation. But the Democratic victory is likely to be short as the Republican leadership has expressed a strong desire to strip the amendment before the bill goes to a House-Senate conference committee.

An ultimately unsuccessful Democratic amendment, introduced by Congressman Pete Stark (D-CA), was considered that would have reduced the budget for the Office of the Secretary at HHS by $84,500. This amount is roughly equal to the amount the GAO suggests former CMS Administrator Tom Scully owes the federal government. (See related story below)

Health Care News and Publications

Frist Statement Dooms Vote on Drug Reimportation

On Tuesday, September 7, 2004, Senate Majority Leader William Frist (R-TN) told reporters that he was "doubtful" Senate action would be taken on any of the drug reimportation bills introduced this year and that such legislation would have to follow normal protocol by first being considered in the Senate Health, Education, Labor and Pensions (HELP) Committee.

On the floor Wednesday, Senator Byron Dorgan (D-ND), sponsor of S. 2328, a bipartisan reimportation bill introduced earlier this year, reminded Frist of his promise in March to hold a floor vote on a reimportation bill by the end of the Congressional session. Senator Dorgan stated that on March 11, 2004, during a session dealing with the budget, he and Senator Frist reached an agreement. Part of that agreement, he stated, was a promise by Senator Frist to announce in consultation with the Chairman of the HELP Committee and several cosponsors of S. 2328, a process for developing proposals for the safe reimportation of FDA-approved prescription drugs. With the end of this 108th Congress nearing, the likelihood of such an initiative is waning.

Senator Dorgan went on to state that he hopes the Senate will either vote on his bill or consider HR 2427, a reimportation bill already passed by the House. Additionally, Senator Dorgan's staff has mentioned the possibility of attaching his bill to an appropriations bill, set to be voted on in the coming weeks.

Medicare Premiums up 17%, Private Health Care Premiums up 11%

On Friday, September 3, 2004, HHS announced a 17.3% increase in 2005 Medicare Part B premiums, the highest jump in the program's history. The premium will increase by $11.60 from $66.70 to $78.30 per month. Under Medicare, beneficiaries can buy into Medicare Part B to help pay for hospital outpatient care, physician services, durable medical equipment (DME), and some home health care.

In a statement released the same day, Congressman Pete Stark (D-CA), Ranking Member on the Health Subcommittee of the Committee on Ways and Means, stated that record high Medicare premium increases, coupled with an increase in the deductible, will make it even harder for those on fixed incomes to access Medicare benefits. However, Dr. Mark McClellan, Administrator of the Centers for Medicare and Medicaid Services (CMS), stated that the new premiums reflect an enhanced Medicare program, providing additional services and options for beneficiaries.

Though not as much as the Medicare premium increase, premiums for employer-sponsored health insurance increased an average of 11.2% in 2004 according to a new survey released Thursday, September 9 by the Kaiser Family Foundation and Health Research and Educational Trust. The study surveyed 3,017 employers between January and May 2004. According to the Bureau of Labor Statistics, this year's increase in premiums is more than five times the national increase in wages, which rose 2.2% from the spring of 2003 to spring 2004. The increase, though, was less than the 13% reported last year.

GAO: Scully Broke the Law, Must Return Salary

On September 7, the Government Accountability Office (GAO) released a legal opinion that former CMS Administrator Tom Scully broke the law by telling Medicare chief actuary Rick Foster not to release his internal cost estimates for the Medicare prescription drug law to members of Congress who requested them. In the opinion, GAO recommends that HHS recoup Scully’s salary earned from the time he ordered Foster not to turn over the estimates to the time he left government service following the enactment of the Medicare Modernization Act, which is approximately $84,000.

The HHS Office of Inspector General released an opinion in July stating that Scully did not break the law, though his actions were potentially ethically suspect.

Scully called the opinion a “joke” and is not expected to return the back salary recommended by the GAO.

Upcoming Events

Hearings

Tuesday, September 14, 2004

Committee on Finance
10:00AM
215 Dirksen Senate Office Building
"Implementing the Medicare Prescription Drug Benefit and Medicare Advantage Program: Perspectives on the Proposed Rules"
-Larry Burton - Executive Director, Business Roundtable
-Dr. Mark McClellan - Administrator of the Centers for Medicare and Medicaid Services
-Michael Fitzpatrick - Executive Director National Alliance for the Mentally Ill
-Karen Ignagni - President and CEO, America's Health Insurance Plans
-Mark Merritt - President and CEO, Pharmaceutical Care Management Association
-Gerald Shea - Assistant to the President for Government Affairs, AFL-CIO

Special Committee on Aging
10:00AM
628 Dirksen Senate Office Building
"A Fresh Look At Mandatory Retirements: Do They Still Make Sense?"

Committee on the Judiciary, Subcommittee on Antitrust, Competition Policy, and Consumer Rights
2:00PM
226 Dirksen Senate Office Building
"Hospital Group Purchasing: How To Maintain Innovation and Cost Savings"

Words of the Week

Words of the Week

A new addition to the Weekly Washington Wire will be a poignant, notable, or just plain funny quote from a major political leader on a health care issue. This week we will inaugurate the festivities with a bipartisan double feature of the presidential candidates, President George W. Bush and Senator John Kerry.

“We need to do something about these frivolous lawsuits that are running up the cost of your health care and running good docs out of business. We've got an issue in America. Too many good docs are getting out of business. Too many OB/GYNs aren't able to practice their love with women all across this country.” – President Bush speaking about medical malpractice reform at a rally in Poplar Bluff, Missouri, September 8, 2004. A video of the comment can be viewed here.

“What I want to do, what I'm determined to do, and it's in my health-care plan, is refocus America on something that can reduce the cost of health care significantly for all Americans, which is wellness and prevention…And I intend to have not just a Department of Health and Human Services, but a Department of Wellness.” Senator John Kerry, responding to a question from a woman who stated that "There's not one agency in this government that has come forward" to deal with the problem of mold and indoor air contamination. Thank you to Slate for pointing this out.

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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