December 11, 2006

HEADLINE

Congress Stops Medicare Physician Payment Cuts

Just prior to adjournment, the 109^th Congress passed legislation preventing the 5.1 percent cut in Medicare physician payments for 2007 and instead provided a 0 percent update in 2007.  The forestalled cuts were a result of the flawed sustainable growth rate (SGR) formula that links growth in Medicare physician payments to growth in the gross domestic product and arbitrary physician spending targets.  The physician community has long called for Congress to change the SGR formula that is leading to the cuts in Medicare physician payments.

Congress has acted twice previously to avert cuts in Medicare payments to physicians.  In both of those cases, Congress paid for averted cuts by future reductions in Medicare payments to physicians in the out years.  This made the cost of correcting the problem even more expensive in the future. 

While the Congressional action prevents cuts in 2007, the legislation does not address the underlying flawed SGR formula.  The physician community will again be faced with predicted cuts in 2008 and will need Congressional intervention to prevent those cuts.  However, unlike previous efforts to prevent cuts, this legislation does not shift the cost of the 2007 payment to future years.

The averted SGR cuts combined with increases in evaluation and management code work values and new practice expense calculations will likely means gains for pulmonary and critical care physicians.  Pulmonary physicians are predicted to see an overall 6 percent increase in Medicare reimbursements; while critical care physicians will likely see a 4 percent increase.

Congress Enhances Voluntary Pay-for-Performance Program

In related action, Congress enhanced the existing Physician Voluntary Reporting Program (PVRP) and will now give a 1.5 percent bonus payment to physicians who participate in the program and report on at least 3 quality measures.   At press time, it remains unclear the 1.5 percent bonus payment applies to all Medicare reimbursements for participating providers or is limited to only Medicare payments on the quality reporting measures.

RESEARCH

NIH Reauthorization Bill Passes Congress

A last minute compromise between House and Senate negotiators allowed Congress to pass the National Institutes of the Health (NIH) reauthorization bill.  The legislation reauthorizes the NIH for the next several years.  Key provisions of the bill include: 

• Establishes the NIH Director’s Common Fund funded through a reserve account.
• Provides a 5 percent increase in the funding level for FY07 and FY08 and provides such sums as necessary in FY09.
• The bill maintains House passed provisions creating the overall funding authority for NIH instead of the individual institutes, but the Appropriations Committees have said that they will continue to fund institutes and centers individually.
• Modifies the provision which would allow individual institute and center directors to reconfigure and reorganize programs with their institute or center. The final bill calls for any institute or center director who wishes to initiate major changes to engage in a public process, and receive input from the patient, scientific and other interested parties, and secure the approval of the Director of NIH.
• Establishes a Scientific Management Review Board to periodically review the configuration of the NIH and make recommendations to key officials every 7 years.
• Establishes a more comprehensive reporting system for the National Institutes of Health in terms of spending on various diseases, and the management of data and statistics. Requires the NIH Director to report to Congress on progress on key areas of health, but includes a provision which would allow individual institutes and centers to report directly to Congress, as well.
• Establishes a Bridging the Sciences Initiative, a High Risk-High Reward Initiative, and a Public-Private Partnerships Initiative.
• Includes a provision modifying the Clinical and Translational Science Award program to preserve independent funding and infrastructure for pediatric clinical research centers.

The ATS had expressed a number of concerns with earlier versions of the legislation.  Most of these concerns were addressed in the final legislation.

CLEAN AIR

EPA Changes NAAQS Standard Development Process

Last week, EPA announced a series of changes to how future National Ambient Air Quality Standards (NAAQS) will be developed, including:  eliminating the EPA staff paper which provides EPA scientific staff recommendations on the standard setting process and, reducing the role of the Clean Air Scientific Advisory Committee (CASAC).  The EPA scientific staff paper will be replaced with an advanced notice of proposed rule making (ANPR).

NAAQS covered pollutants include ozone, particulate matter, sulfur dioxide, carbon monoxide, nitrous oxides and lead.

The result of these administrative steps will be to reduce the input of the scientific community in the early stages of the rule making and to enhance the power of EPA Administration political appointees in crafting the regulatory agenda. 

BUDGET

Last Minute Action Levels Funds Research and Public Health Programs

House and Senate leaders left town without having completed action on 10 the 12 regular appropriations bills that fund the federal government.  Before concluding the 109th session of Congress, legislators passed a stop gap funding measure – called a Continuing Resolution - that will fund federal programs until February 15th – thereby giving the incoming 110th Congress some time to complete the spending bills.

The Continuing Resolution will provide level funding for key public health and research programs, including the National Institutes of Health and the Centers for Disease Control through February 15th.

It is unclear how the incoming 110th Congress will deal with remaining appropriations bills.

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