February 27, 2009

President Obama Releases FY10 Budget Outline

This week, President Obama released an outline of his priorities for fiscal year 2010 . A more detailed budget document is expected in April. Included in the budget outline is a $634 billion “down-payment” on healthcare reform, essentially a fund reserved to help defray some, but not all, of the price of enacting healthcare reform legislation. About a third of the healthcare reform reserve fund would be paid for by proposed cuts in Medicare managed care payments. Another third comes from raising taxes on couples making more than $250,000 and individuals more than $200,000. And the remaining third comes from miscellaneous other proposals.

The budget outline includes a number of provisions impacting the Medicare program, including:

• Bundled payments for hospitals and post-acute care services ($17.8 billion)
• Reduce payments for hospital readmissions ($8.4 billion)
• Reduced payments for home health services ($37.1 billion)
• Increased Medicaid drug rebates ($19.6 billion)
• Increased Part D drug premiums for higher income beneficiaries ($8.1 billion)
• Medicare program integrity efforts ($2billion) Is this increased funding?

In a welcome change, the Obama budget provides $329 billion over 10 years to prevent cuts in Medicare physician payments. Without Congressional intervention, physician payments are scheduled to be cut by 21 percent in 2010 and by as much as 40 percent over the next 10 years. While most observers believe Congress will not let these scheduled cuts happen, no one has been able to present a plan that identifies funding to prevent the cuts. Obama’s budget, while not providing any funds to increase Medicare physician payments, at least provides funding to avert future cuts. This is a significant step forward in efforts to prevent cuts in Medicare physician payment.

On other fronts, the Obama budget outlines, while not providing overall number for the NIH or CDC, does propose to double cancer research funding at the NIH. More details on NIH and CDC funding are expected in April.

House Passes FY09 Funding Bill

This week, the House of Representative attended to unfinished business by passing an omnibus appropriations bill for FY09 funding of several federal agencies, including the NIH and CDC. The House passed bill provides $30.3 billion for FY09, an increase of $938 million over FY08 funding. The bill provides $6.6 billion for CDC, an increase of $239 million over FY08.

Congress is under pressure to pass the Omnibus bill before the temporary funding bill expires on March 6, 2009. The Senate is expected to vote on the bill early next week.

District Court Remands EPA PM Standard

The U.S. District of Columbia Court of Appeals handed the ATS and other clean air advocates an important legal victory by remanding to the Environmental Protection Agency the annual standard for fine particulate matter. The ATS was an amicus filer in the case.

The court essentially determined that the EPA, under the Bush Administration, failed to adequately justify its decision to not lower the annual standard for fine particle pollution and further failed to consider all relevant research on the health effects of particle pollution. The court also reaffirmed the EPA’s authority to regulate course particle pollution.

While the court did not tell the EPA what the standard should be, the EPA is expected to reconsider the annual standard and will likely issue a stricter standard in the near future.

In November 2006, the EPA promulgated a new standard for fine particulate matter (PM2.5, i.e., particles less than 2.5 µm in aerodynamic diameter) of:

• 15 µg/m3 for the average annual standard
• 35 µg/m3 for the 24-hour standard

The EPA standard for particulate matter pollution replaced the previous standard of :

• 15 µg/m3 for the average annual standard
• 60 µg/m3 for the 24-hour standard
• 98th percentile used for compliance determination

The was used by business interests (farm, mining, chemical, power utilities) stating the proposed EPA rules were 1) too strict; 2) went beyond EPA statutory authority; and 3) ignored the available science. Clean air groups and 13 East Coast states also sued the EPA, holding that proposed rules were too lenient, did not fulfill EPA statutory obligations and ignored available science.

The courts are also considering a similar case regarding the EPA standard for ozone pollution. The ruling on the fine particle case may be a preview of the court’s position on the pending ozone case.

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