Capitol News: A rundown of health care issues from Washington, D.C.

by David Reynolds 
Senior Manager, 
AAFP State Government Relations

Since the midterm elections this past November, Washington D.C. has lurched from one crisis to the next. The usual pallor inside the D.C. Beltway has been colored by the impending military action in the Middle East, the rubric of trying to kick-start the national economy, a strengthened Republican hand in the House of Representatives and a change in leadership within the U.S. Senate, not to mention the unceasing lousy weather. In light of all these crises, Congressional business has continued unabated. Physicians and medical lobbyists redoubled their efforts to draw attention to an unfair Medicare reimbursement fee formula as well as inadequate funding proposals for Title VII and for the Agency for Healthcare Research and Quality. Getting the message across was particularly difficult because the legislative leadership was already grappling with the omnibus appropriations bill, which in theory should have been completed prior to last year’s elections.

Medicare Physician Reimbursement Fee

 

Since the beginning of the 107th Congress two years ago, the American Academy of Family Physicians has been participating in negotiations and lobbying to persuade Congress that the existing Medicare formula has dire consequences for patients and physicians. The formula yielded a 5.4 percent cut in 2002 and threatened to drive fees down another 4.4 percent in 2003. Family physicians sent the message to Congress about the precipitous decline in the fee: Physicians’ doors would close, services would be cut, doctor’s employees would lose their jobs, providers would opt out of the program, and, most importantly, patients’ access to their medical care providers would be decreased.

 

It became clear, after an unusually rancorous election cycle because of the razor-thin margin of party control, that the 107th Congress would not finish its business. Lawmakers went home in December after failing to overcome an impasse on budget negotiations. Unfortunately, when the lawmakers left without addressing several spending bills for fiscal year 2003, they left many wondering if their programs would continue to exist.

 

In unanswered political calculations, opportunities often exist to favorably alter the outcome. During that break in Congressional decision-making, the medical community gained an opportunity to intensify its lobbying. Family physicians focused on two major challenges. First, they had to convince House and Senate leaders that a 4.4 percent cut would be a staggering blow to the practicing physician and patients; and second, they had to convince the chairs of committees with jurisdictions over health matters to go to bat for AAFP-supported proposals within the global budget framework, when and if the proposals got to a conference committee.

 

The first step proved to be a challenge as Sen. Charles Grassley (R-Iowa) insisted that any provider payment bill include measures to address disparities in funding for rural areas. In addition, interests representing hospitals, home health care agencies and nursing homes strongly opposed provider payment legislation that did not address their concerns. Rep. Bill Thomas (R-Calif.), who chairs the House Ways and Means Committee and Sen. Grassley agreed to a compromise favorable for medicine. In the conference committee, both held firm to their agreements as other interests fought for their proposals, most entirely unrelated to health care.

 

Jerry Connolly, AAFP Senior Government Relations Representative, described the budget bill before it became law by saying, “This bill contains a provision that would provide legal protection for Centers for Medicare and Medicaid Services to correct past projection errors made by the agency in ‘98 and ‘99 in calculating fee schedule updates. The Benefits Improvement and Protection Act gave the agency the authority to do this from 2000 going forward, but the general counsel of CMS claimed the agency did not have the authority to reach back and correct the calculations for the two years that were affecting the baseline. Additionally, the general counsel did not want the correction to create exposure to legal action from other provider groups who may want to use the ‘correct past errors’ argument to push for reimbursement increases for themselves.”

 

The end result was a major victory for physicians and patients. Medicine persuaded Congress to avert an expected 4.4 percent cut in Medicare physician fees. Instead, Congress took action approving a raise of 1.6 percent on March 1, 2003. After weeks of horse trading and haggling, conferees agreed to the omnibus budget and subsequently the House and Senate approved it. On Feb. 20, President Bush signed it into law.

 

AAFP leaders focused members’ attention and efforts on increasing Congress’ awareness of detrimental effects that the unanswered budget questions would have on practicing family physicians and their patients. The AAFP undertook an unprecedented grassroots campaign. While lawmakers were home for their end of the year holiday break, AAFP members sent over 2,400 emails on the Medicare payment issue alone, and members and patients made many more phone calls as well as office visits with their legislators.

 

Looking back on the process, AAFP President James Martin, M.D., of San Antonio observed in a Feb. 14 statement, “Over the past year and a half, family physicians and patients have sent Congress more than 15,000 e-mails on the [Medicare reimbursement] topic. Hundreds of family physicians have visited or called their elected officials in Washington and in their home state offices. AAFP leadership represented physicians at numerous multi-specialty meetings on Capitol Hill. Having many thousands of family physicians respond to Congress on this issue shows the power and influence we can have as our lawmakers’ constituents.”

 

Kevin Burke, Director of AAFP Division of Government Relations notes, “The bottom line is that instead of a cut of 4.4 percent for 2003, we’re looking at an increase of 1.6 percent. And the future updates will be better than if they were calculated based on the old, incorrect baseline. They may not always be positive, but they will be better than they would have been. It is an accounting approach, but it makes the improvement that we need.” Regarding future updates, Burke says Congress will need to address the issue this year because the formula is still flawed and it will be necessary to alter it sooner rather than later to ensure equitable payment scheme.

Title VII Health Professions Programs and AHRQ

 

Another set of items that were equally important to family medicine but that flew a little lower on Congress’ radar screen was the funding for Agency for Healthcare Research and Quality and Section 747 of Title VII in the Public Health Service Act. Appropriations for Title VII health professions programs and the AHRQ were increased from current levels in the omnibus spending bill. Specifically, funding for the Section 747 primary care cluster, which includes family practice training, was increased to $93.04 million, a 0.04-percent increase over 2002 funding levels and AHRQ’s appropriation rose to $303.7 million, a 1.6-percent boost. While funding for AHRQ does not appear as to be in jeopardy during the 108th Congress, the threatened termination of Title VII programs requires thoughtful examination of the Section 747 family medicine programs. The President’s budget proposal for fiscal year 2004 will again zero out funding for Section 747. Of key interest, the Title VII funding victory has been attributed directly to the acknowledgment by Senate Majority Leader and physician Bill Frist that the decrease in these funds would have a detrimental effect on primary care and historically black medical schools, particularly Meharry Medical College in downtown Nashville, Tenn.

 

Coincidentally, the Title VII programs are due to be reauthorized this year. This presents an ideal opportunity for the AAFP and the academic family medicine organizations to re-evaluate the program. Staff from the AAFP, Organizations of Academic Family Medicine and the Robert Graham Policy Center have held preliminary meetings to discuss everything from modification of Title VII grants in the appropriations bill to wholesale changes through the reauthorization legislation.

 

 
 

Medical Liability Insurance Legislation

 

Medical liability insurance reform was a clear priority of the House leadership in the last Congress. Rep. James Greenwood (R-Penn.) and Sen. John Ensign (R-Nev.) introduced companion bills to reform how medical liability cases are litigated in the states. The legislation, entitled the Help Efficient, Accessible, Low Cost and Timely Health Care, or HEALTH Act, (H.R. 4600/S. 2793), passed the House of Representatives by a vote of 271-203 very late in session in September 2002.

 

Unfortunately, there was not similar enthusiasm for passage of tort reform among the Senate leadership, which was Democratic at the time. As demonstrated by one of the last votes prior to last year’s August recess, Sen. Mitch McConnell (R-Ky.) offered a medical liability amendment during the debate over Medicare prescription drugs. That amendment failed by a vote of 42-57.

 

Medical liability has already received a great deal of attention by both the White House and Congress in this session. In his State of the Union Address and other talks, President Bush highlighted the crisis for physicians and patients by explaining that exorbitant medical liability premiums are causing an increase in health care costs and decreasing access to care, and that only a cap on non-economic damages can rectify the situation.

 

In the 108th Congress, both Senate and House leadership staff say that medical liability legislation is expected to move quickly. At press time, H.R. 5 passed the House by a vote of 229-196 on Thursday, March 13. Senate leadership is pushing for a vote on medical liability during the week of March 24, however members have not developed a medical liability reform vehicle that they are ready to debate on the Senate floor. It is clear from public statements that the provisions in H.R. 5 do not have the 60 votes necessary to win a cloture vote so negotiations among Senators are ongoing.  Proponents of this legislation, including the Academy lobbyists, are actively participating in meetings to determine the best plan of action to move this critical piece of legislation.

 

In early February the Senate Health, Education, Labor and Pensions (HELP) Committee and the Senate Judiciary Committee held a joint hearing on “The Patient Access Crisis: The Role of Medical Litigation.” Majority Leader Frist made an opening statement before opening the floor to HELP Committee Chairman Judd Gregg (R-N.H.) and Judiciary Committee Chairman Orin Hatch (R-Utah). He said he hoped that this hearing was the first in a series of steps that would lead to the passage of legislation to address this crisis. Sen. Gregg and Sen. Hatch were supportive of passing liability reforms. However, Sen. Hatch agreed with Sen. Edward Kennedy (D-Mass.) that a $250,000 cap on non-economic damages is too low to adequately compensate the most severely injured patients. During the question period, there was a debate about whether insurance reform or tort reform was really responsible for lowering premiums in California.

 

It is apparent to seasoned observers that the critical factor to success, and the challenge remaining for the 108th Congress, will be to obtain the 60 Senate votes needed to bring up the bill for consideration. The McConnell vote from the 107th Congress shows that, at best, there are 42 votes in favor of medical liability reform. The Senate has historically been opposed to this type of reform legislation. In the past 10 years, the House of Representatives has passed medical liability legislation three times, but final passage has been blocked in the Senate every time. In an interesting turn of events, Sen. Diane Feinstein (D-Calif.) has announced that she would draft a bill containing most of the medical liability reforms currently in place in California through the Medical Injury Compensation Reform Act of 1975, or MICRA. This bill is still being drafted, but if introduced, it could represent an important step forward for proponents of reform.

 

Freshman Congressman Dr. Michael Burgess of Highland Village shared his views on the medical liability issue with the Academy. “As a physician, I know too well, that the staggering cost of lawsuits are costing all Americans higher health care premiums and limiting access to quality care,” Burgess said, adding, “We must encourage both the House and Senate to act in a bipartisan manner and pass medical liability reform in order to give doctors the ability to deliver quality care to all of their patients and to ensure affordable and accessible health care in America.”

 

AAFP Past President Richard Roberts, M.D., J.D., of Madison, Wisconsin says that “State-based initiatives that include caps on non-economic damage awards — such as MICRA — work and physicians in states implementing these initiatives have managed to keep malpractice insurance rates in check. Other successful tort reform strategies include reducing the statute of limitations, limiting contingency fees, implementing some form of collateral source rule and utilizing periodic payments.”

Practicing Physicians Advisory Council

 

In another effort to address the physician equitable payment issue via the regulatory route, the AAFP was involved in a meeting that the Centers for Medicare and Medicaid Services recently convened. The meeting provided the Practicing Physician Advisory Council an opportunity to recommend changes for incorporation into the notice of proposed rulemaking for the Medicare physician fee schedule. After deliberation, PPAC offered recommendations that will be forwarded to CMS. The agency will take these recommendations into consideration as it develops its proposed 2004 fee schedule, which is scheduled for publication in May of this year.

 

The vice speaker of AAFP, Tom Weida, M.D. of Hershey, Penn., presented to PPAC testimony on behalf of the Academy. The topics Weida addressed in his testimony included: (1) the impact of payment rates on beneficiary access, (2) the calculation of the payment rates, and (3) a code and payment for coordination of care. Weida urged PPAC to recommend to CMS that the agency explore the development of a code for coordination of care performed by primary care physicians. In addition, AAFP members Dennis Iglar, M.D., of Oconomowoc, Wis., and Robert Urata, M.D., of Juneau, Alaska were appointed to PPAC. Their terms will begin in June.

 

Medicaid Reform

 

HHS Secretary Tommy Thompson recently met with the nation’s governors to discuss the Bush administration’s Medicaid reform proposal. Under the proposal, states would have to maintain comprehensive Medicaid coverage for the two-thirds of beneficiaries whose income levels are low enough that the federal government mandates that they be covered. For beneficiaries covered at the states’ discretion, states would be permitted to change Medicaid rules and regulations, simplify and alter eligibility requirements and revise or reduce benefits. States would no longer have to apply for federal waivers to deviate from federal standards for Medicaid eligibility and benefits. The proposal would also give states a fixed amount of money, rather than matching funds, for the beneficiaries who the states choose to cover. Democratic governors said that the proposal over time could require states to make “crippling cuts” in their Medicaid budgets. However, Tennessee Gov. Phil Bredesen (D) said that the proposal would give states increased flexibility and could help them control Medicaid costs. Thompson made an impassioned pitch to the governors — whose support is crucial for the proposal to pass in Congress — and hopes to negotiate a compromise. Some governors suggested that under the proposal, Medicare should cover the prescription drug costs of seniors enrolled in Medicaid. Thompson said the federal government would still provide “an open checkbook” to the states for people whom the states are required to cover, but he made no guarantees for the other recipients.

 

President Bush has said to the governors that he will oppose new funds going to the states. “We’ve got an issue with our own budget, and you’ve got issues with your budgets,” Bush said. “We can talk about that. Our budget is in a deficit. It’s because we went through a recession and we’re at war.” Bush added that his fiscal year 2004 budget proposal includes a 9-percent increase for a total of $400 billion in grants to states.

 

Critics of the President’s proposal have said that state Medicaid programs need immediate financial help and the easiest way to do this is to temporarily increase the federal medical assistance percentage (FMAP). Longtime Medicaid observers have observed an unwillingness from states to battle over the current FMAP allotment both because of the enormous amount of effort and resources necessary and the risk/reward scenarios are not entirely promising. In short, their FMAP allotment may not be great at this time, but that is preferable to the unknown. Critics also oppose the administration’s Medicaid proposal because in the out years, it only provides about half as much money to the states as the FMAP legislative proposals and does not add any permanent new money to the program. Sen. John Breaux, (D-La.) expressed reservations about the administration’s proposal. “The federal government would give you more money in the first seven years, but take it back in the next three years,” Breaux told the governors. He urged them to think carefully about the hardship that could arise during the final three years. “You will have drastic slashing of optional programs,” Breaux said, noting that prescription drugs were an optional benefit that could be cut under the president’s proposal.

SCHIP

 

An agreement was reached between House and Senate leadership on legislation that allows states to retain almost $2.7 billion for children’s health insurance instead of returning the money to the federal government. The current law, originally signed in 1996, requires that each state spend its SCHIP allotment by Sept. 30, 2002 or risk losing it. Last fall, states that missed the deadline were billed $1.2 billion. In addition, under current law, states will have to return another $1.5 billion to the federal government by Sept. 30 of this year. However, Rep. Billy Tauzin (R-La.), and the Chair and ranking Democrat on the House Energy and Commerce Committee, which oversees the program, Rep. John Dingell (D-Mich.), agreed to a bill that would let states continue to use the $1.2 billion originally allocated before fiscal 2000. The proposal also would let states keep half of each year’s unspent money for fiscal years 2000 and 2001. The remainder would be distributed to states that have spent all of each year’s allotment.

 

AAFP’s Division of Government Relations expects that Congress will expend its efforts on only a few domestic items. In the next several months, lawmakers will focus on medical liability reform, Medicare prescription drug benefit plans and Medicaid reform. All AAFP members are encouraged to stay tuned to the situation and AAFP efforts via Speak out, which is updated on a regular basis. Speak Out can be found on the Web at http://capitol.aafp.org.