109TH CONGRESS CLOSES WITH A FLURRY

Decemeber 11, 2006

Criticized for its meager accomplishments, the 109th Congress closed its doors just shy of 5:00 a.m., December 9.  Just before the pre-dawn finish, lawmakers passed a massive tax and trade bill and a raft of other measures, including legislation to block a planned Medicare physician pay cut, a reauthorization of the National Institutes of Health and measures to combat AIDS, pandemic diseases and premature births.

Appropriations Left in Limbo

Despite the flurry of activity, the outgoing Republican-controlled Congress left behind a political time bomb for Democrats who will take over January 4: lawmakers failed to complete work on nine of the 11 appropriations bills required to fund federal government programs, including veterans health, education, and fuel assistance for the needy.  Instead, Congress adopted a continuing resolution that will keep the government operating at a bare-bones level through February 15—more than a quarter of the way into the fiscal year. 

Part of the excuse for the latest gridlock is a revolt by some conservative senators against earmarks contained in the remaining bills, although none of them offered any motion to strip out the offending legislation. 

The nine unfinished spending bills account for about $460 billion worth of domestic programs.  Under the terms of the continuing resolution, programs will be funded at the lowest of three budget amounts: the amount recommended by the full House or Senate, or the amount appropriated last year.  In most cases, that will be last year's appropriation. 

Virtually all federal programs will face inflation-related cuts in services.  But for some agencies the consequences are particularly serious.  The Department of Veterans Affairs will be especially hard-hit since the agency will be funded at last year's level—even as costs and the number of veterans it treats continue to rise.  Some agencies, like the Social Security Administration may be forced to furlough workers, and the FBI will have to impose a hiring freeze on agents. 

When Democrats take control of Congress in January they will face two choices.  They may attempt to pass the remaining spending bills—a daunting exercise that would coincide with writing next year's budget—or pass a full-year continuing resolution. 

Congress Adopts NIH Reform Act

One of the measures passed in the waning hours was H.R. 6164, the National Institutes of Health Reform Act of 2006.  This is a compromise product resulting from the advocacy of many science and patient advocacy groups.  The major changes are an increase in the amount of funds authorized for fiscal years 2007 and 2008 and an elimination of a funding cap in fiscal year 2009.  The original bill, introduced by Rep. Joe Barton (R-TX), Chairman of the House Energy and Committee, and supported by a number of organizations limited funding to an annual increase of 5 percent for fiscal years 2007 through 2009.  The original bill also created a Common fund that would have received money by taking 50 percent of each year's overall increase for the Institutes and Centers and placing it in the Common Fund.  The final bill removes this funding link. 

Following is a summary analysis of the bill passed by Congress:

1. 1.      Authorization of Appropriations
   
   
1. a.       The bill provides for the following "authorization" of amounts that may be appropriated annually by the Appropriations Committees:
   
   
1.                                                    i.      $30,331,309,000 for fiscal year 2007 (the current fiscal year).
2.                                                  ii.      $32,831,309,000 for fiscal year 2008 (an increase of 8 percent over 2007).
3.                                                 iii.      "Such sums as may be necessary" for fiscal year 2009 (eliminates the cap).
   
   
2. 2.      Establishes a "Common Fund"
   
   
1. a.       The amount to be set aside for the Common Fund in a fiscal year shall be the same "percentage"  of the amount appropriated in the previous fiscal year.
   
   
2. b.      The Secretary shall submit a report, beginning June 2007 and every two years thereafter, containing a strategic plan for funding research through the Common Fund.
3. c.       Once the amount set aside for the Common Fund reaches 5 percent of the total amount appropriated for the NIH, the Secretary shall submit recommendations to the Congress for changes in the set aside amounts for the Common Fund.
   
   
3. 3.      Limits the number of Institutes and Centers to 27
   
   
4. 4.      Authorizes an internal reorganization of Institutes and Centers
   
   
1. a.       A director of an institute or center may, after a series of public hearings, reorganize the divisions or other administrative units within such institute or center, including addition, removal or termination of such units.
   
   
2. b.      Requires the approval of the Director of NIH
   
   
5. 5.      Authorizes a Scientific Management Review Board for periodic organizational review of the NIH
   
   
1. a.       The Secretary is to establish an advisory council to be known as the "Scientific Management Review Board," not later than 60 days after the enactment of this bill.
   
   
2. b.      The Board shall review the organizational structure of NIH at least once every seven years.
   
   
6. 6.      Responsibilities of the Board include:
   
   
1. a.       Reviewing the research portfolio of the NIH in order to determine the progress and effectiveness and value of the portfolio.
   
   
2. b.      Determining pending scientific opportunities and public health needs within the jurisdiction of NIH.
   
   
3. c.       Proposing organizational changes.
   
   
7. 7.      The Board shall consist of:
   
   
1. a.       The Director of NIH—a permanent non-voting member.  The total members on the Board shall not exceed 21.
   
   
2. b.      The voting members shall consist of:
   
   
1.                                                    i.      At least 9 directors of institutes or centers.  Representation shall consist of large and small institutes and centers.
2.                                                  ii.      Members appointed by the Secretary from among individuals not employed by the Federal government.
   
   
8. 8.      Recommendations of the Board
   
   
1. a.       Shall be submitted to the Secretary and the Congressional Committees with jurisdiction over NIH.
   
   
2. b.      The Director may submit to Congress a report outlining objections to the Board's recommendations.
   
   
9. 9.      Authorizes a reorganization of the Office of the Director
   
   
1. a.       Such reorganization may occur after a series of public hearings.
   
   
2. b.      Approval of the Secretary.
   
   
10. 10.  Creates the Division of Program Coordination, Planning and Strategic Initiatives.  The following offices are within the division:
    
    
1. a.       AIDS Research
2. b.      Research on Women's Health
3. c.       Behavioral and Social Sciences Research
4. d.      Disease Prevention
5. e.       Dietary Supplements
6. f.        Rare Diseases
   
   
11. 11.  Council of Councils
    
    
1. a.       The Director of NIH shall establish a "Council of Councils" for the purpose of advising the Director on the policies and activities of the Division of Program Coordination, Planning and Strategic Initiatives.
   
   
2. b.      This Council shall be composed of 27 members selected by the Director.
   
   
12. 12.  Trans-NIH Research Report
    
    
1. a.       Beginning in January 2008 and each January thereafter, each Institute and Center Director shall submit a report on the amount spent by the Institute or Center for research that involves collaboration between one or more Institutes or Centers.  The Secretary shall submit to Congress a report identifying the amount of collaborative research funded by each Institute or Center.
   
   
2. b.      If the Director of an Institute or Center fails to submit a report that Institute or Center may not receive a funding level for the next fiscal year that exceeds the amount received in fiscal year 2006.
   
   
13. 13.  Transfer Authority
    
    
1. a.       Of the total amount appropriated to Institutes and Center each year, the Director may transfer not more than 1 percent for programs or activities authorized by this bill.
   
   
14. 14.  Electronic Coding of Grants
    
    
1. a.       The Secretary shall establish an electronic system to "uniformly" code grants and other research activities.
   
   
15. 15.  Increased Interagency Collaboration and Coordination
    
    
1. a.       The Director of NIH shall submit annually to the Secretary a report on the activities of the NIH involving collaboration with other agencies of the Department of Health and Human Services.
   
   
2. b.      The Director of NIH shall submit to the Commissioner of the Food and Drug Administration a report that identifies each "Clinical Trial" that is registered during such calendar year.
   
   
3. c.       The Director shall submit to Congress a report that describes how NIH stores and tracks "human tissue" samples.

Overview of Medicare Physician Payment Provisions

Medicare Physician Payment Update: The legislation adopted by Congress prevents the scheduled 5 percent cut in 2007 Medicare physician payment rates by freezing the Medicare conversion factor at its 2006 level.  Unlike previous Medicare packages, this provision does not add to the projected payment cuts scheduled for 2007 through 2015.  Instead, this 2007 freeze is fully funded by using money from the Medicare Stabilization Fund, which was created under the 2003 Medicare Modernization Act to help incentivize participation of Medicare Advantage plans.  However, the legislation does not change base payment rates beyond 2007 and, therefore, physicians potentially face a cut of more than 5 percent in 2008.  The Secretary of HHS is allocated $1.35 billion to use for physicians' services in 2008, including helping to avert the 2008 cut, but this provision allows the Secretary broad discretion in determining how to use the $1.35 billion.

New Medicare Physician Quality Reporting Program for 2007:  The legislation establishes a Medicare physician quality reporting program using quality measures from the current Centers for Medicare and Medicaid Services (CMS) Physician Voluntary Reporting Program (PVRP), for July 1, 2007 through December 31, 2007.  Of the 66 PVRP measures now in effect, 56 were developed by the American Medical Association's Physician Consortium for Performance Improvement (PCPI). There is some ambiguity in the bill language regarding additional measures that would be eligible for inclusion in the 2007 PVRP, such as those that may be completed in early 2007.  If these additional measures are permitted as part of the PVRP, more physicians would be eligible to participate in the program. 

A bonus payment of 1.5 percent will be paid to physicians who report on at least one or more PVRP quality measure.  It is unclear at this time whether the 1.5 percent bonus will be paid for all claims submitted by the reporting physician or only with respect to those claims for which data has been reported (during the July 1 through December 31, 2007 time period). Nevertheless, the payment methodology is subject to certain limits and may not offset physicians' administrative reporting costs. 

Much uncertainty surrounds the legislation's quality reporting provisions.  For example, the bill includes language allowing technical corrections on the 66 PVRP quality measures until April 2007, at which time CMS will work to publish a finalized Program Memorandum in time for the 2007 PVRP July launch.  It remains unclear if CMS will also be amenable to adding new "consensus-based" quality measures to the current list, allowing more physicians the opportunity to participate.  Further, the distribution of the 1.5 percent bonus payment and how it relates to the number of quality measures reported is unclear. The legislation mandates that a physician report on one or more quality measures 80 percent of the time to receive the 1.5 bonus payment. However, if a physician reports on more than one quality measure, the bonus payment remains the same. These, and other issues regarding this quality reporting framework, must be addressed with CMS in the coming months.

Medicare Physician Quality Reporting Program for 2008:  Establishes a Medicare reporting program for 2008 under which physicians would report with respect to quality or structural measures, including those related to use of health information technology (HIT) and electronic physician prescribing.  The measures must have been adopted or endorsed by the National Quality Forum (NQF) or the Ambulatory Care Quality Alliance (AQA) and developed in a consensus-based process, but the bill does not specify that the measures must be developed through the PCPI.  Physicians can also use an appropriate medical registry, such as the Society of Thoracic Surgeons National database, to submit data on quality measures. 

Geographic Practice Cost Indices (GPCI):  The work GPCI floor is extended for one year, averting pay cuts in 53 states and localities where the geographic adjustments were set to expire.  Physicians in a number of states would have faced average payment cuts of 7-10 percent due to the combined effects of the GPCI and physician fee formula cuts.