Government Executive - Authors - Meghan McCarthy

Troops not safe from sequestration

Sara Sorcher and Meghan McCarthy, National Journal — Fri, 16 Nov 2012 08:47:28 -0500

If Washington’s defense community has achieved one thing over the past year, it’s spreading the message of how the fiscal cliff could desecrate the military. Sequestration cuts of $55 billion would jeopardize weapons contracts, furlough civilian staff, and imperil national security, defense hawks say.

One glaring casualty has gotten far less notice: the military’s $37 billion health account. In designing the trigger mechanism, members of Congress were careful to make sure that the men and women in uniform wouldn’t suffer because of the cuts—but not careful enough. Now, without a compromise on Capitol Hill during the lame-duck session, the deal the committee crafted would cause a rollback in health benefits for active-duty troops, veterans, and their families.

When lawmakers wrote the Budget Control Act (which set up the fiscal cliff), they gave President Obama the option, which he has already exercised, to exempt military-personnel accounts and the Veterans Affairs budget. Many observers believe, falsely, that these groups are safe: That exemption covers only troops’ paychecks, not their health benefits, which fall under another part of the Pentagon budget.

About 9 million active-duty soldiers, retirees, and families are enrolled in the military’s health care system, known as Tricare. While other massive federal health programs are largely shielded from the effects of sequestration—Medicare is limited to a 2 percent cut and Medicaid is completely exempted—discretionary spending for military health programs such as Tricare could see a 9.4 percent reduction in 2013 if the automatic cuts take effect. (The military’s Tricare for Life program, which covers Medicare co-pays and premiums for retirees over 65, is protected.)

Defense health accountants have never tried to absorb steep cuts on short notice. Steve Strobridge, director of government relations for the Military Officers Association of America, says that the cuts could rattle the entire Tricare system, from hospitals to doctors to drug coverage. “It could affect anything from mowing the lawn, to not having the formulary cover as many medications, to cutting physicians so it takes longer to get an appointment, to actually reducing what Tricare pays,” he says.

The Tricare cuts are an obvious political grenade: No one in Congress or the administration wants to be seen as breaking faith with the troops because of budget gridlock. Policymakers may try to snatch Tricare’s sequestered $3.3 billion from other defense accounts so they don’t have to face stories about active-duty troops and their family members getting cut off from lifesaving drugs. But it wouldn’t be easy to find that money when every account has been slashed by nearly 10 percent.

Pentagon Comptroller Robert Hale told the House Armed Services Committee in late September that it would be “very difficult, frankly,” to save the defense health account. “We can only do it through reprogramming, and you’ve got to find something to cut. And as I’ve learned painfully over the last four years, that’s very hard to do.” Instead, the military would probably be unable to pay its Tricare bills until the end of fiscal 2013, Hale said. “I’m not quite sure what our providers would do in that case.… We’d try to fix it in ’14.”

Todd Harrison of the Center for Strategic and Budgetary Assessments describes another unpleasant possibility: Health care providers could ration care. “You could have some sort of triage system where you say, ‘If this is something that can wait, a low priority, we’re not going to see you,’ and focus care on some of the highest-priority patients,” Harrison says. To fix the problem, Congress could amend the Budget Control Act to let Obama exempt defense health care, too. In that case, though, other defense accounts (which the sequester will already cut by 9.4 percent) would face a much steeper reduction than the 8.2 percent falloff in nondefense spending.

Still, even this option carries significant political risks. As the clock ticks down to the new year’s deadline, Obama is not likely to want to discuss how best to gouge other defense accounts further. And at every turn, the administration has insisted it will not plan for the looming cuts, rebuffing the GOP’s effort to make the White House spell out how it might mitigate the damage of sequestration. The White House says that members of Congress should spend their time and energy reaching a deficit deal so the cuts don’t take effect, instead of hashing out details in case of failure. Opening up last-minute heated political negotiations—even to something all sides would presumably want—could also start congressional turf wars over, say, what weapons systems in what districts might be slashed or delayed.

So Congress is unlikely to revisit the sequestration rules before the deadline. In other words, those deficit hawks worried about desecrating the military were closer to the mark than they knew.

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Senators jab FDA over lethal meningitis outbreak

Meghan McCarthy, National Journal — Thu, 15 Nov 2012 17:00:00 -0500

The Food and Drug Administration was the subject of tough criticism from Democrats and Republicans today at a Senate panel investigating a deadly meningitis outbreak.

The Senate Health, Education, Pensions and Labor Committee held a hearing on tainted drugs produced by the New England Compounding Center that have killed 32 people and sickened more than 400 with a rare form of meningitis. The FDA sent the New England pharmacy a warning letter in 2006 admonishing them for inappropriate manufacturing practices, but ultimately took no action to stop production at the facility.

Committee Chairman Tom Harkin, D-Iowa, used the hearing as a forum to call for better public health infrastructure and funding, saying Congress has treated public health as the “step child of health in America.” He told the FDA he understood that their authority to regulate the pharmacy was unclear, but wanted to focus on how to fix the current situation.

“I have some sympathy for the FDA not knowing exactly what its role is going to be, but that’s OK, that’s in the past,” Harkin said.

Other members had tough words for FDA Commissioner Margaret Hamburg. Sen. Pat Roberts, R-Kansas, wanted Hamburg to answer "yes" or "no" to whether the FDA had the propoer authority to shut down NECC.

“It's not a yes or no answer,” Hamburg said. “We have authority but it is limited and unclear and contested.”

“Well, that’s a hell of an authority,” Roberts said. “Why in the hell send the warning letters if you can’t act on them?...If this is an empty threat, why do we even have an FDA? Why do you have a job?”

Democrats also criticized the FDA, which is asking for broader authority to regulate compounding pharmacies like the one responsible for the outbreak.

“I think that a lot of the questioning that you are seeing here reflects a skepticisim on the part of Congress and the public about whether the FDA will use this enhanced authority more effectively than the authority it has had up to date,” Sen. Richard Blumenthal, D-Ct., said.

Barry Cadden, the co-owner and chief pharmacist at NECC, declined to testify at the hearing. He was subpoenaed and appeared at the House Energy and Commerce hearing Wednesday, but invoked his 5^thamendment rights to not incriminate himself. Harkin said the Senate committee did not subpoena Cadden.

“There’s no reason to go through that charade today with him,” Harkin said.

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White House holds back on sequester details

Meghan McCarthy and Fawn Johnson, National Journal — Thu, 25 Oct 2012 15:14:18 -0400

From the Agriculture Department to the Pentagon to the Social Security Administration, more than a dozen agencies have given National Journal the same stock response, redirecting reporters to OMB. (The exception was Justin Hamilton at the Education Department, who responded to a query with a link to Carly Simon’s “Anticipation.”)

Not that OMB, which has the task of making sure that President Obama’s vision is implemented throughout federal agencies, is willing to offer any more details. When asked why federal agencies have been told not to discuss sequester details, OMB press officers told NJ to review Deputy Director Jeffrey Zients’s July memo to agencies, telling them to continue normal spending. OMB also pointed to a 394-page report in September that estimates how much federal programs would have to be cut to meet the $1.2 trillion goal.

Obama’s own comments on the sequester offer insights on the administration’s motives for keeping a tight lid on the details of the potential cuts: The White House is hopeful Congress can reach an agreement during the postelection lame-duck session to head off the reductions. Obama said so himself at his third debate with Mitt Romney on Monday. In an interview with The Des Moines Register this week, Obama described the sequester as a “forcing mechanism” that could help motivate a polarized Congress to strike a broad deal on deficit reduction.

The lobbying community is getting the same nonanswers from agencies, even though they historically have better relationships with their individual agencies than OMB. Take the aviation community, which is obviously nervous because the Federal Aviation Administration could take a $1 billion hit. But the FAA is mum. “It’s a little scary because I don’t think the agencies know. Can the FAA wall off air-traffic control? It’s all up to OMB, and they never tell anybody anything,” said Jane Calderwood, vice president of federal affairs for the Airports Council International.

The National Air Traffic Controllers Association, whose members could be directly affected by sequestration, won’t talk to the media about its concerns. A written statement from NATCA spokeswoman Sarah Dunn said this: “NATCA is talking to members of Congress and others in the aviation industry about its concerns that the sequester could harm the efficient functioning of the U.S. aviation system.”

Lobbyists across a vast range of industries are in the dark about the details.

Julius Hobson, a lobbyist at Polsinelli Shughart who represents physician groups and long-term-care facilities, said he’s not surprised agencies have been mum ahead of the election—they want to avoid any information that could hurt Obama’s reelection bid. The sequester was mandated under the 2011 Budget Control Act, which was agreed to by both Democrats and Republicans. But if the administration were to detail where the budget knife would actually fall, Obama could end up getting stuck with a greater share of the blame for the cuts.

“I’d be surprised if we saw any kind of information about sequestration before Election Day,” Hobson said in an interview. “The only reason we have anything about sequestration now is because Republicans pushed through the Sequestration Transparency Act, and that forced OMB to put out the September report. That’s all we’ve got, and there’s not going to be anything else, at least not before the election.”

Hobson said that the flurry of letters sent by Republican members to federal health agencies like the Centers for Medicare and Medicaid Services and the Health and Human Services Department seeking details on health program cuts would also go unanswered.

The same is true in the defense world, where concerns over the potential impact of the $500 billion in extra reductions to Pentagon accounts have reached a feverish pitch. Sean O’Keefe, the CEO of EADS North America, a major defense contractor, told NJ in an interview this month he has not gotten any details from the Pentagon on sequestration.

“I’ve had plenty of discussions over there. I’ve met with several members of the leadership in the Pentagon over the course of the last several months. I’ve been honored to be invited by Secretary [Leon] Panetta himself to engage in industry debates about this question,” O’Keefe said. “I have not had any discussion with anyone about any individual program and how it would be affected by it.”

Contrast this to the furor that the FAA and the aviation community drummed up last year when Congress was on the brink of partially shuttering the agency. The FAA told anyone who would listen that $2.5 billion in contracting money would be held hostage by a partial FAA shutdown and 4,000 employees would be furloughed. The agency provided detailed lists of the projects and offices that would be most affected by the shutdown. Transportation Secretary Ray LaHood took over a White House press conference to beg Congress not to let it happen.

There is a big difference between then and now. One could argue that the DOT tactics didn’t work the last time around. Congress let the FAA close anyway, almost egged on by the administration’s outrage, and it cost the Treasury millions in uncollected airline tax fees.

Now the only thing that has been made public is the OMB’s analysis. While those numbers are a starting place, they don’t give a full picture of how the cuts will work on the ground. For example, $2.5 billion would come from the National Institutes of Health. But that doesn’t give any indication of which research projects, grant programs, and labs will be cut, or by how much. On top of this, agencies and OMB can shuffle around the cuts to hit programs they think are inefficient and protect those with Obama administration approval.

With the cuts coming in just over two months, shouldn’t the agency be getting ready? Yes, say federal budget experts, but there are plenty of political reasons not to spill exactly how the cuts would work.

“Folks in the administration very much want the sequester to be averted,” said Douglas Holtz-Eakin, former head of the Congressional Budget Office, in an interview. “Then you should try to ensure for as long as possible that everything is at risk.”

In other words, giving specific details on what gets cut means lobbying groups and advocates representing programs that are lucky enough to avoid the sequester’s ax could stop pressuring members and the White House to turn off the automatic cut.

“When you have details, that also tells you what’s not going to get cut … if you try to have maximum pressure to get the sequester undone, that doesn’t help,” Holtz-Eakin said.

In addition to keeping the pressure on, having the Obama administration pick which programs it is most willing to cut risks handing Republican budget hawks some future targets. You can hear the talking points: If you were willing to give this up first under the sequester, why not do it now?

Should Congress fail to head off the sequester, final decisions on the cuts would be made between OMB and congressional appropriators, says Dan Mendelson, an associate director for health at OMB during the Clinton administration.

“Ultimately it will be like a mini-negotiated round of appropriations with the Congress,” Mendelson said in an interview. "And if you want to do some big deficit-reduction bill down the road, you have to make sure you aren’t angering the very people you need as allies.”

This is precisely the tactic that the American Association of Port Authorities is taking as terminal operators look at the variety of cuts to port-security programs that they could face under sequestration. AAPA President Kurt Nagle said he is spending most of his lobbying energy on Capitol Hill because he knows it is lawmakers who must act to avert the automatic cuts. “They obviously are going to need to come up with a deal that still cuts the budget, probably even more so in that scenario,” he said. “We continue to talk to the leadership in both the House and the Senate, and certainly in terms of importance of our programs.”

That sounds a lot like an appropriations negotiation: Don’t cut us, we’re too important.

Here’s another excuse for the “I don’t know” response. What gets cut will ultimately rely on the election. Here’s one example from Mendelson: If President Obama gets a second term, some health programs could be more likely to get cut, because 30 million uninsured people are expected to get insurance coverage. If Mitt Romney wins, in theory, fewer health programs would suffer cuts because he would try to repeal the health care law.

Sara Sorcher and Amy Harder contributed to this report. ]]>

Treasury may revamp flexible spending account rule

Meghan McCarthy, National Journal — Mon, 13 Aug 2012 13:16:00 -0400

A little-noticed bulletin from the Treasury Department could have a big impact on the roughly 155 million Americans who use flexible spending accounts to cover out-of-pocket health care expenses.

The government's notice, sent out in May, included a surprise in what otherwise might have been a dry announcement on the implementation of President Obama's health care reform law. In addition to detailing a new spending cap, the federal government asked for comment on whether it should scrap the “use it or lose it” rules associated with the tax-free health care spending accounts known as FSAs.

FSA accounts allow workers to set aside pretax dollars from their paychecks to pay for approved health care expenses, such as eyeglasses, braces and doctor visit co-pays. Republicans have sought to encourage such accounts based on the view that having consumers take on more out-of-pocket expenses would increase competitive pressures in the health care market and bring down costs. FSAs, however, were targeted twice in Democrats’ health reform law, partly to help cover the cost of the law. The Affordable Care Act restricted FSAs from covering over-the-counter drugs unless users have a doctor’s prescription. It also capped the total contributions people can make to the accounts at $2,500.

But the new restrictions might result in the end of what is often considered one of the most burdensome restrictions on FSA accounts: employees must spend all of the money they put aside for health purchases before the end of the year or forfeit that balance to their employer.

Known as the “use it or lose it” rule, it is one of the top reasons cited by people who decline the option of setting up FSAs. According to Mercer Health & Benefits, a benefits consulting firm, 85 percent of large employers offer FSAs, but only 22 percent of employees participated in 2011. Nearly half of employees surveyed by Evolution1, a software company that specializes in helping companies administer FSA benefits, lost between $100 and $1,000 over the course of one year.

And nothing irks people more than the thought of losing money to their employers. Just ask Susan Kline, a taxpayer from North Carolina who submitted comments to the IRS urging them to end the FSA rule.

“At this point this year, it looks like I may have set too much aside for the year. My husband went on Medicare for the first time this year and I did not anticipate that our costs would go down as much as they did. Unless something unforeseen happens this year, I will end up losing some of my hard-earned money,” Kline wrote. “This whole FSA system of ‘use it or lose it’ is so unfair.”

That rule was originally established to make sure people didn’t use the accounts as a way to shield their income from taxes. But a new cap of $2,500 set to take effect in 2013 would prevent people from using the accounts as big tax shelters. So now the Internal Revenue Service and the Treasury want to know if they should change the FSA “use it or lose it” rule to “provide a different form of administrative relief.”

That relief could come in a number of different forms. Bipartisan legislation from Sens. Ben Cardin, D-Md., and Michael Enzi, R-Wyo., and Reps. Charles Boustany, R-La., and John Larson, D-Conn., would allow employees to collect whatever money is left over in their accounts in the end of the year, up to $500. But Treasury and the IRS could take a number of different approaches, including letting employees roll over funds from one year to the next, or extending a grace period for spending left-over funds into the next calendar year.

Comments on the potential rule change from Treasury and the IRS are due Aug. 17. So far, the IRS has only received seven comments, mostly from ordinary citizens who filled out a form on the “Save Flexible Spending Plans” website. Despite the lack of interest in voicing an opinion (although some people may wait until just before the deadline to comment), Employee Benefit Research Institute senior research Paul Fronstin says getting rid of the “use it or lose it” rule would be a big deal.

“It will definitely have a significant impact,” Fronstin said in an interview. “One of the criticisms of employer benefits coverage is that it is rich, but that’s changed in the last few years. It’s only recently that employers have tried to get into higher cost-sharing as a way to engage people, and to the degree you can pay that cost-sharing from pretax dollars, it insulates people.”

Out-of-pocket costs have steadily grown for employees getting insurance from their jobs. According to the Kaiser Family Foundation, 31 percent of people getting insurance from their employers had deductibles of $1,000 or higher, up from just 10 percent in 2006. An FSA could help reduce the cost of covering those deductibles or co-pays.

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Obesity a national security issue, experts agree

Meghan McCarthy, National Journal — Wed, 23 May 2012 15:27:13 -0400

Improving school lunches and nutrition education are a key way to get Americans healthy enough to join the military, and a badly divided Congress might be amenable to cooperating on this one issue, obesity policy experts said said Wednesday.

The nation’s health is “a train wreck that is occurring in front of our eyes," said James Barnett, a retired Navy rear admiral who is now at the Potomac Institute for Policy Studies and on the executive advisory council for Mission:Readiness.

“Obesity and our future military strength are linked,” Barnett said at a National Journal Live event. Three-quarters of Americans of military age are not qualified to join the military, largely because they are too overweight, Barnett said.

School food programs are a key way to keep kids healthy, since kids can get half their calories at school every day, Barnett said. He said schools need support -- financial and policy backing -- to provide nutrition education and remove junk food from school vending machines and lunches.

“If they are given the resources, the school nutritionists are so excited about these programs,” Barnett said. “We want to make sure we have as much impact as possible…and we can have a big impact there.”

Tracy Fox, the president of Food, Nutrition & Policy Consultants, said First Lady Michelle Obama’s efforts to reduce childhood obesity were a great first step, but more work was needed.

“It’s time now to certainly applaud her efforts and support, but we really need to kind of take it to the next level. The prevention fund that was part of the [Affordable Care Act] is being nipped at and used for other things not related to prevention funding,” Fox said. “We have very significant threats.”

(Image via Colour /Shutterstock.com)

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Obama sticks to same Medicare cost-savers

Meghan McCarthy, National Journal — Mon, 13 Feb 2012 14:28:00 -0500

President Obama sticks to his Medicare proposals from last year in his 2013 budget, asking seniors to pay more for their Medicare while also cutting payments to health care providers.

His budget projects Medicare spending of $528 billion in fiscal 2013. The president estimates that Medicare can save at least $370 billion over 10 years with a variety of cuts, such as paying hospitals less for bad debts, when seniors miss co-pays and deductibles, and cutting the cost of drugs for seniors who are also enrolled in Medicaid.

Obama also proposes things that his fellow Democrats won’t like. He wants wealthier seniors to pay more for Medicare, and changes the deductible for doctors’ visits for seniors who enrolled after 2017. He also adds a new co-payment for home health services and increases premiums if seniors choose to have a supplemental “Medigap” plan.

Overall, the president requested $76.4 billion for the Health and Human Services Department, a bump of $7 billion from fiscal 2012.

To help implement the health reform law, Obama wants a $1 billion increase to $4.8 billion for the Centers for Medicare and Medicaid Services in fiscal 2013.

The agency got $3.8 billion in 2012 to run the mammoth federal health programs of Medicare and Medicaid and develop critical pieces of the health care law, from building state insurance exchanges to regulating the private health insurance market.

The president requested a $758 million increase for CMS in 2012, but Congress only bumped up the agency’s funding by $241 million last year. In a time of budget slashing on Capitol Hill, getting any increase is impressive, particularly with Republicans repeatedly targeting the health care law.

But increasing funding isn’t going to get any easier this year, especially as Congress faces down an election in November. That means it is unlikely that Obama will get the full $1 billion increase.

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What kind of health insurance do the GOP candidates get?

Margot Sanger-Katz and Meghan McCarthy, National Journal — Thu, 12 Jan 2012 00:00:00 -0500

Charles Krupa/AP

Mitt Romney's rivals may enjoy repeating his line that he likes "being able to fire people who provide services to me," but when it comes to health insurance, he has the luxury of choosing among several coverage options, thanks to the health care reform law he signed in his home state.

Romney, like all his rivals for the Republican nomination, says he would like to repeal the 2010 health care reform law, privatize parts of Medicare, and create a system in which more people shop for health insurance on the individual market. But that's not the option most of the candidates have taken for their personal health care-which is not surprising, considering that the individual market is generally the most restrictive and most expensive place to buy health insurance.

The Romney campaign refused to say where he gets his health care coverage. But because of the health care reform law he signed as governor of Massachusetts, he is lucky to live in one of the few states with good insurance options for a 64-year-old unemployed man with a wife who has a preexisting health condition: multiple sclerosis. Massachusetts law, like a provision of the national health care law set to go into effect in 2014, requires insurers to offer coverage to all comers and limits the amount they can raise premiums because of a customer's age or health history. The Romneys have a choice of 41 private health plans, with premiums ranging from $997 to $1,026 a month.

"His experience in Massachusetts would be profoundly different from any other state," said Sara Iselin, president of the Blue Cross Blue Shield of Massachusetts Foundation and the former commissioner of the Massachusetts Health Care Finance and Policy Division.

Only one other candidate buys his insurance on the individual market. Rick Santorum, the 53-year-old former senator from Pennsylvania, is enrolled in insurance that "is totally private, and not related to his time in Congress," his spokesman, John Brabender, said in a phone interview. And if Republicans succeed in their stated goal of repealing "Obamacare," Santorum likely won't be firing his insurer any time soon. One of the first pieces of the health reform law to go into effect was a ban on denying coverage to children with preexisting conditions. His youngest daughter, Isabella, suffers from a rare genetic disorder that requires ongoing and costly treatment, just the sort of preexisting condition that makes her look like a poor insurance risk. All insurance plans issued after March 23, 2010, must cover children up to age 19, regardless of prior illnesses.

Many of the Republican presidential nominee hopefuls enroll in public-employee benefit programs that give them the advantages of large-group pricing-and heavy taxpayer subsidy of their premiums. Newt Gingrich, 68, is enrolled in Medicare and buys his own supplemental insurance from Blue Cross Blue Shield, according to his campaign. Paul, 76, as a member of Congress, gets his insurance coverage from the federal-employee benefit program, his campaign says. Rick Perry, 61, gets his insurance from the state of Texas, a benefit he can continue to receive for the rest of his life. (According to the Texas Tribune, Perry is already collecting a state pension, even while he earns his salary as governor.)

Huntsman's campaign also declined to say what type of plan the former governor has. At 51, he is the youngest in the field, making his options for individual coverage better than the others. Utah has its own insurance exchange, but the choices are slim for individual customers, especially when compared with the Massachusetts Connector health exchange. The Utah Health Exchange website merely offers individual insurance shoppers links to five insurance company websites that provide individual coverage in the state. The exchange also lacks many of the consumer protections that Massachusetts offers.

Several of the candidates qualify for multiple government plans. Perry and Paul could apply for benefits through the Veterans Affairs Department because of their military service. Santorum will eventually qualify for the federal-employee benefit plan. Paul is eligible for Medicare. (It is a strange twist that Paul, the candidate most committed to dismantling public benefit programs, finds himself eligible for health benefits from three of them; for his part, he has said publicly that he doesn't use the insurance he has.)

The candidates are lucky to have large personal fortunes and access to public insurance plans. Unlike Massachusetts, most states have no requirement that insurers take customers with health problems, and many allow them to vary pricing tremendously based on age. (And let's be honest: These guys are not spring chickens.)

"It is difficult for the average person to get coverage in the individual market, but we're not talking about average people, in a number of ways," said Paul Fronstin, the director of health research at the Employee Benefit Research Institute, a think tank funded by the business community.

Fronstin said that until the health care reform law kicks in in 2014, insurance companies in most states can deny anyone based on potential preexisting conditions. The cost of coverage in the individual market, which can run as high as $15,000 for a year of family coverage, can also be prohibitive. But the biggest difference between the candidates and the general public is a history of holding public office.

"You're talking about people who have had public service, and public service tends to have the most-generous retiree health benefits at this point," Fronstin said.

One goal of the health care reform law is to set up state insurance exchanges so that individuals in every state will have access to an array of choices like those currently available to the Romneys. If any of the candidates succeeds in repealing that law, shopping around for insurance and firing companies that don't perform are likely to get harder, not easier.

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What's at stake if Congress fails this time?

Kelsey Snell, Meghan McCarthy, and Nancy Cook — Mon, 19 Dec 2011 00:00:00 -0500

UNEMPLOYMENT INSURANCE

Roughly 1.8 million Americans will no longer be eligible for federal unemployment insurance benefits if Congress fails to extend legislation beyond its Dec. 31 expiration date, according to the advocacy group, the National Employment Law Project. Federal unemployment insurance goes to workers who have exhausted state benefits, which typically max out at 26 weeks. This is where the federal unemployment insurance benefits step in to provide anywhere from an additional 34 to 73 weeks of extra checks. It has become an important financial stopgap for the long-term unemployed, or anyone out of work for at least 27 weeks. Macroeconomists also overwhelmingly approve of the benefits because they inject much-needed cash into the fragile economy, and usually, it's money that's quickly spent, boosting consumer demand. PAYROLL TAX CUT

The payroll tax rate will jump from the temporarily reduced 4.2 percent back to 6.2 percent on the first of the year. That means most workers will see the effects of Congress' failure to reach a deal when they receive their first paycheck in 2012. Last year, lawmakers approved a one-year, 2 percent break on payroll taxes to help funnel more cash into the economy. About 160 million workers benefitted from that $110 billion in tax relief, according to the White House. The average worker earning about $50,000 received a $1,000 break this year. Many economists have warned that allowing the benefit to expire could hurt the already struggling economy. DOC FIX

Nearly 50 million Americans on Medicare might face longer wait times to see their physicians. The 27 percent pay cut that the "Doc fix" patch addresses wouldn't happen immediately. The Centers for Medicare and Medicaid Services can and has delayed payments to doctors as Congress struggled to pass bills preventing large cuts in Medicare reimbursements. In June 2010, CMS stopped processing Medicare physician claims for nearly three weeks as Congress worked to pass a doc fix bill that prevented a more than 20 percent pay cut. While that means doctors won't see their incomes drop right away, it does mean long delays in getting government reimbursements. That's something that could lead some doctors to slow down their appointment schedule.

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House votes to repeal contractor withholding tax

Billy House, Katy O'Donnell, and Meghan McCarthy — Thu, 27 Oct 2011 00:00:00 -0400

But it remains uncertain what the Senate will do.

Last week, Senate Democrats prevented similar legislation from reaching the floor; they objected to covering the cost of the repeal by directing the executive branch to rescind funds and make further cuts to discretionary spending in 2012. The White House threatened to veto that measure because of those pay-fors.

But the Republican-pushed House bill passed on Thursday would cover the cost of undoing the contractors' tax with a fix to the 2010 health care law that would tighten Medicaid eligibility requirements, saving $14 billion. That fix was passed earlier on Thursday, 262-157.

The Obama administration has backed the House bill. But how a final version will be worked out with the Senate remains ambiguous. The Office of Management and Budget has also said the administration would be willing to work with Congress to identify "acceptable offsets" for the repeal's budgetary costs.

Senate Majority Leader Harry Reid, D-Nev., said last week he would take up the House bill, though he said he wanted to pay for it with elimination of a corporate-jet subsidy and tax breaks for multinational corporations, an approach Republicans oppose.

Some Democrats are reluctant to use the Medicaid savings to offset the cost of eliminating the withholding tax, preferring to save the offset for other legislation. Whatever the approach to paying for it, Reid said he was confident the withholding tax will be repealed. "I don't think people are too far apart on this," Reid spokesman Adam Jentleson said.

The contracting rule was originally devised in 2006 as a means of combating tax avoidance, but has never been implemented and has drawn the ire of Republicans and Democrats alike as a burdensome requirement on potential job creators.

Implementation had been delayed earlier this year until the end of 2012. But President Obama proposed in his jobs package this fall that the regulation be delayed until 2014.

The Medicaid-related bill is a rare glimmer of bipartisanship when it comes to the 2010 health care law. The White House and some congressional Democrats, although not all, want to see the "fix" passed to alleviate a larger budget crunch on the already-strapped Medicaid program.

The bill would undo a piece of the 2010 health care overhaul that would have made more than a million seniors newly eligible for Medicaid, because Social Security income would no longer factor into eligibility.

The president included the $14 billion cost-saver in his latest deficit-reduction package, and the White House did not threaten to veto the House bill passed on Thursday sponsored by Rep. Diane Black, R-Tenn.

But House Democrats largely voted against that bill because they would rather use the Medicaid funds to cover the cost of other health-related bills, like the looming Medicare doctors' pay fix that Congress must deal with by the end of the year.

"It certainly has been raised in my caucus," Rep. Allyson Schwartz, D-Pa., said in an interview.

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HHS drops controversial long-term care program

Meghan McCarthy — Fri, 14 Oct 2011 00:00:00 -0400

The Obama administration has given up on a controversial long-term care insurance program called the CLASS Act, Health and Human Services Secretary Kathleen Sebelius said on Friday.

Sebelius told Congress she did not see a way forward for the program, which Senate appropriators had cut off funding for in September. Republicans have strongly opposed the program.

"...despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time," Sebelius wrote.

The controversial insurance program, established under the 2010 health reform law, had been on indefinite hiatus. Staff at the CLASS office within HHS were reassigned last month. Senate Democrats removed all funding for CLASS in the Labor-Health and Human Services 2012 spending bill because program "implementation has been delayed." The program was originally intended to start collecting premiums in October 2012.

Sebelius has said changing the income and premium levels, among other items, set in the health care law to make the program solvent are potential fixes. But critics say the department would need legislation to make those changes.

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National health program triples in size

Meghan McCarthy — Thu, 13 Oct 2011 00:00:00 -0400

The National Health Service Corps, which received $1.5 billion in funding from the 2010 health care reform law, has increased from 3,600 clinicians in 2008 to more than 10,000 this year. Significant funding from the health care law, the 2009 stimulus bill, and fiscal 2011 dollars helped increase the size of the loan-repayment and scholarship program.

"When you don't have access to primary care, small health problems grow into big ones," Health and Human Services Secretary Kathleen Sebelius said on a conference call. "Most of these providers graduate with tens or even hundreds of thousands of dollars in loans, and it is very difficult to pay off while doing this important work."

Since 2008, HHS has awarded 5,418 loan-repayment awards, totaling $253 million, and 247 scholarships, which cover tuition, totaling $46 million. HHS estimates that the increase in the program will deliver care to an additional 7 million Americans.

Even with the growth in the program, Health Resources and Services Administration chief Mary Wakefield said there are underserved areas of the country that qualify for National Health Service Corps members, but there is not enough money to fund providers there.

"It is a significant challenge," Wakefield said. "We have more sites that are designated or eligible than we have clinicians. We also have, on the flip side, more students applying to National Health Service Corps than we have availability" of funding, Wakefield said.

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Lawmaker wants HHS to take closer look at doctor pay

Meghan McCarthy — Tue, 29 Mar 2011 00:00:00 -0400

McDermott is slated to introduce legislation this week that would strengthen Section 3134 of the law, which requires the Health and Human Services secretary to "periodically" review specific Medicare reimbursements for certain procedures. McDermott wants to make that an annual process for HHS, and require the agency to use its own data to determine how much doctors should be paid.

As of now, a board of physicians organized by the American Medical Association holds closed-door meetings every five years to make recommendations to the Centers for Medicare and Medicaid Services on how much Medicare should pay for certain procedures. CMS adopts nearly 90 percent of recommendations made by the group, known as the Relative Value Scale Update Committee, or more commonly, RUC.

The group has faced criticism that some doctors have a keen interest in updating codes for treatments that are underpaid, but little incentive to overhaul -- and ultimately reduce -- payments for care where the cost has dropped thanks to technological advances. The independent board that advises Congress on Medicare payments, MedPAC, has called for CMS to strengthen its expertise in physician payments since 2006.

The AMA is sure to oppose the legislation. On Monday, RUC Chairwoman Barbara Levy wrote in Kaiser Health News that the RUC has "has stepped up its efforts to address any misevaluation" of certain treatments.

But some doctors' groups are already on board. The American Academy of Family Physicians and the Society of General Internal Medicine are backing the legislation. No surprise there, as primary doctors have long contended that their services lose out in the RUC process when compared to specialty physicians.

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Gates, Clinton can't predict when U.S. role in Libya ends

Meghan McCarthy — Mon, 28 Mar 2011 00:00:00 -0400

The president's top foreign officials on Sunday said unrest in Libya posed no imminent threat to national interests, and were unable to answer exactly how long the U.S. mission in Libya would last.

Defense Secretary Robert Gates and Secretary of State Hillary Rodham Clinton hit the Sunday talk shows one day before President Obama is slated to address the nation, but their interviews left many basic questions for Obama to answer: How long will the mission in Libya last? What is the mission? And what exactly is the endgame for the U.S.?

The officials' comments came hours before NATO officially agreed to take command of operations in Libya, the State Department announced Sunday.

On the ground in Libya, meanwhile, the rebel forces pushed the troops loyal to Libyan dictator Moammar Gadhafi back, taking Brega and nearly recapturing Ras Lanuf. Both places are important because of oil refineries there, media reported.

When pointedly asked on ABC's This Week if the Libyan mission would end by the end of the year, Gates said he did not believe anyone knew how long the mission in Libya would last, despite reports that officials within the Pentagon believe the mission could last several months or longer.

"I don't think anybody knows the answer to that," Gates said.

Gates also said the Libyan invasion was not a "vital national interest" to the United States, but said the future of Libya was key to successful democratic revolutions in other Middle Eastern countries.

"It was not a vital national interest to the United States, but it was an interest…you had a potentially significantly destabilizing event taking place in Libya that put at risk potentially the revolutions in both Tunisia and Egypt," Gates said.

The point that Libya was not a military threat to the United States may be obvious, but Gates's statement could open up a new line of attack from Republicans.

Sen. Dick Lugar, R-Ind., the ranking member on the Senate Foreign Relations Committee, questioned that exact point Sunday.

"I don't believe we should be engaged in a Libyan civil war. The fact is we don't have particular ties with anybody in the Libyan picture. It is not a vital interest to the United States," Lugar said on NBC's Meet the Press. "American interests are not at stake," he said.

Another emerging Republican argument contends that U.S. military involvement with Libya must continue until Gadhafi is removed.

Former National Security Adviser Stephen Hadley and former National Security Agency Director retired Gen. Michael Hayden, both officials under the George W. Bush administration, said the removal of Gadhafi must be the ultimate U.S. goal in Libya, or the country will risk destabilizing the region and the prestige of the United States.

"That was the informal contract," Hayden said. "We're in this until he goes away.

"If we fail in Libya, we will teach Bashar Al-Assad and leaders in Tehran: if you kill enough of your own citizens, you stay," Hayden said. "Maybe the most important thing we can do in Syria is to succeed in Libya."

Former Defense Secretary Donald Rumsfeld echoed that point Sunday.

"I think the goal has to be that Gadhafi leaves. My personal view is that once you're involved, you have to recognize the prestige of the United States is at stake," Rumsfeld said on ABC's This Week.

But Gates said the ultimate U.S. military mission did not include the removal of Gadhafi, because regime change can be "very complicated."

"What you're seeing is the difference between a military mission and a policy objective," said Gates on CBS. "You don't, as a military campaign, set as a mission something you can't achieve," Gates said.

Democratic Sen. Carl Levin of Michigan, the chairman of the Senate Armed Services Committee, also deflected statements that the U.S. role in Libya would not end until Gadhafi is removed from office.

"It depends on the circumstances that exist at that particular time," Levin said on CNN's State of the Union. "There are other means of removing Gadhafi besides militarily."

Clinton was pushed on her and President Obama's opposition, when they were both in the Senate, to former President George W. Bush's invasion of Iraq without seeking congressional approval.

"We would welcome congressional support," Clinton said. "But I don't think this kind if internationally authorized intervention…is the kind of unilateral action that either I or President Obama were speaking of several years ago."

Congress has not authorized the Libyan military action. Levin is holding a hearing in the Senate Armed Services committee Tuesday on the Libyan mission.

Despite violent retaliations by Middle Eastern dictators against their own people, Clinton said the United States is not planning a military role similar to the mission in Libya.

"Each of these situations is unique," said Secretary of State Hillary Rodham Clinton on CBS' Face the Nation, after saying the U.S. is not going into Syria or other Middle Eastern countries.

"Certainly we deplore the violence in Syria," Clinton said, "but the situation in Libya…the international community moved with great speed, in part because there's a history here."

Clinton defended the U.S. role in Libya by saying no policy position is perfect.

"Every decision that we make is going to have pluses and minuses," said Clinton.

"Imagine we were sitting here and Bengazi had been overrun and tens of thousands of people had been slaughtered…the cries would be 'Why did the United States not doing anything?'"

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Short-term funding measures have agency budget officials finding ways to save

Meghan McCarthy — Mon, 28 Mar 2011 00:00:00 -0400

As Congress inches its way closer to a final deal -- or a government shutdown -- over 2011 spending, federal agencies have already been forced to make do with less and prepare for the worst.

Thanks to the three short-term government funding bills that have passed since the start of fiscal 2011, federal agencies have been required to fund their year-long budget in pieces, instead of planning for a full year of spending. That means agency budget officers have had to be conservative with their funds, in some cases holding off on hiring new employees to fill vacancies and slowing down grants or other contracts that require up-front government funding. The latest funding bill expires on April 8.

Douglas Holtz-Eakin of the conservative American Action Forum, who served as head of the Congressional Budget Office from 2003 to 2005, said that in his own experience, short-term funding bills meant that he could not hire new economists at CBO.

Prior to the full-year spending legislation, Holtz-Eakin said the environment was too unpredictable to make a new hire. But by the time the office did get full funding for the year, the regular season for hiring economists had passed.

"The trouble is, your hands are really tied," Holtz-Eakin said. "It is a real sclerosis to the system. If you are worrying about a future cut, you have to be pretty confident to spend that money."

Agency-level financial planners are typically very conservative with their funds, said one former agency budget director. They do not spend in anticipation of an increased budget, and will start finding places to make room in the budget.

If the agency is personnel-heavy -- for example, the Social Security Administration has 68,000 employees -- then budget planners can find extra federal dollars by not filling vacancies. If the agency primarily doles out cash to contractors or grantees, they can slow down the amount of money distributed. For example, in past budget crunches the National Institutes of Health has slowed down the release of funds through research grants.

The former budget officer also said agencies try to make the best use of any leftover, year-end funds in their budget, buying whatever supplies or equipment they can to make it through the next year's funding cycle.

Agencies also get guidance from the White House on what to do during a short-term funding cycle. The Office of Management and Budget is tasked with doling out the funds each agency gets from Congress, and they issue a letter to agency heads whenever a short-term funding bill is passed to explain exactly how much they can spend.

In September 2010, OMB directed agencies to spend only a chunk of their 2011 funds, divided by the number of days the short-term spending bill covers. Should an agency need more money -- say, for a multimillion dollar contract that requires upfront financing from the government-the agency must write to OMB for permission.

"Only a very limited number of written… requests are expected to be granted," OMB Acting Director Jeffrey Zients advised in his letter to the agencies.

In August of 1995, then-OMB Director Alice Rivlin wrote to the heads of federal agencies just three months before the first government shutdown of that year, offering more detailed advice on how to prepare for lower-than-expected funding.

"You have the full range of management tools at your disposal, including reductions in procurements or service contracting, furloughs, and reductions in force," Rivlin wrote.

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HHS regulations follow Obama waiver endorsement

Meghan McCarthy — Fri, 11 Mar 2011 00:00:00 -0500

The Department of Health and Human Services rolled out proposed regulations Thursday laying out exactly how states can apply to get a waiver from major pieces of the health care law, including state insurance exchanges and a requirement that individuals buy health insurance.

The HHS announcement comes just over two weeks after President Obama backed bipartisan legislation from Sens. Ron Wyden, D-Ore., and Scott Brown, R-Mass., to move the waiver date in the law from 2017 to 2014. Obama's announcement was widely characterized as an effort to soothe state governors' concerns over the cost of Medicaid eligibility requirements enshrined in the health law.

While the regulations released Thursday do not specifically apply to Medicaid eligiblity, they do leave room for states to jigger the "essential benefits" package insurance companies must offer to qualify for state insurance exchanges. Exactly what benefits are "essential" has yet to be determined by the federal government. The Institute of Medicine is now studying how HHS should select which treatments to include.

"States could demonstrate an alternative package of benefits," said HHS's Steve Larsen, who heads the agency's office overseeing insurance regulation and state exchanges. "We're not at the point where we're going to speculate exactly how that would happen, but we really are looking for states to innovate."

The proposed rules would require states wanting waivers to first pass a law that codifies their health overhaul plans. States would then go to HHS Secretary Kathleen Sebelius and prove through actuarial certificates their plans would provide coverage that is as comprehensive and affordable as those offered on insurance exchanges, cover at least as many people as the federal government plan, and not increase the federal deficit.

If states qualify for a waiver, they will have to submit quarterly and annual reports to HHS tracking how many people are covered, how affordable and comprehensive coverage is, and the impact of the federal deficit.

"The proposed rules lay out the steps states would need to take to allow states to get innovation waivers," said Larsen. "It closely tracks the legislation language and sets out the general rules of the road."

HHS was careful to emphasize that insurance companies could not use the waiver process to wriggle out of certain health law requirements, like a ban on lifetime limits on coverage or providing preventive care without cost sharing.

"It's important to keep in mind that Americans will continue to be protected from the worst insurance company abuses," said Chiquita Brooks-LaSure, director of coverage policy in HHS's Office of Health Reform.

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Tragedy brings focus on mental health agencies

Meghan McCarthy — Mon, 10 Jan 2011 00:00:00 -0500

The Arizona shooting has focused national attention on the state of mental health care in the United States, and whether government agencies do enough to aid mentally ill people who may become a danger to others. The timing of the attack is coincidental, coming as the House was slated to vote to repeal the health care law this week, which would substantially expand mental health services.

Suspect Jared Loughner has been categorized as "mentally unstable" by law enforcement officials in the wake of the attack on Rep. Gabrielle Giffords, D-Ariz., and constituents gathered at a Tuscon grocery store Saturday. Reports say Loughner was kicked out of Pima County Community College in October after a series of disturbances frightened classmates and instructors.

Although little is known about whether Loughner received any mental health services and if government agencies failed to get him help, Mental Health Association CEO David Shern says the health care law Republicans are working to repeal would bring improvements to potential care.

Shern said last year's overhaul strengthened a 2008 law that required employee-sponsored insurance to give equal coverage for mental health treatment, but it does not apply to employers with fewer than 50 employees. The health care law goes further, requiring plans on insurance exchanges that are slated to open in 2014 and potentially be open to employees at businesses with fewer than 50 employees, to provide equal coverage to mental health issues.

"When exchanges are operating, it will increase mental health coverage availability to individuals who will need them," said Shern. "It's a piece of good news [that will] ultimately be helpful in the long term."

The law also requires insurance companies to provide preventive care free-of-charge for beneficiaries, including mental health screenings, which Shern says would vastly improve the identification of mental health problems, especially among teenagers who Shern says often go untreated for years.

Another provision of the health care law that could expand mental health treatment is the elimination of lifetime limits for insurance plans. Phoenix-area licensed professional counselor Lisa Bravo said severely mentally ill people can easily "cap out" on their policies.

While mental health services are generally administered on the state level, the federal government plays a significant role through the Medicaid program. The health care law substantially expands the Medicaid program in 2014, expanding it to include people at 133 percent of the federal poverty line.

In Arizona, that expansion could be key, as the state cut mental health services not funded by the federal government last year in an effort to eliminate budget deficits.

"We're just reeling from the withdrawal of services," said Phoenix-area lawyer Charles Arnold, who litigated a case challenging the lack of mental health services provided in Arizona for nearly 30 years.

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HHS shifts new health insurance oversight office to CMS

Meghan McCarthy — Thu, 06 Jan 2011 00:00:00 -0500

Health and Human Services Secretary Kathleen Sebelius sent a letter on Wednesday to House Appropriations Committee Chairman Hal Rogers, R-Ky., informing Congress of the department's decision to move a new insurance regulatory office, created under the health care law and called the Office of Consumer Information and Insurance Oversight, from HHS to the Centers for Medicare and Medicaid Services.

Sebelius said the OCIIO shift happened because CMS has the "best resources, in terms of expertise and administrative processes, to achieve successful implementation." But it could also help protect the newly created office from Republican House appropriators who want to defund key parts of the law.

The insurance regulatory office is at the crux of the largest provisions of the health care law. It is tasked with enforcing new insurance market regulations, including rules requiring insurance companies to spend the large majority of premium dollars on medical care and determining if premiums are ultimately "unreasonable." The office is also responsible for establishing insurance exchange regulations and ultimately providing oversight to the exchanges.

Given OCIIO's key role in implementing and monitoring the overhaul effort, it is a top target for Republicans who want to dismantle the law by defunding implementation.

House Republicans have scheduled a vote on Wednesday to repeal the law in its entirety. Although they likely have the votes to send it to the Senate, the bill will die there. Key Republicans have said they will also pursue a plan to dismantle the law using all the tools at their disposal, including the power of the purse.

The vast majority of HHS' annual budget flows to CMS to pay claims for Medicare and Medicaid. In 2010, 85 percent of the $879 billion HHS budget went to fund both government health care programs. The large mandatory accounts under CMS could make it easier for administration officials to find funds for OCIIO in the CMS budget versus the HHS operating budget, giving the office greater protection from Republican appropriators.

But the move also gives OCIIO greater political cover. Republicans might be wary of cutting a large chunk of money from CMS, lest they be pegged for doing what they criticized Democrats for doing during the debate over the law-cutting the Medicare program.

An HHS official said the move is being made to streamline the agency by using existing structures instead of creating new bureaucracies. The department also announced Wednesday that the office in charge of implementing the long-term care provisions of the health care law would be moved into the Administration on Aging.

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Congress overhauls federal food safety efforts

Meghan McCarthy — Wed, 22 Dec 2010 00:00:00 -0500

The House voted in favor of the legislation, 215-144, after the Senate unexpectedly approved the bill by unanimous consent on Sunday. Against all odds, the measure is now on its way to the president's desk.

"This victory has been a long time coming--almost a century, in fact," said Sen. Tom Harkin, D-Iowa, who shepherded the bill through committee and on the Senate floor. "It's been that long since our food safety system was last updated."

The Senate originally passed the food safety bill in November on a 73-25 vote after weeks of opposition from Sen. Tom Coburn, R-Okla. But the House objected to the measure, contending that it included fees that violated the Constitution's requirement that all revenue-raising legislation originate in the lower chamber. The House twice sent back corrected language to the Senate, on one occasion attaching it to a yearlong continuing resolution and on another to the omnibus spending package; but both pieces of legislation were scuttled in favor of a shorter-term funding bill.

On Sunday, however, Senate Majority Leader Harry Reid was able to pass the updated bill by unanimous consent, within a House vehicle.

Most interest groups lauded passage of the legislation, which for the first time gives the Food and Drug Administration the authority to order a recall of tainted food. Currently, the FDA must ask producers to pull tainted products from the shelves.

"Americans sitting at their dinner tables should have greater confidence that their food will be safe when this long-overdue law is put into place," said Shelley Hearne, managing director of the Pew Health Group.

But the United Fresh Produce Association, a lobbying group, said it had a "mixed reaction" to the legislation because it included an amendment that gives some exemptions to certain small farms.

"We remain fearful that this profound error will come back to haunt Congress, public health agencies, and even those who thought they would benefit from food safety exemptions," said Robert Guenther, United Fresh's senior vice president for public policy.

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Senate Republicans block 9/11 health bill

Meghan McCarthy — Thu, 09 Dec 2010 00:00:00 -0500

Republican senators held together Thursday to defeat a measure to provide extra funds to treat first responders sickened after working in rescue efforts after the September 11, 2001, terrorist attacks, voting down a cloture motion, 57-42.

Senators from New York and New Jersey blasted Republicans' votes against the measure, calling their tax legislation priorities misguided. All 42 Senate Republicans have vowed to object to all legislation until tax-cut and government-funding bills are passed.

"Frankly, it's exactly what's wrong with Washington -- an example of politics put above people," Sen. Kirsten Gillibrand, D-N.Y., said after the vote.

"To me, it is morally reprehensible that there is somehow an equivalency between a tax vote and an excuse for not voting on this," said Sen. Robert Menendez, D-N.J.

But the tax vote is not the only obstacle in the bill's path. Republicans in the House and Senate have opposed the legislation, calling it an unnecessary new entitlement program.

The vote is likely the last the bill will get in the 111th Congress, and the outcome effectively kills the legislation because the new House Republican majority is not expected to take it up next year. Nevertheless, Sen. Chuck Schumer, D-N.Y., vowed to "pursue every possible route" to passage before the Senate leaves next week, and he did not rule out trying to attach the bill to must-pass legislation.

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Senate Republicans vow to block financial services spending bill

Meghan McCarthy — Mon, 20 Sep 2010 00:00:00 -0400

A group of Senate Republicans have told their leadership they will block consideration of fiscal 2011 Financial Services Appropriations legislation if a pharmaceutical "pay-for-delay" amendment that Senate appropriators attached to the spending bill isn't stripped out of the measure.

In a letter sent to Senate GOP leaders Friday, Republican Sens. Jeff Sessions of Alabama, Tom Coburn of Oklahoma, John Thune of South Dakota, and John Cornyn of Texas said the inclusion of the amendment in appropriations legislation "is a gross breach of Senate custom," because the Judiciary Committee considered similar legislation in October.

The Senate Appropriations Committee approved the Financial Services bill July 29 on a party-line vote of 18-12, with all Republicans voting against the measure.

The pharmaceutical provision seeks to prevent brand-name and generic drug manufacturers from agreeing to settlements that essentially trade cash for promises that generic drug firms will not challenge brand-name drug patents for a set period of time.

It is similar to legislation by Sen. Herb Kohl, D-Wis., which nearly all Republicans on the Judiciary Committee opposed last year. The Congressional Budget Office has estimated the Kohl language would save the government $2.6 billion over 10 years by allowing generic drugs to enter the market sooner, thereby reducing Medicare and Medicaid pharmaceutical spending.

Kohl's "pay-for-delay" legislation has been considered most recently in the House when it passed a version of the fiscal 2010 war supplemental on July 1. House Democrats swapped their proposal prohibiting all deals between brand-name and generic firms in favor of Kohl's legislation, which doesn't ban the agreements, but establishes a legal presumption in any Federal Trade Commission proceeding that any deal to limit the release of a new drug is anticompetitive and illegal.

Kohl's measure would give companies the opportunity to prove to the FTC, with clear and convincing evidence, that the agreement would benefit industry competition.

But the legislation never made it to the Senate floor as part of the supplemental, and a similar provision also was stripped from the Senate's healthcare overhaul bill.

The Senate Republicans opposed to having the amendment in the Financial Services spending bill said they did not believe the FTC could successfully mediate the conflicting interests of the generic and brand-name drug manufacturers.

"We believe that the reported bill gives excessive power over such settlements to the FTC," they said, "and that the bill would do serious violence to the Hatch-Waxman process for the market entry of generic drugs."

Despite objections, it is unlikely any individual non-national security appropriations measures will make it the Senate floor before a continuing resolution is needed by the start of the new fiscal year Oct. 1 to pay for government operations.

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GAO sees improvement in CMS competitive bid process

Meghan McCarthy — Wed, 15 Sep 2010 00:00:00 -0400

Two years after Congress stepped in to stop a flawed Medicare competitive bidding program for durable medical equipment, the Government Accountability Office is expected to tell a House committee on Wednesday that HHS has improved the bidding process.

But medical equipment firms and hospitals are warning lawmakers that the program will have an adverse impact on businesses, jobs and patients.

At a House Energy and Commerce hearing on Wednesday, GAO's Health Care Director Kathleen King plans to report that the Centers for Medicare and Medicaid Services has made positive changes to the durable medical equipment program since the agency's 2009 report on the flawed bidding process.

"Problems were identified in the [first round] bidding process in providing suppliers with bid submission information, but some improvements were made in the [rebid] process," King says in prepared testimony obtained by CongressDaily.

CMS now pays for durable medical equipment, which includes hospital beds, walkers and wheelchairs, on a fee schedule based on 1986 prices that are adjusted for inflation. GAO and the HHS inspector general have found that this payment system leads Medicare to overpay for equipment, sometimes by an estimated three to four times over retail cost.

In 2003, Congress required CMS to implement a competitive bidding program for durable medical equipment and in March 2008 the agency awarded contracts to bid winners. But after reports of a flawed bidding process, Congress delayed the 2008 contracts and ordered CMS to repeat the process the following year.

On July 1, CMS announced 1,300 bids were offered as a result of the 2009 rebidding process, with contract awards expected to be announced in the coming weeks.

Some of the improvements made by CMS include providing interested bidders with application information before the bid-window opening, clearer instructions on what financial documents were needed, and a process that notified applicants if they were missing necessary documents. GAO also found that CMS implemented a more successful electronic bid-submission system, and planned to notify applicants who did not win bids of what had specifically disqualified them.

But interest groups have concerns over the competitive bidding process despite the improvements, especially as the program is slated to operate throughout the entire country by 2016, as stipulated by the recently enacted healthcare overhaul law.

Testimony from Karen Lerner of Allcare Medical, a New Jersey-based home medical equipment company, warns lawmakers that competitive bidding will lead to the loss of thousands of jobs and the disruption of enrollee's access to necessary medical equipment.

Some of the potential problems with the process highlighted by Lerner include the potential for speculative "low-ball" bids that will increase once contracts are awarded, and the difficulty of issuing a rational bid without guaranteed volumes from CMS.

Hospital groups also expressed concern that hospital-based durable medical equipment suppliers will not be able to win bids, limiting their ability to coordinate with in-house suppliers to quickly move patients out of the hospitals and home with the right equipment.

Former House Energy and Commerce Chairman John Dingell, D-Mich., introduced a bill in August to exempt hospital-based durable equipment suppliers from competitive bidding programs.

"We are willing to accept the pricing determined by competitive bidding, but we question the wisdom of a rule will prevent our ability to own and control post-acute care as a strategy to improve care and reduce costs," Nancy Schlichting of the Henry Ford Health System says in testimony prepared for the hearing.

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Senators call for improved Medicaid oversight

Meghan McCarthy — Thu, 05 Aug 2010 00:00:00 -0400

Senate Finance Committee leaders Wednesday called on the Centers for Medicare and Medicaid Services to improve oversight of how states determine payment rates for their managed Medicaid programs, after a Government Accountability Office report found that CMS was inconsistently reviewing if the payments were actuarially sound.

"To protect Medicaid, we need to ensure states are paying an appropriate price for the benefits private plans deliver. This report makes clear that we don't have enough information to guarantee that prices are accurate and that Medicaid is protected," said Finance Committee Chairman Max Baucus, D-Mont., who called on CMS to be more aggressive in their oversight.

Finance ranking member Chuck Grassley, R-Iowa, agreed.

"Medicaid could be overpaying in some cases and underpaying in others," Grassley said. "CMS isn't checking behind adequately to know either way. In a program that spends hundreds of billions of dollars, that's a problem. "

In Medicaid managed care programs, states contract with health plans to pay a fixed monthly rate per enrollee that covers most health services. Since 2002, CMS has had a rule requiring states to document how they set plan payment rates and have an actuarial certification of rates.

GAO's findings are significant in the run-up to implement the healthcare law, as Medicaid is expected to provide insurance coverage to an estimated 16 million adults and reduce the number of uninsured, low-income Americans by 45 percent by 2019. Nearly half of Medicaid enrollees, over 20 million people, were covered under managed care programs in 2008, and the managed care plans garnered $62 billion in federal and state spending in 2007.

The GAO report, which was mandated in the 2009 Children's Health Insurance Program reauthorization, found Tennessee's managed care Medicaid rates had not been reviewed by CMS for several years, despite receiving $5 billion a year in federal funds. GAO also found that CMS had never fully reviewed if Nebraska's rates were actuarially sound since the agency required states to document such information.

For Medicaid Health Plans of America CEO Thomas Johnson, GAO's report confirms concerns the group, which represents a national coalition of Medicaid health plans, has had for nearly a decade.

"We would like to see more transparency and consistency," in the ways states determine what to pay managed care plans, said Johnson, "especially given the fiscal pressures that states are under."

"CMS really took a hands-off approach," to oversight of the states' rate-setting processes, said Johnson, but he noted that his organization wanted to move forward to improve the existing system.

CMS largely agreed with GAO's findings and said the agency was working to address problems.

"By the time GAO had initiated this review, CMS had identified these inconsistencies as a concern, and had begun developing a plan for corrective action," CMS' Andrea Palm said in a letter responding to GAO's report.

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Key Dems criticize HHS reshuffling of public health fund

Meghan McCarthy — Thu, 17 Jun 2010 00:00:00 -0400

Health and Human Services Secretary Kathleen Sebelius drew criticism from key Democrats on Wednesday after the agency announced that $250 million from a public health fund established in the healthcare overhaul law would be used to increase the physician workforce.

While lawmakers and interest groups acknowledged that addressing a shortage of primary care physicians was important, they also said they were disappointed with the agency's use of half of the $500 million appropriated to the prevention fund in 2010 for purposes they say were not the intent of the law.

"We need to do prevention and we need to do workforce, but we had an agreement," said House Energy and Commerce Committee Chairman Rep. Henry Waxman, D-Calif., explaining that funds originally intended for the workforce title of the law got lost in the shuffle of bills between the House and Senate in the reconciliation process used to pass the legislation.

"I don't like the idea that there should be a scramble for funds when we had a pretty clear idea that we were going to use them for different purposes," said Waxman.

"Prevention and public health, as well as manpower, are things we need to support, not have them compete against the other the way it appears the way they're doing now," he added.

Senate Health, Education, Labor and Pensions Committee Chairman Tom Harkin, D-Iowa, agreed that the workforce programs were not an ideal implementation of the funds.

"Well, I don't like it, but I understand what they're doing. It's a one-time shot," said Harkin, who said he would make sure prevention funds would not be used for the physician workforce in the future.

Trust for America's Health Executive Director Jeff Levi said HHS' use of the money was not the intended purpose of the prevention funds.

"While increasing the primary care workforce is important, the goal of the prevention fund was to start early, so more people could enter the reformed system healthy," said Levi. "HHS' use of this money may be within the letter of the law, but it is not the intent of the law."

Levi also said HHS' use of half of this year's prevention funds would mean that prevention efforts would have to "do more with less."

"We were hoping to overcome that tradition in public health prevention efforts with this fund," said Levi.

HHS said the $250 million would be used to train 500 new primary care physicians and 600 new physician assistants by 2015, in addition to funding nursing education and grants for state health departments.

Sebelius said increasing the primary care workforce was a "personal priority" of President Obama, and putting the funds to this effort would be a "quick but critical investment" in improving the healthcare system.

Rep. Lois Capps, D-Calif., helped Sebelius introduce the workforce initiatives.

"This critical investment will help alleviate the current shortage of primary health care providers, including physicians, physician assistants and nurses," said Capps.

Robert Pestronk, executive director of the National Association of County and City Health Officials, said the public health workforce was also shrinking, losing 15 percent of the workforce in 2008 and 2009.

"The same funding could have been applied to creating workers in the public health workforce," said Pestronk, who noted that the purpose of public health work is to "prevent disease from happening in the first place," as opposed to treating already existing illness.

"Within the primary care workforce, patients tend to see physicians when they are ill, and a smaller portion of the time is spent on preventing disease," said Pestronk.

HHS officials couched the use of the prevention fund to build the primary care workforce as targeting money to workers on the "front line" of prevention efforts.

"We actually think the primary care workforce certainly aligns with prevention," said Health Resources and Services Administration Administrator Mary Wakefield.

Levi said his group had assurances this would be the only time the agency would use prevention funds for the primary care workforce, signaling that HHS is struggling to find money for the myriad programs authorized, but not appropriated any funds, in the healthcare law.

Sebelius told the House Labor-HHS Appropriations Subcommittee in April that the administration would not request additional funds in 2011 to implement the healthcare law. The Congressional Budget Office estimated the agency would need as much as $2 billion a year over the next 10 years to cover the cost of implementation.

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HHS chief plugs government health data

Meghan McCarthy — Wed, 02 Jun 2010 00:00:00 -0400

Health and Human Services Secretary Kathleen Sebelius urged federal and local leaders and technology experts on Wednesday to use the agency's extensive health data to create tools that would help individuals and health care providers improve choices and hold the government, including Congress, accountable for the nation's health outcomes.

"These initiatives are aimed at giving Americans and their health care providers more control over their own health care decisions. That's where health reform meets open government," said Sebelius, who emphasized that transparency was a priority for the Obama administration.

She spoke at the Community Health Data Initiative, a group started by HHS and the Institutes of Medicine, which made public the agency's vast accumulation of data on the national, state, local, and hospital level. It covers a variety of topics, including smoking and obesity rates, access to healthy food, utilization of medical services, and quality of hospital treatments.

The first HHS data sets were released by an HHS and IOM working group in March, and several products developed from that information were demonstrated at the forum, with Sebelius in the audience. Presentations included one using Microsoft's Bing search engine, which displays HHS information on hospital quality and patient satisfaction when users search individual hospitals, and a data visualization tool from Palantir Technologies, which layers information from various government sources and could allow users to track federal grants to see whether they are going to the neediest populations or having a measurable impact.

The new tools could help the agency fulfill one duty required by the health care overhaul: to develop a public-private campaign for wellness and prevention that would cost up to $500 million.

The forum also comes amid a push in Congress to add more transparency to the health system by requiring providers to list the price of their services. The House Energy and Commerce Committee held a hearing in May on several bipartisan bills that would require price transparency.

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Young adults might have to wait for health care coverage

Meghan McCarthy — Mon, 24 May 2010 00:00:00 -0400

In the midst of college graduation season, health insurance experts warned Monday that many employers will not be prepared to offer coverage to dependents up to age 26 before 2011, despite insurance companies' early commitment to provide that coverage this year.

"For young adults who are graduating this spring, it's really important to go to your employers and see if they are starting this right off the bat, and when their enrollment year begins," said Sara Collins, an economist at the Commonwealth Fund.

While insurance companies are required by the health overhaul law to offer coverage for dependents as old as 26 on their parents' plans after Sept. 23, Collins said the availability of coverage would depend on when an employer's enrollment period begins.

"It will likely be later than that," said Collins, referring to the September deadline.

Roland McDevitt, healthcare research director at consulting firm Towers Watson, agreed that the reality of coverage for dependents this year is unlikely.

"The detail that most people don't understand is all the administrative enrollment stuff that's behind a large employer's health plan is actually typically done by the employer, not the health plan," said McDevitt, who explained that employers are responsible for determining how to enact many provisions of the requirement, including whether to offer dental and vision coverage, which is not mandated under the healthcare law.

McDevitt said few of his clients were likely to start offering coverage to dependents under 26 before their 2011 plan year begins. He warned that many small- and medium-size businesses may not be ready to handle the administrative requirements of implementing the law.

"I suspect that group is not as well prepared to sort of plan for all these administrative issues," said McDevitt.

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