February 18, 2005

TO: Board of Directors

FR: Kevin J. Burke
Director, Division of Government Relations

CC: Doug Henley
Todd Dicus
Rosi Sweeney

RE: State and Federal Legislative Update (Week of February 14)

On February 17 Health and Human Services Secretary Michael Leavitt testified before the House Ways and Means Committee and separately before the House Energy and Commerce Committee concerning the President’s FY 2006 budget request. During his testimony the Secretary stated that President Bush’s agenda includes promoting the dissemination of health information technology to support improved health care at a lower cost; implementation of the Medicare Modernization Act (MMA); and Medicaid reform. Energy and Commerce Chairman Joe Barton (R-TX) asked Secretary Leavitt about plans for oversight of the Food and Drug Administration (FDA), the National Institutes of Health (NIH) and the Center for Disease Control (CDC). Sec. Leavitt was very supportive of the FDA and said changes were being made at NIH to ensure compliance with federal regulations regulating when NIH researchers could receive private contracts.

The majority of concerns from both sides of the aisle were the Secretary’s plans to address intergovernmental transfers (IGT) under Medicaid. Representatives from states that heavily rely upon IGT such as California (Reps. Mary Bono [R-CA] and Henry Waxman [D-CA]) and New York (Rep. Eliot Engel [D-NY]) expressed distress over the Secretary’s plans to end IGTs. Secretary Leavitt was unyielding however, and explained it as a simple defrauding of the federal government which he intended to end using existing administrative authority.

During the hearing in the Ways and Means Committee, Rep. Kenny Hulshof (R-MO) requested that Secretary Leavitt investigate the CMS interpretation of existing graduate medical education payments to hospitals were not allowed where ambulatory residency programs depended upon voluntary preceptors. Later that same day, during the Secretary’s appearance before the House Energy and Commerce Committee, Rep. Greg Walden (R-OR) raised the same issue. Rep. Walden said the CMS policy directly threatened the family practice residency at a hospital in Klammoth Falls, Oregon, part of his congressional district. Secretary Leavitt said he would look into the matter.

On February 14, 2005, the National Rural Network convened a broad-based coalition interested in policy affecting rural communities. Approximately 35 different organizations were represented at the meeting; however, AAFP and National Rural Health Association were the only two healthcare organizations. The NRN led a discussion about President Bush’s budget for FY 06 and the rural programs that will be negatively impacted if it is accepted by Congress.

The NRN decided to create an information piece that will be shared with Congress and the public highlighting the risks to rural communities represented by the administration’s budget proposals. Accompanying this will be a compilation of one-pagers from interested NRN stakeholder organizations describing specific concerns and the organization’s position. The timetable for completion of this activity will be the first week in March.

On February 15, the White House announced that Acting FDA Commissioner Lester Crawford would be nominated as permanent administrator of the agency. However, Dr. Crawford, who has been criticized for passivity during the Chiron investigation and the resulting flu vaccine shortage, must appear before the Finance Committee in his confirmation hearings, which is chaired by FDA critic Sen. Charles Grassley (R-IA).

On February 16 and 17, the Senate HELP committee held hearings on the safety of drug importation. Witnesses included Surgeon General Richard Carmona, as well as Grant Aldonas, Undersecretary of Commerce for International Trade. Also on February 16, HHS Secretary Michael Leavitt announced the formation of a drug safety board within the FDA. The announcement was greeted less than enthusiastically by consumer groups and Democratic Senators who stated the new panel required more authority and independence. Key Republican Senator Grassley also indicated that he was drafting legislation to establish an independent drug safety panel.

On February 17, S 306, the Genetic Non-Discrimination Act, passed the Senate by a vote of 98-0. S 306 was introduced by Sen. Olympia Snowe (R-ME) and would prohibit discrimination on the basis of genetic information with respect to health insurance and employment. While the legislation passed the Senate during the last Congress, and was supported by the administration, it made no progress in the House of Representatives, due, in part, to the measure’s referral to three House Committees to the opposition of the Chamber of Commerce, among others.

Congress is in recess until February 28 for the Presidents’ Day holiday.

The Georgia Senate passed their tort reform measure which included a non-economic cap of $350,000, elimination of joint and several liability in all cases, stronger expert witness rules, and a severability clause so that if one or more sections of the bill are ruled unconstitutional, the other provisions will stand.

HB 2256, prescriptive authority for nurse practitioners, has completed the hearing. The committee has yet to take action on this bill.

HB 393, medical malpractice reform, was debated on the House floor this week, passed out of the House and was first read in the Senate on Thursday. The Senate is expected to refer the bill to committee early next week.

The state medical assistance program (Medicaid) is including language in provider contracts that will require physicians to provide Limited English Proficiency (LEP) assistance in their practice at the physicians’ cost. The contract language is included based on the state’s interpretation that LEP services are federally mandated. The academy is researching this issue and will determine what further action is required.