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During the session interim, the Legislative Hotline will be distributed monthly. In addition to state issues, we will include relevant information on federal and local affairs. The Legislative Hotline will return to a weekly distribution when Session resumes in January of 2006.

To view the legislative information below, click on the subject of interest to go directly to that area or scroll down to view the entire document.

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FEDERAL

Congress Wraps Up Spending Legislation
Labor--Health and Human Services FY 2006 Appropriations
DOD FY 2006 Appropriations

STATE

Legislative Leaders Recommend 8.9 Percent Budget Growth

LOCAL

Charles Commons

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STAFF CONTACT INFORMATION

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FEDERAL ISSUES

Congress Wraps Up Spending Legislation

While Congress was scheduled to complete its first session of the 109th Congress at the end of October, after several weeks of intense negotiations on budget cuts, hurricane relief, and drilling in Alaska, the House and Senate have adopted the $39.7 billion Deficit Reduction Act of 2005. The House passed the bill by a vote of 212 to 206. Before the final vote was taken in the Senate, a number of procedural motions (pursuant to the Budget Act�s Byrd Rule) were made that resulted in three provisions being deleted from the conference report. The final Senate vote, which had already been delayed several times and required Vice President Cheney to return from the Middle East to break the tie, adopted the modified bill by a vote of 51 to 50. Because of the three excised provisions, the House of Representatives must now vote on the measure once again. It is not known when that will take place. The removal of these three provisions was more a symbolic than an actual victory for Senate Democrats as it now necessitates another vote in the House � it has virtually no effect on the policies set out in the measure. Below are summaries of the major provisions included in the enacted bill.

Medicare
Overall, the budget reconciliation bill results in a net of $6.0 billion in reductions over the next five years, and includes several provisions for increased expenditures.

• Without congressional action, the Medicare Sustainable Growth Rate (SGR) formula would reduce physician reimbursements by 4.4 percent effective January 1, 2006. However, the conference report eliminates the cut for one year at a cost of $7.3 billion, holding reimbursement rates at the CY 2005 level.

• While the SGR will be held at the 2005 rates, the bill reforms payments for imaging services by reducing reimbursements for multiple images on contiguous body parts in 2006 and 2007. In addition, payment rates for imaging services delivered in physician offices may not exceed payment rates for identical imaging services delivered in hospital outpatient departments.

• The Senate version of the bill originally included a requirement for the Secretary of Health and Human Services to develop a Pay-for-Performance (P4P) program for physicians, hospitals, home health agencies, and End Stage Renal Disease facilities beginning in 2006. While the adopted conference committee report deleted the P4P requirements for physicians, the bill expands hospital quality reporting to include complications and co-morbidities upon admission, the addition of at least two hospital-acquired infections, and, beginning in 2007 quality reporting for home care.

• Medicare Advantage plans will see rate reductions totaling $6.5 billion over five years due to the elimination of the �budget neutral� requirement for risk adjusting, which will result in lower payments to plans with healthier patients. However, the bill removed the Senate language that would have also reduced the managed care incentive fund that was included in the Medicare Modernization Act.

• The bill creates a Medicare gain-sharing demonstration to evaluate gain-sharing arrangements between hospitals and other providers at up to six sites, beginning on January 1, 2007. A final report is to be submitted to Congress on the outcome of the project by May 1, 2010.

• The bill cuts durable medical equipment (DME) rates by $2.9 billion and provides that a Medicare beneficiary is to own certain items of DME after the 13th month of rental (for items for which rental begins after January 1, 2006) and for oxygen equipment after the 36th month of rental. Originally, the bill would have required beneficiaries to cover the costs of service and maintenance of DME, but this provision was eliminated.

• The bill freezes home care rates for 2006, resulting in a $2.2 billion reduction, but provides for a 5 percent add-on for rural home health agencies and a 1.6 percent update for ESRD facilities.

Medicaid
In addition to Medicare, the budget reconciliation bill includes $4.7 billion in net Medicaid cuts along with increased expenditures related to Hurricane Katrina, high-risk insurance pools, adjustments to state federal matching fund levels, and various grant proposals. The bill includes:

• $1.9 billion in reductions by allowing states to raise premiums and co-payments for physician visits, prescription drugs, and inappropriate usage of the ED. Maryland had attempted to levy a co-payment in FY 2005 for inappropriate usage of the ED for Medicaid patients. However, due to EMTALA and the definition of inappropriate usage, the State withdrew the co-payment requirement.

• Currently, under the Medicaid program states must provide a similar benefits package to all enrollees. Under the enacted bill, states will have greater flexibility to design benefits packages for adults, with anticipated savings totaling $1.2 billion. However, children, pregnant women, and other vulnerable patients will be exempt.

• $2.1 billion in savings will be achieved by altering the assets transfers for seniors who apply for Medicaid coverage from three years to five years. In addition to altering the look-back period, the bill changes the start of the penalty period from when the assets were transferred to when the patient applies for Medicaid.

• The bill reduces Medicaid costs by $805 million by encouraging states to enact State False Claims Acts. In addition, employers who receive more than $5 million in Medicaid reimbursements are to establish policies and procedures for employees regarding the federal False Claims Act, efforts for detecting and preventing fraud and abuse, and mandatory training of all employees regarding fraud and abuse.

• The bill makes several adjustments to prescription drug reimbursements and projects a $3.8 billion budget reduction. The changes include alterations to the federal upper payment limit for multiple source drugs, requiring the public disclosure of Average Manufacture Price, and requires the Inspector General to review, no later than June 1, 2006, the manner in which AMP is calculated.

Labor--Health and Human Services FY 2006 Appropriations

The original conference report failed to pass the House of Representatives, with a vote of 209 to 224 in November primarily due to (1) cuts in rural health and (2) the elimination of an expected $1 billion in member earmarks. The revised bill was approved by the House on December 14 (215 to 213), and the Senate on a voice vote as part of a package hammered out with the Defense appropriations bill. The Labor-HHS bill adopted is $1.5 billion smaller than last year�s bill, even before applying a 1% across the board budget reduction.

The revised conference committee report includes:

• NIH � an increase of $253 million, or 0.9 percent; note however, with the nearly 1 percent across-the-board cut included in the Defense Appropriations bills, NIH will receive less in FY 2006 than in FY 2005 before adjusting for inflation.

• Higher Education--the majority of the programs are funded at the FY 2005 levels and include several provisions that benefit students: a reduction of student loan origination fees; a new National Science and Mathematics Access to Retain Talent Grant (SMART) for undergraduate students; an increase to first- and second-year and graduate student loan limits; a simplification of the federal student need analysis test; the eligibility of graduate students to participate in the PLUS loan program. However, the bill also cuts a net total of approximately $13 billion from the student loan programs and potentially destabilizes the delivery of federal student aid because it transfers $600 million in administrative funds from the mandatory to the discretionary portion of the budget. Due to these actions, some members of the higher education community have asked the Senate to reject the conference report.

DOD FY 2006 Appropriations

The conference report (HR 2863) passed the House of Representatives at 5:04 a.m. on Monday December 19th, and provides a record $453.5 billion for the Defense Department. The Senate failed to invoke cloture (end the filibuster) by a vote of 56 to 44. The inclusion of language opening up the Arctic National Wildlife Refuge (ANWR) to drilling has generated a great deal of opposition in the Senate, necessitating the cloture vote. Majority Leader Frist changed his vote at the last moment and has entered a motion to reconsider, but in the end, the Senate removed the language regarding ANWR on Wednesday paving way for the passage of the conference committee report by a vote of 93-0.

Included in the conference report is $3.8 billion for avian flu preparedness, which is less than the $7.1 billion the President requested. The bill also includes a provision to provide liability immunity for vaccine manufacturers and creates an unfunded injury pool.

In addition, the conference report would fund science and technology (S&T) accounts at the Department of Defense at $13.4 billion, an increase of 2.6 percent over FY05. Within that total, basic research (6.1) would receive $1.49 billion. This is higher than the Administration�s request of $1.32 billion but represents a reduction of 1.5 percent from the FY05 level of $1.51 billion. Applied research (6.2) would receive $5.24 billion, an increase of more than 8 percent from the FY05 level of $4.85 billion. The Administration had requested $4.14 billion for 6.2 programs. These totals include congressional earmarks in the bill but do not reflect the 1 percent across-the-board cut in discretionary spending that has been added to the measure. This continues a trend within Defense S&T to shift resources away from basic research toward applied research and development.

Funding provided for the SMART/NDEP scholarship and fellowship program is $10.3 million, the same as the budget request and the House-approved level. Conferees rejected the additional $10 million for the SMART/NDEP program that was approved on the Senate floor in an amendment offered by Senators Edward Kennedy (D-MA) and Susan Collins (R-ME).

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STATE ISSUES

Legislative Leaders Recommend 8.9 Percent Budget Growth

On December 7, the state�s Spending Affordability Committee, consisting of General Assembly leaders, decided that the state can spend nearly $1.5 billion (8.9 percent) more next year on public services without raising taxes or using reserve funds. General fund revenue, mostly from income and sales taxes, is expected to grow to $12.2 billion, or 7.1 percent, in fiscal 2006, which ends June 30. In the next financial year, growth will slow but remain at a respectable 5.2 percent, bringing in $12.8 million to the state.

The increase in operating expenses is enough to fully fund the baseline budget, which covers all anticipated spending increases for education, state worker payroll, health care and other services. Additionally, General Assembly leaders expect Maryland to have enough money to boost its rainy-day reserve account by at least $250 million in the 2007 budget year that begins July 1.

The committee recommended that the state issue no more than $690 million in new general obligation bonds, which are used to fund large capital projects, a $20 million increase over the fiscal 2006 budget. The Governor�s office has not committed to the 8.9 percent growth rate because it may not be sufficient, according to their estimates, to pay for all the state�s needs.

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LOCAL ISSUES

Charles Commons

In September 2004, The Johns Hopkins University began construction of its mixed-use Charles Commons complex, located at Charles and 33rd streets. The $76 million facility will house 618 students, dining and conference facilities, a branch of the Johns Hopkins Federal Credit Union, and a full-service Barnes & Noble college bookstore open to the public. The project is being developed by College Town Development Alliance, a joint partnership of Struever Bros. Eccles & Rouse and Capstone Development, and is currently 60 percent complete, with opening scheduled for August 2006.

The project included a comprehensive 16-month community engagement component to help ensure its incorporation into the surrounding community. The complex has two student-housing buildings linked by a walkway/bridge over Lovegrove Street. The 12-story Charles Street building will have 100,000 square feet of space and features ground-floor retail facing 33rd Street. The St. Paul Street building will have 10 floors with 203,000 square feet of space including a student dining facility and the two-story bookstore. A coffee shop will also be included within the bookstore. Tax Increment Financing (TIF) is being used to fund significant streetscape improvements along adjacent streets. Charles Commons is designed to strengthen the existing community, as well as work with two other projects being undertaken by Struever Brothers; the redevelopment of the east and west sides of the 3200 block of St. Paul Street with ground-floor retail, upper-floor condominiums, and structured parking. Additional information, including a project webcam, can be found at http://www.charlesvillageprojects.com.

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STAFF CONTACT INFORMATION
Please contact the Government Relations staff if you would like additional information. Your input assists us greatly in evaluating and formulating the position of Johns Hopkins on all legislation.

Government, Community, and Public Affairs
Johns Hopkins Institutions
901 S. Bond Street, Suite 540
Baltimore, MD 21231
phone 443-287-9900
fax 443-287-9898

FEDERAL
Beth Felder	bfelder@jhu.edu
Jim Kaufman	jkaufma@jhmi.edu
Maggie McIntosh	mmcintosh@jhu.edu
STATE
Heather Barthel	hbarthel@jhmi.edu
Sheila Higdon	shigdon@jhmi.edu
Tom Lewis	tomlewis@jhu.edu
Bret Schreiber	bschreiber@jhu.edu
LOCAL
Deidra Bishop	dbishop@jhu.edu
Joseph Smith	josephsmith@jhu.edu
Salem Reiner	sreiner1@jhu.edu
Staff
Mickey Geisler	mgeisler@jhu.edu
Matthew Greenwood	mgreenwood@jhu.edu
Cathy Ximenez	cximenez@jhmi.edu