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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

Hospital Infection Investigation
Medicare and Medicaid Budget Cuts
Medicare Prescription Drug Plans

STATE

Academic Health Centers and MCOs
Capital Budget Requests
Legislature Begins Fiscal Briefings

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STAFF CONTACT INFORMATION

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FEDERAL ISSUES

Hospital Infection Investigation

Rep. Joe Barton (R-Texas), Chairman of the U.S. House of Representatives, Energy and Commerce Committee has sent letters to nine hospitals across the county requesting information on public reporting of healthcare associated infections (HAI) in hospitals. The Chairman�s letter notes that hospital HAIs account for an estimated 2 million infections, 90,000 deaths, and $4.5 billion in excess health care costs annually. In Pennsylvania alone, nearly 12,000 patients contracted hospital infections in 2004, costing an extra $2 billion in care and at least 1,500 avoidable deaths.

While five states have enacted legislation requiring disclosure of HAI rates, the House Energy and Commerce Committee�s investigation will focus on how some of the nation�s largest hospitals detect, monitor, and report HAI rates. Johns Hopkins was not one of the hospitals solicited for information.

Medicare and Medicaid Budget Cuts

Earlier this year, the FY 2006 Congressional budget called for $10 billion in reductions from the Medicaid program over five years. In addition, a Medicaid Commission was appointed to examine how to restructure the program. Meanwhile, Michael Leavitt, Secretary of the Department of Health and Human Services (HHS) has unveiled his own plan for achieving the projected savings. Both proposals include:

• prescription drug reimbursement formula reform and tiered co-payments,
• extension of the Medicaid drug rebate program to Medicaid managed care plans,
• changing the penalty for transferring assets and increasing the look-back period,
• restricting intergovernmental transfers,
• closing loopholes in provider tax provisions and limiting the tax to 3%,
• clarifying the definition of targeted case management and rehabilitation services, and
• reimbursing targeted case management services at 50% of administrative rate.

Beyond the original $10 billion in cuts, the impact of Hurricane Katrina relief efforts has prompted many in both the House and the Senate to call for additional reductions. Sen. Judd Gregg (R-N.H.), Chairman of the U. S. Senate Budget Committee, has called for $50 billion in additional budget cuts, with 75% or $37.5 billion coming from mandatory spending. Overall, Medicare cuts could be as high as $16.5 billion as Sen. Charles Grassley (R-Iowa), Chairman of the U.S. Senate Finance Committee looks to cut $8 billion from Medicare and other Senators are considering tapping into the $10 billion Medicare stabilization fund that was included in the 2003 Medicare Prescription Drug bill to help entice private health plans into the Medicare managed care market.

While additional budget cuts are likely in both Medicare and Medicaid, there has been discussion on plowing some of these savings back into other Medicare spending, such as physician payments. However, it is unlikely that the funds will simply be used to mandate an increase in the flawed Sustainable Growth Rate (SGR) formula, due to the nearly $50 billion costs to provide a 2.7% update for two years. Instead, discussions continue around adopting some form of Medicare physician pay-for-performance. Bills such as the Medicare Value-Based Purchasing of Physician Services Act (HR3617) and Medicare Value-Based Purchasing Act of 2005 (S1356) would replace the SGR formula and link payment updates to quality measures. However, these bills do not identify the quality measures. Instead, the bills call for the Secretary of HHS to develop a quality system over the next two years.

Medicare Prescription Drug Plans

Starting on November 15, Medicare beneficiaries across the county will begin to enroll for the new prescription drug benefit adopted under the Medicare Modernization Act of 2003. It should be noted that while some members of Congress are calling for a delay or rollback of this drug benefit to help offset the additional costs of hurricane relief efforts, this proposal is unlikely to meet with Congressional or White House support.

The conventional wisdom a year ago was that few insurers would participate in the new Medicare prescription program. This was because the plans never offered such a product and insurers feared that only seniors with serious pharmaceutical needs would enroll, resulting in tremendous financial losses. However, across the county, even in rural areas, Medicare beneficiaries will have upwards of 20 plans to choose from, not the two or three expected. Some observers believe that insurers are getting into the market simply due to competition � if they do not get in, they will loss market share to their competitors in other lines of business, such as Medicare HMO and Medigap coverage.

In Maryland, as of September 25th, 22 different Medicare Advantage and Prescription Drug plans have been approved. The plans will be operated by Aetna Health, Aetna Life (combined these two account for 14 of the 22 plans), Elder Health, Kaiser Permanente, and United Healthcare. Beneficiary drug premiums range from zero to $57.36, with a mail order option offered in each plan. Of the top 100 drugs on the formulary, the Kaiser plans offer 72, the Aetna plans range from 82 to 95, Elder Health offers 93, and United provides 96. This information does not include demonstrations, PACE organizations, or employer sponsored plans.

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STATE ISSUES

Academic Health Centers and MCOs

After extensive discussions regarding MCO use of hospital-based teaching clinics, the General Assembly mandated a task force to study the impact of using academic medical centers on the HealthChoice program. The task force charged with conducting the study included key stakeholders; Johns Hopkins was represented by Patty Brown.

The report was due July 1 but was delayed by the Department of Health and Mental Hygiene until mid-August. The report did identify financial disincentives to the use of academic health center (AHC) clinics but despite those disincentives, the department opposed changes in the current rate methodology. On the study question of whether the state should continue to assure access to AHC clinics, it was concluded that no change in methodology was necessary, without answering the question of whether the state has a policy role in assuring access to these clinics. As regulators continue to grapple with this matter, more than likely it will become an issue during the 2006 legislative session.

Capital Budget Requests

Securing State support for capital projects in FY2007 is a long and intense process that began in August when Johns Hopkins filed applications for consideration to Maryland�s Department of Budget and Management.

Johns Hopkins Medicine has again requested $100 million over a five-year period for the new clinical buildings. At the conclusion of the 2005 legislative session, the State committed $50 million over five years ($25 million each) for the Pediatric Trauma Center and the Cardiovascular and Critical Care Tower. With a brighter fiscal outlook for Maryland, and positive indications from State leaders, Johns Hopkins is asking the Governor and General Assembly to increase the level of support for this project � consistent with our original request of $100 million over five years. Final decisions on the State�s commitments for all capital projects for FY2007 will not be known until April 2006, but hearings before the Department of Budget and Management, as well as discussions with the Governor and his staff, are already under way.

Johns Hopkins University, in conjunction with the Maryland Independent College and University Association (MICUA), had its capital budget hearings for the School of Nursing, and the Phoebe R. Berman Bioethics Institute capital request on September 14 and 15. The capital hearings were held before the Office of Capital Budgeting within the Maryland Department of Budget and Management, and the Maryland Higher Education Commission. Dr. James McGill, Senior Vice President for Finance and Administration for the University; Dr. Martha Hill, Dean of the School of Nursing; and Dr. Ruth Faden, Executive Director of the Berman Bioethics Institute, testified on behalf of Johns Hopkins at the hearings.

Legislature Begins Fiscal Briefings

This week the House and Senate budget committees and the Spending Affordability Committee, which includes legislators, business representatives and citizens, met to discuss the state's fiscal outlook for the upcoming year. This is the first in a series of budget-related meetings that will culminate in the Spending Affordability Committee's recommendations in mid-December for ceilings on state spending levels for FY 2007.

Although the state has a budget surplus on paper of approximately $600 million, state expenditures, particularly in K-12 education and Medicaid, are growing faster than revenues, creating what is termed a �structural deficit.� This structural deficit is expected to be $291 million in FY 2008, and reach $628 million in FY 2009.

The dramatic increase in tax revenues for the last two years should keep the state budget well in the black for the near future, the General Assembly's fiscal committees were told by Department of Legislative Services (DLS) staffers. The rapid increase in revenues is the result of a number of factors, including strong growth in personal income, soaring property values, and a strong housing market. As a result, state revenues for the fiscal year that ended on June 30 were about $1.2 billion higher than the year before.

The DLS staff stated that based on projections for growth in revenues and growth in spending, the state should have about $1.5 billion in surplus funds for the FY 2007 budget, including the rainy day fund that is maintained to help Maryland keep its AAA bond rating.

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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
Staff
Mickey Geisler	mgeisler@jhu.edu
Cathy Ximenez	cximenez@jhmi.edu