Spring brings budget cuts, Stark debate, and hope for GME

April 12, 2019

"The past month has been an active one for developments in Washington that impact health care, from proposed budget cuts to modernizing the Stark Law and boosting Graduate Medical Education funding," writes the AACU's Raymond Nicholas.

Based on a partnership with Urology Times, articles from the American Association of Clinical Urologists (AACU) provide updates on legislative processes and issues affecting urologists. We welcome your comments and suggestions. Contact the AACU government affairs office at 847-517-1050 or info@aacuweb.org for more information.

The past month has been an active one for developments in Washington that impact health care, from proposed budget cuts to modernizing the Stark Law and boosting Graduate Medical Education funding.

The Trump administration recently submitted a new budget proposal to Congress for fiscal year 2020. The budget includes some small cuts to domestic discretionary spending on agencies such as the Centers for Disease Control and Prevention ($5.28 billion) and the National Institutes of Health ($6 billion). The budget also includes some reductions to mandatory spending programs such as Medicare and Medicaid. The scale-back remains relatively minor compared to the overall budget for these programs, but Democratic leadership in the House of Representatives asserts that the domestic reductions are too much.

Health and Human Services Secretary Alex Azar testified in support of the 2020 budget proposal before several committees in the House and Senate on March 12. He said the cuts are necessary to help reign in spending. Azar laid out his main priorities for HHS, including increased access to and affordability of health insurance. In addition, he mentioned shifting Medicare toward a more value-based system, lowering prescription drug costs, and embracing telehealth services, which will help rural communities.

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Referring to Medicare as a “bedrock of our society,” Azar said he is determined to keep the program solvent by driving out waste, fraud, and abuse. He said the recent White House budget proposal continues the shift toward value-based and outcome-based care, adding that “the future of Medicare must be driven by value.”

At the regulatory level, HHS and Secretary Azar have taken up a proposal to modernize and streamline the Stark Law in an effort to reduce regulatory burdens. Secretary Azar discussed an HHS initiative known as the “Regulatory Sprint to Coordinated Care,” which has been regularly covered. The agency is undergoing a “comprehensive reexamination of rules that may be impeding coordinated care,” he said. As a “sprint,” he noted the goal is to issue rulemaking to alleviate certain regulatory impediments “as soon as possible.”

In his speech, Secretary Azar identified the Stark Law as a major impediment to value-based compensation arrangements. He noted that the law is necessary in a fee-for-service environment to prevent incentives to increase the volume of services. However, as the Trump administration seeks to transition to payment based on outcomes rather than volume, Azar views the Stark Law as an obstacle. The Stark Law was the first issue targeted by the administration’s Sprint to Coordinated Care, with the Office of Inspector General seeking comments on a potential exception for advanced payment models and other changes in a Request for Information issued in June.

Next:"Azar used strong language in attacking the use of rebates"Shifting to the administration’s focus on affordable health care, Azar’s discussion of Anti-Kickback Statute reforms focused on the recent proposed rule to eliminate discount safe harbor protection for formulary rebates. As he has done in prior remarks on pharmaceutical rebates, Azar used strong language in attacking the use of rebates.

“Any approach to drug pricing that does not tackle the issue of rebates-whether through our proposed approach or otherwise will simply not get list prices down,” he said. “If you stand for rebates, you stand for ever-higher list prices, and against transparency, and lower patient out-of-pocket costs at the pharmacy. It’s that simple.”

(Also see, “HHS Leader Addresses Referral Law Reform, Administrative Burdens.”)

At the same time, the AACU is working with a coalition to promote a legislative solution. The bill sponsored by Rep. Larry Bucshon (R-IN-8) in 2017 is gaining traction and has a chance at being proposed again in the House of Representatives for the 116thCongress. The Senate has already proposed a similar bill to Bucshon’s, which is currently sponsored by Sen. Rob Portman (R-OH) and Sen. Michael Bennett (D-CO).

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Graduate Medical Education funding is also seeing some success in both chambers of Congress. The number of Medicare-funded residency positions has been frozen since 1997, when the Balanced Budget Act limited payments at 1996 levels. The AACU has long advocated for improvements to the nation's GME system, the most comprehensive effort being the Physician Shortage Reduction Act, which was reintroduced in the Senate by Sens. Bob Menendez (D-NJ), John Boozman (R-AR), and Chuck Schumer (D-NY).

A concurrent bill has been introduced in the House by Rep. Terri Sewell (D-AL-7) and Rep. John Katko (R-NY-24). Both House and Senate bills have bipartisan sponsorship, providing a decent chance of some progress being made on this issue. Increasing funding in Medicare may be difficult, but funding for residency positions has been growing in other departments such as the Department of Veterans Affairs.