December 21, 2007

1. Congress Increases Medicare Physician Pay 0.5% for Six Months

2. Congress Provides NIH 1.1% Increase

1. Congress Increases Medicare Physician Pay 0.5% for Six Months

Amid partisan bickering, Congress forestalled the impending 10% reduction in Medicare physician pay slated for implementation Tuesday, January 1, 2008. In passing the Medicare, Medicaid, and State Children’s Health Insurance Program Extension Act of 2007
(S 2499)—which President George W. Bush is expected to sign shortly—Congress provided a 0.5% increase in Medicare physician pay for six months. This move requires future congressional action during the next six months?which will be mired in electoral politics?or else the 10% cut will take effect in July 2008.

In a statement, the White House press office noted “we are pleased that Congress found a way to avoid scheduled reductions in Medicare physician payments without making irresponsible cuts to the Medicare Advantage program which provides benefits to over 20% of Medicare beneficiaries.” Rather, Congress chose to offset the $5.3 billion cost of this change by reducing payments for inpatient rehabilitation services as well as cutting payments for physician administered drugs.

Congressional leaders of both parties denounced the legislation as a “lousy” solution to the long-term problem of physician pay under the Medicare program. Observers expect Congress to engage in many rhetorical exchanges about possible solutions for the next six months but do not anticipate an operable long-term fix to emerge until after the inauguration of the next president and the swearing in of a new Congress.

2. Congress Provides NIH 1.1% Increase

The US House of Representatives passed a large, catch-all spending bill (HR 2764) Wednesday, December 19, 2007, that provides funding for fiscal year (FY) 2008 for most federal agencies and programs. The House vote concluded this year’s appropriations process after the Senate passed the omnibus bill Monday, December 17, 2007, with the inclusion of $70 billion in supplemental funding for the wars in Iraq and Afghanistan. The bill—which sets funding levels for the National Institutes of Health (NIH) and the Department of Veterans Affairs (VA) Medical and Prosthetics Research Program—will be sent to President George W. Bush for his approval and signature.

Congress provided a slight increase in funding for NIH in FY 2009. The omnibus set the NIH budget at $29.229 billion, a $329 million, or 1.1%, increase over FY 2007. However, the omnibus allocation fails to match the funds ($30 billion) that were initially provided in the original conference bill vetoed by President Bush Tuesday, November 13, 2007.

The omnibus bill provides a $69 million increase in funding for the VA Medical and Prosthetics Research Program, setting funding at $480 million. However, this allocation was included in the $70 billion emergency spending supplemental, which requires a separate approval from the omnibus appropriations package. According to the White House, President Bush is willing to support additional funding for VA as long as Congress offsets the increases with cuts in other programs. By including VA increases in the supplemental, Congress bypassed President Bush’s restrictions, placing the onus on him to reject funding for the nation’s veterans in a time of war.

Many insiders view the omnibus as a Republican victory. According to House Minority Leader John A. Boehner (R-OH), “Our team stuck together, and we had victories for the American people because we stood on principle against more spending, against higher taxes and in support of our troops.” The omnibus provides far less funding than the Democrats’ original proposal—a $21 billion decrease.

The Alliance for Academic Internal Medicine—the nation’s largest academically focused specialty organization—consists of the Association of Professors of Medicine, the Association of Program Directors in Internal Medicine, the Association of Subspecialty Professors, the Clerkship Directors in Internal Medicine, and the Administrators of Internal Medicine.

Please contact AAIM Vice President for Policy Charles P. Clayton (cclayton@im.org), AAIM Policy Associate Nicole V. Baptista (nbaptista@im.org), or AAIM Policy Assistant Allison L. Haupt (ahaupt@im.org) at (202) 861-9351 with questions or comments about this week’s Merlin.