Federal Scene

• House and Senate negotiators on September 26 tentatively agreed on legislations that partially addresses our concerns about the inpatient prospective payment system (IPPS) cuts of $20 billion
  over five years in the Centers for Medicare and Medicaid Services’ (CMS) IPPS rule for fiscal year 2008. The rule takes effect
  October 1.
  
  With Senate action expected today and the House expected for follow suit, the cuts are halved in 2008 and 2009 to 0.6% and 0.9% respectively (the bill does not address the 2010 cut), resulting in a restoration of $2.5 billion over the next two years, and of $7 billion over the next five years, assuming no additional retrospective adjustments are made.
  
  You’ll remember that CMS had proposed reductions of 1.2%, 1.8% and 1.8% each over the next three years as part of a so-called “behavioral offset” to address what the agency claimed would be changes in hospital coding practices as IPPS moves to the refined Medicare Severity DRG classification system. We strongly opposed the prospective cut of $20 billion to payments for hospital Medicare services, especially in the absence of data or information to indicate that code practices might even occur. Joining us in opposition were a majority of the House and Senate in letters sent to the administration. Yet, CMS went ahead with the cuts in the IPPS rule.
  
  Now, Congress has stepped in legislatively. While we of course prefer that the cut be completely eliminated and still object strenuously to the prospective application of the behavioral offset, we are pleased that some partial relief has been provided by Congress. We will continue to address this issue as Congress deliberates Medicare later in the year.
• NCQA Report notes improvement in quality among health plans. Commercial plans improved on 33 of 44 clinical measures. This is the 8th straight year of improvements with significant gains in childhood immunizations and colorectal-cancer screening. Medicare managed-care plans show less progress.