Industry Appeals for Lame-Duck Legislation

As the 2006 midterm elections recede into the rearview mirror, U.S. lawmakers have just a few weeks left to wrap up the work of the 109th Congress before departing for the holidays—and before the Democratic Party officially takes control of both chambers of Congress in January 2007.

The lame-duck environment could leave many important pieces of healthcare-related legislation in limbo. If Congress does not take them up before the end of the year, they will have to be reintroduced in the next Congress.

However, among some influential lawmakers and health policy staff there is strong sentiment in favor of passing one major piece of healthcare legislation immediately—a short-term remedy to the Medicare physician payment rate. There is a sense of urgency because, if Congress does not act by January 1, 2007, Medicare will reduce physician payments by nearly 5%, with cuts totaling almost 40% through 2015. The American Medical Association (AMA; Chicago) is lobbying intensely for the fix, stating that the cuts "will hurt access to care for America's seniors" because physicians "will either stop accepting or decrease the number of new Medicare patients they accept."

If Congress decides to address the physician payment issue during its lame-duck session, an opportunity could arise for moving other healthcare legislation at the same time. One bill that is ready for such consideration is the bipartisan Advanced Laboratory Diagnostics Act of 2006 (HR 5369), which has the support of industry association AdvaMed (Washington, DC) and a host of laboratory and patient advocacy groups.

"This situation was not unexpected," says Ann Gosier, vice president of government affairs and public policy at BD. "That's why, ever since May 2006, when the bill was first introduced, AdvaMed and the company members of its diagnostics sector have been working to position the bill to move, in the event that such a legislative vehicle should arise."

Supporters of the Advanced Laboratory Diagnostics Act believe that urgent action is required to bring Medicare's 22-year-old clinical laboratory fee schedule (CLFS) up to date with advances in molecular and genetic testing. "The current system offers few incentives for laboratories and healthcare providers to adopt new tests, even though they could provide better information to guide potentially lifesaving medical decisions," explains Gosier.

Throughout the summer, AdvaMed executed an advocacy campaign that positioned the diagnostics act as a ready ride-along if Congress chooses to address the Medicare physician payment issue. "But if that doesn't happen, supporters of HR 5369 will just start the fight for CLFS reform again next year," says Gosier.

AdvaMed has also been active in a coalition of groups that are urging Congress to reauthorize the federal research and development (R&D) tax credit during the lame-duck session. According to proponents, the credit provides companies with an important incentive to make high-risk investments, leading to the development of innovative life saving therapies and medical technologies, thus stimulating job creation and economic growth. The previous credit expired on December 31, 2005.

The lapse in the credit "has created tremendous disruption to firms planning long-term R&D projects in the United States," said AdvaMed president and CEO Stephen J. Ubl. "The credit supports the creation of high-wage jobs in the medical device industry. Companies trying to plan and hire are constrained by the lapse in credit coverage."

Also supporting reauthorization of the tax credit is the California Healthcare Institute (CHI; La Jolla, CA), a nonprofit public policy research organization for California's biomedical R&D industry. "The uncertainty surrounding the future of the credit and the unpredictability of year-to-year extensions make long-term planning very difficult," said David L. Gollaher, PhD, CHI president and chief executive officer. "It is imperative that Congress enact a permanent R&D credit that will provide companies the appropriate incentives to allow them to continue their operations in the U.S. at a time when foreign countries are aggressively recruiting high-tech industries to move offshore."

According to AdvaMed, the level of R&D spending in the medical device industry, as a percent of sales, is more than three times the overall U.S. average. Medtech R&D spending more than doubled during the 1990s, increasing from 5.4% in 1990 to 8.4% in 1995, and to more than 11% in 2005. In absolute terms, R&D spending has increased 20% on a cumulative annual basis since 1990.

Under generally accepted accounting principles, noted Ubl "companies have had to report financial results and offer guidance about future performance assuming that the credit will not be seamlessly restored. This has affected market expectations and many companies have been left with unexpected shortfalls. Even more troubling, a gap in coverage functions as a new tax on innovation in America."

"Extending the R&D tax credit is a top priority," agrees Mark Leahey, executive director of the Medical Device Manufacturers Association (MDMA; Washington, DC). "MDMA is part of the coalition with other stakeholders, including the National Association of Manufacturers, that has been pushing hard for the extension and believes it is critical to help promote innovation.

"But there are many other important issues we would also like Congress to take up during the lame-duck session," says Leahey. "For instance, passing a healthcare IT bill that includes language requiring early implementation of the ICD-10 coding system is critical to ensuring that the coding system can be updated in the United States."

Before the midterm elections, Senate Majority Leader Bill Frist (R–TN) indicated that he believed a healthcare information technology (IT) bill could be passed before the end of the 109th Congress. But since then, the versions of the legislation proposed in the House and Senate have stalled while awaiting compromise solutions. Areas of difference include timing for implementation of the ICD-10 coding system and whether healthcare facilities can legally provide healthcare IT systems to their referring physicians.

The Healthcare Information and Management Systems Society (HIMSS; Chicago) had been encouraging House and Senate conferees to resolve differences between the pending versions of healthcare IT legislation, so that a compromise bill could be passed before the end of the year. But in recent days, even HIMSS appears to have thrown in the towel. "The conference issues are just too difficult to resolve," said Dave Roberts, vice president of government relations at HIMSS.

Instead, according to Healthcare IT News, proponents of healthcare IT legislation are turning their hopes to the New Democrat Coalition (NDC), a moderate, progrowth congressional group cochaired by representatives Adam Smith (D–WA), Ellen Tauscher (D–CA), and Ron Kind (D–WI). The coalition favors promoting economic growth through technology, science, and research and development.

HIMSS's Roberts told Healthcare IT News that the society would work closely with the NDC to develop a compromise bill for early consideration in the 110th Congress.

Eleanor Kerr, director of legislative affairs for healthcare at Siemens Medical Solutions (Malvern, PA), says that the lame-duck Congress should put a high priority on "delaying the Deficit Reduction Act cuts for imaging reimbursement, which are scheduled to go into effect in January 2007. Siemens and other healthcare technology companies are working to delay the implementation of the cuts while we work with Congress to create a revised policy," she notes.

In spite of the fervent hopes of industry reps, most insiders are skeptical that much will get accomplished during the final days of the 109th Congress. With lawmakers possessing little time or inclination to tackle pressing or contentious policy issues—including complex healthcare-related issues—they are likely to let the new majority handle them. "With the Democrats taking control of Congress in the 2006 midterm elections, I don't see the current Congress working to tackle difficult healthcare issues—including the Deficit Reduction Act cuts," says Kerr. "My prediction is that this Congress will leave that issue to the new Congress to deal with beginning in January 2007."

MDMA's Leahey isn't predicting the chances of success for any of the legislation being pushed in front of the session. "It's hard to say what, if anything, will get done—healthcare-related or otherwise," he says.

© 2006 Canon Communications LLC

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