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Government Affairs - Other Issues

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On August 9th, President Obama signed into law the Bipartisan Student Loan Certainty Act of 2013 (H.R. 1911), a measure that links student loan interest rates to the market.  The bill was approved by the Senate on July 24 and by the House on July 31.   


The final bill is similar to the market-based plan offered by the Administration and modified and approved by the House.  But it also includes a rate cap and locks in the interest rate on a loan when it is first made, rather than allowing the rate to vary over the life of the loan, as in the earlier House-passed bill. 


The bill pegs the interest rate for federally subsidized and unsubsidized loans for undergraduates at the 10-year Treasury bond yield plus 2.05%, with rates for unsubsidized loans for graduate students at plus 3.6%, and for parents at plus 4.6 %.  The rates will be capped at 8.25% for undergraduates, at 9.5% for graduate students, and at 10.5 percent for parents.  For undergraduates this fall, the loan rate will be 3.86%. 


The rates in the final bill are slightly higher than those in the tentative deal worked out by a bipartisan group of Senators in early July, which had to be reworked when the Congressional Budget Office determined that it would cost the federal government $22 billion over 10 years.  The new plan would save the government $715 million over 10 years.


Responding to concerns raised by several Democrats that the final bill would raise student loan interest rates over the long term, Senator Tom Harkin (D-IA), chair of the Senate Health, Education, Labor, and Pensions Committee, said he expected to revisit the issue during reauthorization of the Higher Education Act. 


The legislation was necessary because Congress in June failed to reach an agreement to prevent the interest rates on subsidized loans from doubling from 3.4 % to 6.8% on July 1, when a one-year fix Congress enacted last year expired.  The new law will provide a retroactive fix. 


Supreme Court Holds School’s Means of Achieving a Diverse Student Body Subject to Strict Scrutiny

On June 24th, the United States Supreme Court issued its long-awaited opinion in the case of Fisher v. University of Texas at Austin.  In a 7 to 1 decision with Justice Ruth Bader Ginsberg dissenting, the Court vacated and remanded the Fifth Circuit’s holding in favor of the university.  The Court reasoned that the lower court had not applied the appropriate standard of strict scrutiny in reviewing the university’s race-conscious admissions policy.  This narrow holding leaves intact prior case law permitting the limited use of race and ethnicity in admissions where the use is narrowly tailored to meet the compelling state interest in the educational benefits of diversity.  Columbia President Lee C. Bollinger commented in the Court’s ruling in a New York Times Op-Ed.

Justice Kennedy delivered the opinion of the Court vacating the Fifth Circuit’s holding and remanding the case: the lower court’s deference to the university’s educational judgment that student body diversity is essential to its educational mission was appropriate, however, deference should not have extended to the University’s race-conscious method of achieving that educational mission, which is subject to strict judicial scrutiny.  The Court did not opine on whether the university had met its burden of demonstrating that its admissions process was narrowly tailored to meet its goals, leaving this to the Court of Appeals.

The Court did not overrule or change the underlying standard established in Grutter v. Bollinger and Regents of the Univ. of Cal. v. Bakke, taking these cases as “given.” Together, these cases hold that an institution of higher education may use a race-conscious admissions policy provided that it is narrowly tailored to meet the institution’s compelling interest in the educational benefits of a diverse student body. With these holdings intact, institutions of higher education, including medical schools, that consider an applicant’s racial and ethnic background as part of a holistic review process may continue to do so.  However, the Court made clear that such institutions have the burden of demonstrating that race-conscious admissions policies and practices are narrowly tailored to meet educational goals, including providing proof that available, workable race-neutral alternatives would be insufficient to produce the educational benefits sought by the institution.

Fisher arose following an applicant’s denial of admission to the University of Texas at Austin, which accepts a majority of students through the Texas Top Ten Percent program that guarantees admission for students graduating in the top ten percent of a Texas high school.  The rejected applicant, Abigail Fisher, sued the University, alleging that the university’s consideration of race for the remaining spots violated the Equal Protection Clause of the Fourteenth Amendment.


House Passes ‘Smarter Solutions for Students Act’ Despite White House, Senate Opposition

On May 23rd , the House of Representatives approved by a vote of 221-198 the Smarter Solutions for Students Act (H.R. 1911) to establish a market-based interest rate on federal Stafford loans.  The proposed formula is based on the 10-year Treasury Note with a 2.5% add-on for subsidized and unsubsidized Stafford loans and a 4.5% add-on for PLUS loans, including gradPLUS. Interest rates would be variable with an 8.5% cap for Stafford loans and 10.5% cap for PLUS loans.  Interest on Perkins loans would remain fixed at 5%.

The White House issued a Statement of Administrative Policy threatening to veto the measure.  The statement echoes opposition Democrats voiced during the May 16th House Committee on Education and the Workforce mark-up.  It also outlines differences between the President’s budget request and H.R. 1911.  Specifically, the President’s proposal would fix interest rates for the life of the loan and expand the Pay As You Earn repayment program.  Under both proposals, interest rates on Stafford loans available to medical students are expected to decrease initially, but eventually climb to greater than current rates.

With several additional proposals on the table it is unclear how the Senate will address this issue and avoid the looming July 1st doubling of subsidized Stafford loan interest rates for undergraduate students from 3.4% to 6.8%. Loans for graduate and professional students, including medical students, are unsubsidized (i.e., they accrue interest during school) and already carry a fixed 6.8% interest rate.

Senator Jack Reed (D-RI) and Senate Health Education Labor and Pensions (HELP) Committee Chair Tom Harkin (D-IA) have introduced the Student Loan affordability Act (S. 953) that would extend for an additional two years the 3.4% subsidized Stafford interest rate.  The extension would be paid for through closure of non-education tax “loopholes.”  The measure is supported by Senate Majority Leader Harry Reid (D-NV) and has been filed as an amendment to the pending farm bill.

Education Secretary Arne Duncan issued a statement suggesting an extension of current rates until Congress can develop a compromise market-based approach, stating, "There is no excuse if Congress fails to come to an agreement that prevents rates from rising suddenly in July, and we look forward to working with members of both parties to reach a solution."

Senate Judiciary Committee Passes Comprehensive Immigration Reform Bill

On May 21st the Senate Judiciary Committee approved its comprehensive immigration reform bill, the Border Security, Economic Opportunity, and Immigration Modernization Act (S.744), by a vote of 13 to 5, with three Republicans joining 10 Democrats in support.  The panel had deliberated for five days and considered more than 200 amendments.  Senate leaders plan to take the bill to the Senate floor in June. 

In the House, Republican leaders want a different, more conservative version of immigration reform.  A bipartisan group reportedly has reached a tentative agreement on a package, although the plan was almost derailed last week over immigrants’ access to federally subsidized health care. 

Subcommittee Considers New House Patent Reform Measure

On March 30th, the House Judiciary Subcommittee on Intellectual Property held a hearing on comprehensive patent reform legislation.  The hearing focused on the bill introduced earlier that day by House Judiciary Chair Lamar Smith (R-TX), the American Invents Act (H.R. 1249), which largely tracks the Senate-passed measure (S.23).  U.S. Patent and Trademark Office (PTO) Director David Kappos testified in support of the measure, noting that the change to first-inventor-to-file is an “essential” provision to the bill.  He noted that this system would not disadvantage small companies and independent inventors.

Much of the hearing focused on the contentious prior user rights expansion as proposed in the House bill, which differs from the Senate bill. Director Kappos stated that the proposed expansion of the prior user rights defense in the House bill is “pro-manufacturer, pro-small business, and on balance good policy,” but recognized universities’ concerns and expressed his desire to “work with them” towards a provision that “meets the needs of America’s important university community.”  Congressman Jim Sensenbrenner (R-WI), a former chair of the full committee, expressed his strong opposition to the expansion of the prior user rights defense, referencing university publishing and amendments he offered to strike similar expansions in previous patent reform legislation. 

Other witnesses included Steve Bartlett, president and chief executive officer, The Financial Services Roundtable; Steven W. Miller, vice president and general counsel for intellectual property, Procter & Gamble Company, who testified on behalf of the Coalition for 21st Century Patent Reform; Mark Chandler, senior vice president, general counsel and secretary, Cisco Systems, Inc., who testified on behalf of the Coalition for Patent Fairness; and John Vaughn, executive vice president, Association of American Universities, who testified on behalf of a university coalition.  Only Mr. Chandler supported the expansion of the prior user rights defense.

The university coalition of AAMC, Association of American Universities (AAU), the American Council on Education (ACE), the Association of Public and Land-grant Universities (APLU), the Association of University Technology Managers (AUTM), and the Council on Governmental Relations (COGR), released a March 25th statement opposing the proposed expansion of the prior user rights defense.

CMS, ONC Issue Final Regulations on Electronic Health Record Incentive Program

On July 13th, The Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) released final rules implementing the first stage of the Medicare and Medicaid electronic health record (EHR) incentive payment program.  The rule reflects several recommendations made by the AAMC.  The CMS rule finalizes the requirements providers must meet to become "meaningful users" of certified EHRs, and the ONC rule identifies standards and certification criteria for the certification of EHR technology.  The rules are scheduled to be published in the Federal Register on July 28.

CMS's final rule implements a definition of meaningful use that allows providers some flexibility in qualifying for Medicare and Medicaid EHR incentives.  Although CMS initially proposed an "all-or-nothing" approach to meeting the meaningful use requirements, under the final rule, hospitals need only satisfy the requirements of fourteen core measures and five often "menu" measures, while eligible professionals must satisfy the requirements of fifteen core measures and five of ten"menu" measures.

With respect to quality measures, CMS addressed concerns associated with requiring the reporting of clinical quality measures that have not been specified for EHRs nor adequately tested.  The final rule revised the hospital and physician quality reporting requirements by reducing the number of quality reporting measures for Stage 1 and adopting only those measures that have electronic specifications posted on the CMS website.  The CMS final rule also includes important provisions that allow faculty physicians who provide care in hospital-based clinics to qualify for incentives. The rule does not, however, recognize individual hospitals within a system that share a single provider number as eligible for incentive payments.

With respect to standards and certification, ONC revised several certification criteria to reflect more clearly how a complete EHR or EHR module must comply with adopted standards and, where applicable, what the relevant adopted implementation specifications must be.  ONC finalized a proposal to give providers options for achieving certain standards criteria by allowing alternative standards in areas where no specific standard has emerged and where the shift to one standard may pose burdensome (e.g., the continuity of care document (CCD) and the continuity of care record (CCR) may both be used).  ONC also removed REST and SOAP as specified transport standards, enabling flexibility for secure transmission as long as a provider encrypts data and ensures data integrity.

Hospitals and eligible professionals will be able to register for the EHR incentive program beginning in January 2011, and CMS expects to begin making payments to meaningful users of certified EHRs in the spring of 2011.

AAMC, Higher Education Associations Endorse Patent Reform Amendment

The AAMC has joined five other higher education associations in endorsing a substitute amendment to the Patent Reform Act of 2009 (S. 515), the first sweeping overhaul of the patent system in nearly 60 years.  In a letter addressed to Senate Judiciary Committee Chair Patrick Leahy (D-VT) and provided to the entire Senate, the associations expressed support for the recent substitute amendment, which provides a compromise position on several provisions that have prevented Senate passage of the reform bill.

Among its other provisions, S. 515 would create a procedure within the U.S. Patent and Trademark Office (USPTO) for opposing award of a patent.  The substitute amendment would restrict the ability to raise multiple challenges to a patent within the system, and lessen concerns that "post-grant opposition" could be used to harass inventors, including universities.  The associations wrote that this and other changes in the substitute amendment equitably balanced competing concerns and objectives from among the many industries that rely on or are affected by the patent system. The associations also reaffirmed the public's interest in developing a patent system that "will provide faster, less costly alternatives to civil action to challenge patents, [thus] improving patent quality by eliminating invalid patents, while reducing abusive challenges and litigation costs."

In addition to AAMC President and CEO Darrell G. Kirch, M.D., presidents of the Association of American Universities, the American Council on Education, the Association of Public and Land-grant Universities, the Association of University Technology Managers, and the Council on Governmental Relations signed the letter.

ONC Releases Proposed Rule on Accrediting EHR Certification Programs

On March 2nd, the Office of the National Coordinator for Health Information Technology (ONC) issued a proposed rule establishing temporary and permanent certification programs for testing and certifying health information technology (HIT) systems for providers to meet one of the requirements of meaningful use.  The American Recovery and Reinvestment Act of 2009 requires health care providers seeking incentives through the Medicare and Medicaid Electronic Health Records (EHR) Incentive Program to use a certified electronic health-record system.  To be certified, an EHR would have to meet certain criteria for technological capability, functionality, and security. At this time there is neither a certification program nor a certifying body.

In the proposed rule, the ONC makes two separate proposals.  The first is to establish a temporary program that would allow ONC to authorize organizations to test and certify complete EHRs and/or EHR modules.  This would assure the availability of certified EHR technology prior to the date on which health care providers may seek payments under the ARRA HIT incentive program.  Although the initial and primary purpose of proposing both temporary and permanent certification programs is to test and certify complete EHRs and EHR modules, the ONC believes Congress did not intend to limit the national coordinator's authority solely to this function.  The national coordinator is expressly authorized to establish a voluntary certification program or programs for "health information technology," not simply EHRs. As a result, the ONC expects that the permanent certification program could also include the testing and certification of other types and aspects of HIT.

Under the temporary program, an organization would submit an application and demonstrate "its competency and ability to test and certify Complete EHRs and/or EHR Modules."  Because organizations must be able both to test and certify, ONC expects that only a few organizations ultimately will qualify under the temporary certification program.

The proposed rule also lays out a process for permanent certification to replace the temporary program.  The permanent program would separate the responsibilities for performing testing and certification, introduce accreditation requirements, and establish requirements for certification bodies.  The National Institute of Standards and Technology would be responsible for accrediting testing laboratories and determining their competency.  Upon establishment of the permanent program, ONC will move to the public sector many of the administrative processes and duties it will assume under the temporary program.

Public comments on the temporary certification program will be accepted for 30 days after publication in the Federal Register.  Public comments on the permanent certification program will be accepted for 60 days after publication in the Federal Register.  While the single proposed rule describes two certification programs, ONC anticipates issuing separate final rules for each of the programs.  To view the rule and related material visit the ONC website.

White House Creates New Commission on Bioethical Issues

On November 24th President Obama signed an Executive Order creating a new "Presidential Commission for the Study of Bioethical Issues."  According to a press release, the commission will advise the president on bioethical issues that may emerge from advances in biomedicine and related areas of science and technology.  The commission will work with the goal of identifying and promoting policies and practices that ensure scientific research, health care delivery, and technological innovation are conducted in an ethically responsible manner."

The president also announced that he has selected Amy Gutmann, Ph.D., to chair the commission.  Dr. Gutmann currently serves as President of the University of Pennsylvania.  She also is the Christopher H. Browne Distinguished Professor of Political Science in the School of Arts and Sciences and holds secondary appointments in communications, education, and philosophy.  President Obama named James W. Wagner, Ph.D., vice chair of the commission. A materials scientist and engineer, Dr. Wagner currently serves as President of Emory University.

The charter of the Bioethics Council established by President George W. Bush in 2001 expired at the end of September and was not renewed by the Obama administration.


Department of Education Publishes Final Rules on Higher Education Reauthorization

The Department of Education published in the October 27th through October 29th Federal Registers four sets of final rules for the federal student loan programs authorized under Title IV of the Higher Education Act.  The new regulations incorporate many of the changes made under the Higher Education Opportunity Act (HEOA, P.L. 110-315), and reflect recommendations of the AAMC.

With regard to medical school financial aid, the regulations:

  • Amend the calculation of monthly payments under the Income-Based Repayment (IBR) program to adjust for spouses who both elect IBR
  • Increase graduate student annual and aggregate loan maximums in the Perkins Loan Program from $6,000 to $8,000, and from $40,000 to $60,000, respectively;
  • Describe the required content for "codes of conduct" and require institutions to develop and adopt such codes;
  • Require institutions to report on reimbursements received for certain service on lender advisory boards;
  • Require institutions to describe for prospective and enrolled students the terms and conditions of the loans students receive under the Federal Family Education Loan (FFEL), Direct Loan, and Perkins Loan programs;
  • Eliminate the requirement that borrowers make ''written'' requests to obtain a forbearance on their Perkins Loan;
  • Reduce from 12 to nine the number of consecutive on-time, monthly payments a borrower must make to rehabilitate a defaulted Perkins Loan; and,
  • Modify the entrance and exit counseling requirements.


House Chairs Object to Harm Standard in HIPAA Breach Notification Rule

Leaders of the House Committees on Energy and Commerce and Ways and Means sent a letter on October 1st urging the Department of Health and Human Services (HHS) to revise its interim final rule on notification requirements for breaches of unsecured protected health information.

The letter objects to HHS's proposal that covered entities and business associates must perform a risk assessment to determine if an impermissible use or disclosure of protected health information triggers breach notification requirements added to the HIPAA Privacy Rule through the American Recovery and Reinvestment Act (P.L. 111-5).  According to the legislators, the HHS approach "is not consistent with Congressional intent" because when the legislation was crafted, "Members considered the comments they received, the practices of States, and ultimately decided against inclusion of a harm standard."

Signed by House Energy and Commerce Committee Chair Henry Waxman (D-CA), Ranking Member Joe Barton (R-TX), Chairman Emeritus John Dingell (D-MI.), Health Subcommittee Chair Frank Pallone (D-NJ), Ways and Means Committee Chair Charles Rangel (D-NY) and Ways and Means Health Subcommittee Chair Pete Stark (D-CA), the letter urges HHS "to revise or repeal the harm standard provision included in its interim final rule at the soonest appropriate opportunity."

In a September 24th comment letter on the rule, the AAMC praised HHS for its efforts to implement the "breach notification requirement in a way that fulfills the goals of the legislation while recognizing the burden that covered entities face in complying with it."  The AAMC letter also described the risk assessment as a "reasonable approach" that allows covered entities to gauge the harm that may result from a breach before fulfilling the notification requirements.

Senate HELP Committee Approves President Obama's Surgeon General Nominee

On October 7th, the Senate Health Education Labor and Pensions Committee unanimously approved Regina Benjamin, M.D., M.B.A., as U.S. Surgeon General, clearing her nomination for the full Senate's consideration. President Barack Obama announced Dr. Benjamin as the Surgeon General-nominee on July 13th. In an earlier statement, AAMC President and CEO Darrell G. Kirch, M.D., praised Dr. Benjamin as "a gifted physician with a strong commitment to caring for the underserved and community health."  Dr. Kirch noted that "this nomination also appears to mark the first time that a former participant in the National Health Service Corps (NHSC) could serve as our chief public health official," observing that the program is "critically important to America's future health care needs." Dr. Benjamin is founder and CEO of the Bayou Le Batre Rural Health Clinic in Alabama, a primary care facility that treats all patients regardless of their ability to pay.  Her service within the medical community includes her work as the Associate Dean for Rural Health at the University of South Alabama College of Medicine and as Chair of the Federation of State Medical Boards of the United States.

The Senate has not scheduled a vote for Dr. Benjamin's confirmation.

HIT Policy and Standards Committees Adopt Additional Recommendations

On August 14th and 20th respectively, the Office of the National Coordinator (ONC) for Health Information Technology’s (HIT) Policy Committee and Standards Committee met to hear formal recommendations of the committees' workgroups.  The Policy Committee adopted by consensus the Certification/Adoption Workgroup's five detailed recommendations regarding the certification process and the Health Information Exchange Workgroup's four high-level recommendations regarding information exchange requirements.  The Policy Committee's Meaningful Use Workgroup did not present any recommendations to the committee at this meeting but announced a timeline for the workgroup's activities over the next twelve months, including an October meeting to discuss the concerns of specialists and meaningful use criteria for 2013 and 2015.

The Policy Committee's certification recommendations added detail to those adopted at the July 16th meeting by advising, among other things, that the ONC adopt a "preliminary certification" process so that vendors may begin certifying based on proposed "meaningful use" critiera, and that CMS use a single certification for both HIT incentive payment and Stark exception purposes.

The Standards Committee adopted recommendations from all three of its workgroups and chartered a fourth workgroup on implementation guidance.  Recommendations included: adoption of the Clinical Quality Workgroup's grids linking meaningful use measures to Health Information Technology Expert Panel (HITEP) datatypes; a revised implementation chart from the Clinical Operations Workgroup incorporating one new measure for quality reporting; and recommendations from the Privacy and Security Workgroup linking meaningful use objectives and policy measures to privacy and security requirements.  The Standards Committee accepted the Clinical Quality Workgroup's recommendations with the understanding that the workgroup would continue to identify performance standards for the seven meaningful use measures for which no standards currently exist.

Recommendations adopted by these committees are intended to be considered by ONC and CMS in drafting regulations that will be released in December. Tony Trenkle, Director of CMS's Office of E-Health Standards and Services, noted at the Policy Committee meeting, however, that the CMS regulation regarding HIT incentive payments was already in the regulation clearance process.

House and Senate Reach Tentative Agreement on False Claims Act Legislation

On May 6th, the House approved an amended version of the Fraud Enforcement and Reduction Act (FERA, S. 386), which primarily addresses mortgage fraud, but includes provisions that amend the False Claims Act (FCA).  The Senate passed its version of the bill April 28th.

The amended House version includes additional False Claims Act provisions considered previously under broader FCA bills such as the "False Claims Act Correction Act of 2009" (H.R. 1788) and "False Claims Act Clarification Act of 2009" (S. 458).  One of the added provisions expands FCA anti-retaliation protections to a "contractor, or agent," in addition to an employee, without requiring the prohibited retaliatory acts to be taken by an "employer."  Under the amendment, liability could potentially extend to many different types of relationships that do not involve an employment contract.  However, the same provision also would limit liability to discrimination "in the terms and conditions of employment" as a result of action taken by the employee to stop further FCA violations.

During consideration on the House floor, Representative Dan Maffei (D-NY) spoke in favor of language in S.386 that addresses FCA liability for overpayment retention, while taking into account "reconciliation processes established under statutes, regulations, and rules that govern Medicare, Medicaid, and all sorts of other various research grants and programs."  This had been a major concern of research universities and hospitals and Congressman Maffei’s advocacy on behalf of better overpayment language made the bill, although still not supported by the research community, much more palatable.  Before passing S. 386, the Senate adopted an amendment offered by Sen. Jon Kyl (R-AZ) to help clarify that the legislation only imposes liability under FCA for knowing and improper "retention" of an overpayment, as opposed to mere "receipt" of an overpayment.  The AAMC joined sixteen organizations in a coalition letter that supported adoption of the Kyl amendment.

The Senate will have to approve the amended version of S. 386 before sending it to the President, who reportedly supports the measure.

Higher Ed Coalition Asks Full Senate to Vote for Patent Reform

On May 7th, a coalition of higher education associations asked the Senate leadership to allow a vote on the "Patent Reform Act of 2009" (S. 515).  The letter to Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) states that S. 515 that will bring long-sought reforms to the U.S. patent systems and "enhance the capacity of the [U.S.] patent system to promote innovation and strengthen America's economic competitiveness in the 21st century."

As noted by the associations, many of S. 515's provisions reflect hard won compromises among industry sectors, including the biotechnology and the information technology sectors, such as in the bill's provisions for allocation of damages from patent infringement.  The reforms also include, among others, moving to a first-inventor-to-file system and expansion of "interpartes reexamination" procedures permitting affected parties to challenge the award of a patent within the U.S. Patent and Trademark Office.

The higher education coalition seeks further "modifications" to the bill, but notes that in balance, the bill achieves reforms that are in the broad public interest.  "As associations of public service institutions that interact with virtually all…[industry] sectors, we believe patent legislation which balances and incorporates the principal interests of all parties and strengthens the U.S. patent system overall should be broadly supported."  The coalition includes the AAMC, the Association of American Universities (AAU), the Association of Public and Land Grant Universities (APLU, formerly NASULGC), the American Council on Education (ACE), the Council on Governmental Relations (COGR), and the Association of University Technology Managers (AUTM).

In further hopes of completing patent reform this year, the House Judiciary Committee held a hearing on April 30th on the companion version of the Patent Reform Act (H.R. 1260).  Both House Judiciary Chair John Conyers (D-MI) and Ranking Member Lamar Smith (R-TX) indicated that they have no intention of accepting the Senate language as it stands. The central sticking point remains language addressing how to apportion damages in patent infringement suits.

AAMC Supports Legislation to Increase GME Training Slots

Senators Bill Nelson (D-FL), Charles Schumer (D-NY), and Majority Leader Harry Reid (D-NV), May 5 have introduced a bill aimed at addressing the physician shortage.  The "Resident Physician Shortage Reduction Act of 2009" (S. 973), which has received the support of the Association of American Medical Colleges (AAMC), increases the number of Medicare-supported graduate medical education training positions by 15% (approximately 15,000 slots).  The bill also addresses Medicare rules that affect payments for resident time in non-hospital settings such as physician offices.  Finally, the legislation preserves residency slots from closed hospitals and redistributes the slots among nearby teaching hospitals.  Representatives Joseph Crowley (D-NY), Kendrick Meek (D-FL), and Kathy Castor (D-FL) have introduced companion legislation (H.R. 2251).

In a May 5th letter in support of the legislation, AAMC President and CEO Darrell G. Kirch, M.D., said, "The AAMC strongly supports your efforts and leadership to expand residency positions through this legislation." The letter also pledges the AAMC's "continued support" in light of the bill's role in "enhanc[ing] the nation's ability to meet future physician workforce needs."

Senate Committee Approves FCA Amendments

On March 5th, the Senate Judiciary Committee unanimously reported by voice vote the "Fraud Enforcement and Recovery Act of 2009" (S. 386).  The bill includes some of the False Claims Act (FCA) amendments introduced February 24th in the "False Claims Act Clarification Act of 2009" (S. 458).

The legislation would overturn several Supreme Court decisions that had narrowed the reach of the FCA.  The bill also includes as a false claim "the retention of any overpayment."  This provision is very troublesome for research institutions and hospitals that receive Medicare overpayments that are routinely returned during an audit process and for federal grant recipients who routinely use the reconciliation process to return any funds to the government that should not be retained.  Notably, the bill does not contain the language that would have redefined how damages in an FCA case are defined.  This language would have put research institutions at tremendous risk.

The AAMC has joined the United States Chamber of Commerce and eleven other groups in a letter to Senate Judiciary Committee Chair Patrick Leahy (D-VT) and Ranking Member Arlen Specter (R-PA) regarding the inclusion of the FCA amendments. The letter states "we acknowledge and appreciate the various changes the sponsors have made to some of the provisions in the legislation … However, we continue to have serious concerns that the legislation would have many unintended and undesirable consequences, that it contains many ambiguous provisions that would cause years of litigation over the meaning of the statute, and that it would unwisely and unnecessarily expand the scope of liability under the FCA."

House Introduces Generic Drugs Legislation

On March 11th Representative Henry Waxman (D-CA), Frank Pallone (D-NJ), Nathan Deal (R-GA) and Jo Ann Emerson (R-MO) introduced legislation that would allow the Food and Drug Administration (FDA) to approve generic versions of biotech drugs.


The "Promoting Innovation and Access to Life-Saving Medicine Act" (H.R. 1427) allows makers of an original biologic drug a five year period of exclusivity in marketing, and a three year exclusivity period for a modification to an already FDA-approved drug.  The legislation grants six months of exclusive generic marketing to the first company that proves to the FDA that its generic is safe and interchangeable with the original branded drug.  Exclusivity periods for brand name biologics can be extended up to one year if the drug can be used for a new disease indication, or if the applicant conducts pediatric studies.


The sponsors of this bill believe that this legislation will allow greater access to biologic drugs.  The bill sponsors released letters of support from a broad array of groups including, AARP, National Organization of Rare Disorders, and General Motors.  The Biotechnology Industry Organization (BIO) issued a statement objecting to the bill, saying it would jeopardize the development of new biologics.


H.R. 1427 has been referred to the House Committees on Energy and Commerce and the Judiciary.  Congressman Waxman chairs the Committe on Energy and Commerce while Congressmen Pallone and Deal are the chair and ranking member, respectively, of the panel's health subcommittee.


There is currently no companion legislation in the Senate, but Senators Charles Schumer (D-NY), Susan Collins (R-ME), Sherrod Brown (D-OH) and David Vitter (R-LA) are expected to introduce legislation soon.

Senate Panel, HHS Advisory Committee Consider Patent Policy and Reform

On March 10th the Senate Judiciary Committee held its first hearing of the new session on the "Patent Reform Act of 2009," (S. 515).  The legislation was introduced March 3rd by Senate Judiciary Chair Patrick Leahey (D-VT) and Senator Orin Hatch (R-UT), a senior member of the committee.  House Judiciary Committee Chair John Conyers (D-MI) and Ranking Member Lamar Smith (R-TX) introduced companion legislation (H.R. 1260) the same day.              

The hearing focused primarily on industry perspectives, but Senator Dianne Feinstein (D-CA) noted the need to reconcile views of all parties, including the universities.  The AAMC continues to work with the Association of American Universities and other academic associations to present a consensus position on patent reform.             

Members of the committee expressed hope of reaching compromise on certain provisions that have prevented enactment of similar legislation in previous Congresses.  In 2007, the House passed a patent reform bill but the Senate was unable to do so.  The legislation stalled primarily over provisions for the allocation infringement damages and a proposed "second window," in which outside parties could contest the award of a patent by the U.S. Patent and Trademark Office.


In a separate development, the Department of Health and Human Services (HHS) Secretary's Advisory Committee on Genetics, Health, and Society (SACGHS) has requested public comments regarding its draft report, "Public Consultation Draft Report on Gene Patents and Licensing Practices and Their Impact on Patient Access to Genetic Tests."  Public comments on the draft are due May 15th.

Health IT Provisions in the Stimulus Bill

When President Barack Obama signed the American Recovery and Reinvestment Act into law on February 17th, he made the largest investment ever by the federal government in Health Information Technology, over $19 billion.  Most of the funding, an estimated $17.2 billion, will be in the form Medicare and Medicaid incentive payments for hospitals and "eligible professionals" to promote the "meaningful use" of electronic health record technology (EHRs).  The use of EHRs will become linked to Medicare's hospital and physician quality reporting programs, and starting in 2015, non-adopters will face payment reductions. Additionally, the bill appropriates $2 billion in grants and loans that would be available through the HHS Office of the National Coordinator for Health Information Technology.  These funds include matching grants for demonstration projects to develop curricula integrating certified EHRs in the clinical education of health professionals.

HELP Committee, Daschle Highlight Need to Bolster NIH, Health Professions Training

On January 8th, the Senate Committee on Health, Education, Labor, and Pensions held the first confirmation hearing of President-elect Barack Obama's nominee for Secretary of Health and Human Services, Tom Daschle.  Much of the hearing focused on improved coordination across the department and increased support for the National Institutes of Health (NIH) and health professions training programs.

In his closing remarks, HELP Committee Chair Edward Kennedy (D-MA) stressed the need for continued discussions about the NIH.  In his written testimony, Secretary-designate Daschle stated, "NIH is a unique and prominent agency, the major source of research intended to protect the nation's health, stimulate the economy with high-tech job creation across the country, make discoveries that fuel the biotech and pharmaceutical industries, and train biomedical scientists for the future.  However, NIH has been flat-funded in recent years, which has produced a 17% loss of 'buying power' since 2003."

Several committee members expressed concerns about shortages of health professionals in their communities, and Secretary-designate Daschle agreed that workforce is an important factor, noting, "We almost understate the problem of access if all we do is limit it to the number of uninsured."  Instead, he proposed increasing incentives for physicians and "alternative providers" such as nurses, physician assistants, and pharmacists, to enter primary care, describing payment reform and tuition assistance as potential tools.  Senators Lisa Murkowski (R-AK) and Bernie Sanders (I-VT) praised Daschle for highlighting the National Health Service Corps (NHSC) as "a tremendous investment" and for agreeing that increased NHSC "funding is a good way to start."

Senator Patty Murray (D-WA) encouraged the nominee to pursue ways to persuade younger students to consider health professions careers.  Likewise, Senater Jack Reed (D-RI) noted that the Title VII health professions training programs have been "chronically underfunded" and urged the Secretary-designate to "pay particular attention to Title VII" as budget and health care reform proposals are considered.

The committee did not vote on Daschle's nomination. The Finance Committee, which has jurisdiction over his appointment because it oversees Medicare, will hold its own confirmation hearing and vote to advance his nomination to the full Senate.


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Last updated 8/12/ 2013

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