On June 19, the U.S. House of Representatives passed the $165 billion Iraq War Supplemental bill in two amendments. The first amendment, approved on a 268–155 vote, includes $165.4 billion to fund the war through the first part of FY09. Approved on a 416–12 vote, the second amendment, which reduces war spending to $161.8 billion by diverting $3.6 billion for other needs, includes critical moratoria that will block action until April 1, 2009, on six Medicaid regulations issued by the Bush Administration—including elimination of Federal graduate medical education funding, limits on intergovernmental transfers, and reduction of provider taxes. While previous versions of the bill had included an additional moratorium on the hospital outpatient rule, House leadership withdrew this measure to avoid a White House veto. Under the proposed outpatient rule, public hospitals in New York could lose $120 million per year, while the State as a whole would lose roughly $300 million annually. 
     
Because the House modified the underlying bill, the measure must now return to the Senate for final approval. While the Senate had originally wanted additional domestic spending in the package, Senate Majority Leader Harry Reid (D-NV) said that he hoped to pass the measure “as is” at which point it will go to the President. GNYHA will continue to advocate for a separate moratorium on the remaining outpatient Medicaid regulation.
On the Medicare side, Senate Finance Committee Chairman Max Baucus (D-MT) on June 6 released his long-awaited Medicare bill (S. 3101) that would fix the 10.6% physician payment cut slated for July 1, among other Medicare provisions. Much to the relief of the hospital community, the Baucus bill also excludes both direct cuts to hospitals and the implementation of a value-based purchasing (VBP) program. While supportive of the VBP concept, GNYHA does not believe that such a program should be implemented without Congressional hearings or other opportunities for providers to weigh in on how the program should be structured.
     
GNYHA, with the Association for American Medical Colleges (AAMC) and other key stakeholders, continues to advocate for new provisions that would protect teaching hospitals from the elimination of capital indirect medical education (IME) payments and that would clarify how medical resident time can be counted. Prior to the cloture vote in the Senate, the White House issued a veto threat on the bill, citing issues with the cuts to Medicare’s private managed care program, Medicare Advantage. As such, it was not surprising that Senate Republicans succeeded in keeping the measure from moving forward on June 12, by a vote of 54–39 (60 votes were needed to proceed).
     
As a counter to the Baucus proposal, Senate Finance Committee Ranking Member Charles Grassley (R-IA) introduced his own Medicare package on June 10. While much of the Grassley bill is similar to the Democratic proposal, GNYHA strongly opposes two provisions—the implementation of a VBP program entirely at the Administration’s discretion and a policy that would require all states to develop Medicaid payment systems “consistent with Medicare” for certain hospital-acquired conditions. Senators Baucus and Grassley must now work together on crafting a new agreement, though it is unclear whether a compromise bill can pass the Senate before the July 1 physician cut deadline.