Health Care Reform Battle Was Tip of the Iceberg: AAMC Advocacy Update


The AAMC works to support medical schools and teaching hospitals as they improve the health of all. This work includes advocating on a breadth of issues affecting these institutions and the populations they serve. Health care reform dominated the news cycle over the summer and fall of 2017, and the AAMC engaged members of Congress and staff, ran advertisements, and released statements outlining its principles, in efforts to defeat all the repeal and replace proposals. And throughout this time, the AAMC continued its advocacy of other issues that did not garner so much of the spotlight.

These issues, including vital funding for federal agencies, Medicare and Medicaid payments and reimbursements, veterans health, immigration, and Deferred Action for Childhood Arrivals (DACA), will continue to move forward with health care reform off the table—for now.

Funding tomorrow’s cures, doctors, and more: the appropriations process

While Congress attempted to use the budget reconciliation process to pass health care reform, it also made progress on creating the annual federal budget via the appropriations process over the summer.

This year, budget allocations—the topline numbers that members of Congress work with to fund the various programs each agency manages—are affected by caps imposed under the Budget Control Act. Of the various appropriations bills of consequence to the academic medicine community, the one most dramatically affected by these caps is the Labor, Health and Human Services, Education, and Related Agencies (Labor-HHS) bill, which funds the National Institutes of Health (NIH), Agency for Healthcare Research and Quality (AHRQ), Title VII and Title VIII workforce pipeline programs, and other public health priorities.

Despite recent increases, according to AAMC analysis of NIH budget data, funding for NIH has fallen by roughly 18% over the last decade. With biomedical research being a major driver of not only cures and treatments, but also the economy, the research community—including the AAMC—and congressional appropriators have been pushing for an increase in NIH funding.

While the bill in the House of Representatives proposed a $1.1 billion increase for NIH, the spending caps forced appropriators to impose cuts to other agencies, including AHRQ. The House also called for all but eliminating the Title VII and Title VIII programs. The Senate’s Labor-HHS allocation was $8 billion higher than the House’s, allowing senators to offer a $2 billion increase for NIH, while preserving funding for AHRQ and the workforce diversity and pipeline programs in their version of the bill.

To ensure the benefits of medical research are fully realized by funding agencies across the health care continuum and to support pipeline programs in the face of a looming physician shortage, the AAMC and other stakeholders have called on Congress to raise the caps imposed by sequestration.

In a statement on the Senate Appropriations Committee moving its version of the bill forward, AAMC President and CEO Darrell G. Kirch, MD, said, “This bill demonstrates the importance of even moderate discretionary spending growth for health care programs, and we hope Congress will act to ensure the spending caps enable such investments. The AAMC looks forward to working with lawmakers as the process moves forward to secure final funding levels that invest fully in these critical programs that improve our nation’s health security.”

“The AAMC looks forward to working with lawmakers as the process moves forward to secure final funding levels that invest fully in these critical programs that improve our nation’s health security.”

Darrell G. Kirch, MD
AAMC President and CEO

Because lawmakers were unable to complete appropriations work by the start of the fiscal year on Oct. 1, they had to negotiate a stopgap to avert a government shutdown. The administration and congressional leadership agreed to a deal as part of the effort to provide initial funding for hurricane response, which suspended the debt ceiling through Dec. 8 and included a continuing resolution to fund the government just below fiscal year (FY) 2017 levels through that date.

Since passage of the continuing resolution, the full House passed their version of the Labor-HHS bill as part of an “octobus” package of eight spending bills. The Senate has yet to take up its bill before the full chamber. Next steps will depend on whether leadership can negotiate a deal to raise discretionary spending.

Further funding issues in research: F&A costs

Adding to concerns over NIH funding has been a proposal from the president to cut reimbursement for indirect costs, known as facilities and administration, or F&A costs.

F&A costs reflect the expenses institutions incur as a result of conducting research. They include items such as building utilities and maintenance, information technology (IT), administrative staff salaries, and other infrastructure necessary to comply with federal, state, and local rules and regulations. Institutions are reimbursed for these costs at rates negotiated with the government, usually not recouping them in full.

Because these expenses are inseparable from the research itself, many institutions fear they would be forced to close or dramatically scale back their research programs without NIH support for these costs. The AAMC worked closely with others across the research community to help inform lawmakers about the consequences of a proposal to undermine F&A support.

Language included in the House and Senate versions of the Labor-HHS bill would preserve these reimbursements, which are vital to the research conducted at medical schools and teaching hospitals nationwide. Similar language was also included in the continuing resolution funding the government through December.

Serving the underserved: 340B drug pricing program

At the other end of the bench-to-bedside continuum, many teaching hospitals saw another source of funding for essential programs come under attack. In the proposed Hospital Outpatient Prospective Payment System (OPPS) rule, the Centers for Medicare and Medicaid Services (CMS) proposed a major cut to the rate at which Medicare would reimburse hospitals for outpatient drugs purchased through the 340B drug pricing program, from average sales price (ASP) plus 6% to ASP minus 22.5%.

At no cost to the federal government, the 340B program requires pharmaceutical companies to provide certain drugs to safety-net hospitals at a discounted rate. The savings the hospitals accrue are then used to provide crucial services and care for underserved patients.

The AAMC, along with many of its teaching hospital members, responded to the proposed rule, urging CMS to reverse course with regard to the proposed cut to 340B hospitals. In its comment letter sent to CMS, the AAMC wrote, “The proposal represents a significant payment reduction that will undermine the purpose and benefits of the 340B Program, while crippling the ability of 340B hospitals to provide support and programs to serve vulnerable and low-income patients.”

On Capitol Hill, the AAMC engaged members of Congress, educating them about the program, its benefits, and the impact this cut would have on safety-net hospitals and the patients they serve. Representatives David McKinley (R-W.V.), David Kustoff (R-Tenn.), and Mike Thompson (D-Calif.) led a bipartisan “Dear Colleague” letter in the House that urged CMS to rescind the proposal. The letter read, “Given the important role that the 340B program plays in our communities, we strongly urge CMS to abandon this proposal and redirect its efforts toward actions to address the cost of drugs.” A Senate “Dear Colleague” was circulated by Senators John Thune (R-S.D.), Rob Portman (R-Ohio), Shelley Moore Capito (R-W.V.), Debbie Stabenow (D-Mich.), Tammy Baldwin (D-Wis.), and Bill Nelson (D-Fla.).

“Given the important role that the 340B program plays in our communities, we strongly urge CMS to abandon this proposal and redirect its efforts toward actions to address the cost of drugs.”

House “Dear Colleague” letter on 340B program

The AAMC and member institutions worked to have representatives and senators sign on to the letters in their respective chambers. A bipartisan majority of Congress—228 members of the House and 57 Senators—signed these letters.

Despite these letters and public comments from the AAMC, member institutions, and other hospital associations, CMS maintained these cuts in its final rule. The AAMC will pursue all options moving forward including joining with the American Hospital Association and America’s Essential Hospitals in litigation to prevent this cut from going into effect.

There is additional congressional interest in the 340B program. In late September, the House Energy and Commerce Oversight and Investigations Subcommittee sent letters to 19 340B institutions requesting information on their participation in the program from 2012 through 2016. The subcommittee also held hearings in July and October to examine the program.

In response to the hearings, the AAMC sent letters to members of the committee in support of the program and outlined examples of how teaching hospitals use the savings they receive under the program to expand services to vulnerable populations. For example, participants provide free or substantially discounted prescriptions to uninsured or low-income patients, pharmacist counseling for medication therapy disease management, and multidisciplinary clinics offering substance abuse and mental health treatment, among other services.

How Congress will move forward regarding the program is uncertain.

Expanding access to care for veterans: reauthorization of the Choice Act

While working to expand access and services to underserved populations through 340B, the AAMC also advocated for expanding access to care for veterans, primarily through a reauthorization of the Veterans Access, Choice, and Accountability Act (Choice Act).

The Choice Act, signed into law in 2014, allows veterans to seek care from a non–Veterans Affairs (VA) medical centers if there are average wait times over 30 days at their nearest VA center and the veteran lives more than 40 miles away from that center. It also expanded the number of residency positions at VA medical centers, providing more future physicians with exposure to the VA and veterans. Since the passage of the Choice Act, the VA has been working to fill the 1,500 new residency positions, half of which have been allocated, Karen Sanders, MD, deputy chief academic affiliations officer at the VA, said at a congressional briefing in July.

Earlier in 2017, a bill to remove the sunset date of the Choice Act and allow programs under it to continue until all funding was expended was signed into law. The VA has proposed language to replace the act, as have both the House and Senate Veterans Affairs Committees.

As those measures make their way through the process, the AAMC has worked to maintain VA’s authority for direct sole-source contracts with academic affiliates, which is critical for veterans’ access to care not available at other community providers and for bolstering the education and research missions shared by the VA and its affiliates. Other priorities include expanding VA graduate medical education (GME), increasing recruitment incentives, and reducing VA bureaucracy in areas such as joint ventures for space, equipment, and personnel. 

Looking forward: other issues on the horizon

As the appropriations process and action on reauthorizing the Choice Act continue, Congress may act on other issues of interest to medical schools and teaching hospitals. Some major topics to be on the lookout for include funding for GME; potential congressional action on  DACA; tax reform, which may include provisions related to charitable deductions and nonprofit status; reauthorization of the Higher Education Act, which could affect student loans; reauthorization of the Children’s Health Insurance Program (CHIP), which could include Medicare related provisions; and a federal response to the opioid epidemic.