2012-09-01

Congressional Pressure Builds on Spending as New Fiscal Year Approaches 

October 1 marks the beginning of the new fiscal year and the date by which spending bills must be completed by Congress. If Congress cannot reach a decision about spending bills by that date, it has two options: pass a temporary continuing resolution that extends federal agency and program funding from the prior year or shut down the government until it can come to an agreement on spending. As this issue of The Hematologist went to press, it appeared that the leadership in the House and Senate had reached an agreement to fund the government for six months – a move that would avert an October 1 shutdown and keep the federal government operating through March 2013. The continuing resolution would keep the government funding at the same levels as last year, and it would prevent a pre-election showdown over shutting down the government, something neither Democrats nor Republicans want. However, many issues need to be resolved, including how to deal with the automatic across-the-board spending cuts (sequestration) that arose as a consequence of the failure of the Super Committee to agree upon a plan to curtail spending.

Sequestration: What Is It and Is It Going to Happen? 

“Sequestration” is often in the news and is dominating the budget debate in Congress, but what exactly does it mean? Originally sequestration was a legal term referring to the act of seizing property by an agent of the court to prevent that property from being disposed of or misused before a dispute over its ownership could be resolved. But recently the term has been appropriated by Congress to describe a fiscal policy procedure. If the 13 appropriation bills passed separately by the legislature provide for total government spending in excess of the limits of the Budget Control Act, and if Congress cannot agree on ways to cut back the total or if a higher Budget Resolution is not passed, an automatic reduction in spending goes into effect. This automatic spending cut is called sequestration, and in this case, the U.S. Treasury Department will sequester the money that was appropriated in excess of that prescribed by the Budget Control Act. To avoid sequestration, Congress must identify more than $100 billion in savings or across-the-board cuts in funding of domestic and defense programs will be enacted on January 2, 2013.

The budget of every agency could have been equally affected by sequestration. However, Congress chose to exempt some programs (for example, Social Security and certain parts of Medicare and Medicaid). The fallout from this decision is that sequestration of a higher proportion of the budgets of the nonexempt programs would be required to meet the prescribed spending reduction mandate. The exact impact on programs that would be subject to sequestration has not been made available, but NIH leadership has been instructed to plan for sequester cuts of 7 to 9 percent.

Sequestration was intended to be so catastrophic that Congress would find means to avoid such a draconian process, but so far Congress has not been able to come to an agreement on how to resolve the deficit (remember the failure of the Super Committee?). With sequestration pressures mounting, some in Congress have begun discussing the possibility of delaying the process by a year while other members are proposing alternative spending and revenue strategies. Consequently, the outlook is unclear.

ASH is anxious about the impact of sequestration on federal agencies and programs relevant to hematology, particularly the impact on hematology research funded by NIH. As noted in this issue’s cover story, the Society has taken steps to address the NIH budget crisis, including enhanced advocacy focused on protecting NIH. All ASH members are encouraged to participate in ASH’s advocacy campaign and to contact your Representative and Senators. Please visit the ASH Advocacy page to get involved. 

ASH Advocacy Successful; President Obama Signs FDA Bill on User Fee Programs & Drug Shortages 

On July 9, President Obama signed into law the Food and Drug Administration Safety and Innovation Act. The final legislation, also known as the Prescription Drug User Fee Act, includes provisions to mitigate drug shortages, which ASH advocated. In addition to addressing drug shortages, the new law creates user fee programs for generic drugs and generic biologic drugs, or biosimilars, and includes provisions that focus on the safety of the drug supply chain, among other issues.

Medicare Proposes 2013 Physician Fee Schedule Regulation 

The Centers for Medicare & Medicaid Services (CMS) announced the proposed 2013 Physician Fee Schedule rule on July 7. The proposed rule assumes that physician payment will be reduced by 29 percent as a result of the flawed physician payment formula. On the other hand, payments to family physicians would be increased by approximately 7 percent and by 3 to 5 percent for other primary care practitioners. Among the many aspects of health care that are dealt with in this broad reaching legislation are the following: care transition codes, telehealth, advanced molecular pathology services, preventive services, multiple procedure payment reductions, face-to-face requirement for high-cost durable medical equipment, the Physician Compare Program, the Physician Quality Reporting System, e-prescribing, and the value-based modifier. ASH will be submitting comments to CMS by the September 4 deadline.
 

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