CBO Scoring Just Another Lobby Target

Posted November 9, 2007 at 6:16pm

While other lobbyists may have trembled when the 110th Congress instituted the “pay as you go” rule — which requires new costs to be offset with equivalent spending cuts or tax increases — Mark Leahey, the executive director of the Medical Device Manufacturers Association, only saw opportunity.

His member companies had a long-stalled issue: to get Congress to change the way hospital group purchasing organizations are funded — not surprisingly, they want to shift the burden away from device makers and onto hospitals.

Leahey, along with his team of lobbyists from such firms as Ogilvy Government Relations and Patton Boggs, claims such a move wouldn’t just save his companies cash, it also would save Medicare money.

The problem? His opponents in the group purchasing industry disagree, but more importantly, the Congressional Budget Office has given the proposal a “budget neutral” rating, meaning that as Congress looks for ways to save money from the federal coffers, the MDMA proposal won’t help. As a result, Leahey said, no legislation that would make the change MDMA is seeking has been introduced this Congress.

Still, the group is pushing for movement by the end of the year, looking for opportunities in any Medicare bill and trying to find ways around the CBO “score.”

The group’s effort offers a glimpse at how lobbying organizations both use CBO numbers and try, sometimes successfully, to push their agenda at the nonpartisan office, charged since its founding in 1974 to provide timely economic and budgetary analysis of federal programs.

“Maybe there’s a way for CBO to take a more dynamic approach to their scoring,” Leahey said. “It’s so frustrating. There needs to be something to capture policy changes that may not have a quote-unquote technical CBO score. Common sense would say this would save money.”

Curtis Rooney, president of the Health Industry Group Purchasing Association, disagrees.

His group opposes any changes to the funding of group purchasing organizations, which are entities that collect the fees from medical device makers or other providers that are selling to hospitals or other health care organizations. The GPOs, or group purchasing organizations, then negotiate prices with the hospitals.

Leahey said device makers have to pay the GPOs, which act as a sort of broker, in order to sell their products, such as pacemakers, to hospitals. He wants to shift the fee to the hospitals.

Rooney said cost-shifting could actually cost Medicare money. “We’ve put out studies that show that,” he said. “Every time we look at the issue, we find it’s going to cost more money for the federal government if MDMA gets their way.”

The GPOs have been exempted from anti-kickback rules since the late 1980s, and many device manufacturers and industry observers say the GPO arrangement leads to lower costs.

Richard Bednar, senior counsel at Crowell & Moring, represents the Healthcare Group Purchasing Industry Initiative, which also opposes what MDMA wants.

“The current funding model has been in place for a number of years, and it works very well,” he said. “I think the CBO is right. It’s been looked at several times.”

But Leahey contends that as long as companies are paying to gain access, “it’s inflating the cost of the care.” Leahey said his group estimates the savings to Medicare could be up to $2 billion a year.

Jodie Low, a health care lobbyist with Kimbell & Associates, represents an MDMA member company and also is pressing the issue. The way the CBO scores the issue, she said, “it’s kind of like squeezing a balloon.” Any savings in one area end up poking out in another.

“It’s very frustrating as someone who’s working on an issue that would not only benefit Medicare and hospitals and taxpayers, but also provide more innovation and better products,” she said.

This isn’t the only issue where she doesn’t see eye-to-eye with the CBO. She also complains that when scoring Medicare programs, the CBO does not count savings in one section, such as Part A for inpatient care, if it means more spending in another such as Part B, or outpatient care. “The CBO won’t recognize that as savings because [the savings and the costs] are in different parts of the Medicare program,” she said.

Of course, lobbyists long have griped about the CBO when it doesn’t come up with a score that’s in sync with their clients’ arguments. And some lobbyists turn directly to the CBO to make their case.

“We have an open-door policy, and we try and be as transparent as possible,” said Melissa Merson, associate director for communications of the CBO. “We are always happy to review any information or data that organizations or people have.”

In one such case, lobbyist Dean Rosen, who runs the health care practice at Mehlman Vogel Castagnetti, said he found a receptive audience. His client, Medicare Cost Contractor Alliance, felt the data the CBO used to score a program was outdated. The group hired an actuary firm and made its case to the CBO.

“It’s very difficult to try to spin stuff with the CBO,” Rosen said. “We went in and met with the CBO to talk to them about the methodology. I’m not saying they bought everything we had, but I think we filled a gap by modernizing the study methodology.” The final score came out this year lower than the original estimate, Rosen said.

He added: “It’s also enormously helpful to work with Members of Congress who have an interest in this issue.”