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Government Relations Update – October 18, 2011

Pennsylvania Issues


  • S.B. 1281:  Purely Public Charity Act.  On October 3, 2011, Senator Wayne Fontana (D-Allegheny) introduced legislation to amend the Institutions of Purely Public Charity Act (Act 55 of 1997) so that municipalities would be permitted to impose real estate taxes on not-for-profit entities, including hospitals but excluding property owned by police, fire, or emergency services organizations.  As currently proposed, the first $200,000 of assessed property value would be exempt from taxation.  The Senator introduced similar bills in previous legislative sessions, but they were not seriously considered.  HAP opposes the bill, which has been assigned to the Senate Finance Committee.  No Lehigh Valley legislator serves as a co-sponsor of the bill.


  • H.B. 1400:  Primary Stroke Designation Act.  As reported in June, Representative Doug Reichley (R-Berks, Lehigh) introduced legislation directing the Department of Health to designate nationally accredited Primary Stroke Centers (PSC) for the care and treatment of stroke patients.  Pursuant to the bill, emergency medical service providers would be required to transport stroke patients to the closest PSC.  St. Luke’s Hospital – Allentown Campus and St. Luke’s Hospital – Bethlehem Campus were certified as PSC by the Joint Commission in 2007.  On October 5, 2011, the bill was reported out of the House Health Committee and is scheduled for consideration by the House.  HAP and the American Heart Association support the bill. 


  • H.B. 1552:  Venue in Personal Injury Actions.  On May 18, 2011, Representative Bryan Cutler (R-Lancaster) introduced legislation requiring that personal injury actions be filed only in the county in which the cause of action arose, similar to venue rules applicable to medical malpractice cases.  Representatives Clymer (R-Bucks), Knowles (R-Berks, Schuylkill), Simmons (R-Lehigh, Northampton ), and Toepel (R-Montgomery) serve as co-sponsors of the bill.  The bill is currently in the House Judiciary Committee, and a vote has been scheduled for October 18, 2011.  HAP supports the bill.  


  • State Tax Revenues:  The Commonwealth’s revenues during the first three months of its fiscal year are $215 million, or 3.5%, below projections.  During September 2011, the Commonwealth collected 6% less than projected in General Fund revenues.  Senate Appropriations Chair Jake Corman (R-Centre) cautioned that it is too early to panic, although he noted that the results are concerning.   Elizabeth Brassell, a spokeswoman for the Department of Revenue, commented that the economic outlook is gloomy.  In prior fiscal years, revenue shortfalls have resulted in hospital payment reductions. 

New Jersey Issues


  • S.B. 3077:  Non-Profit Hospital Redevelopment and Growth Grant Program.  On September 26, 2011, State Senator Jim Whelan (D-Atlantic) introduced legislation to provide funding grants to non-profit hospitals that create jobs as a result of expansion and redevelopment projects.  The bill would authorize grants equal to 75% of state income taxes generated from new employees hired as a result of the project. 

Federal Issues


  • Physician Payment Plan RecommendationIn December 2010, President Obama signed into law a bill averting for one year the expected 25% decrease in dicare physician payments then scheduled to take effect on January 1, 2011 as a result of the sustainable growth rate (SGR) formula.  If the formula is not corrected, physicians will experience a 29% decrease in dicare payments as of January 1, 2012. 

    On October 6, 2011, the dicare Payment Advisory Commission ( dPAC) recommended the repeal of the SGR formula.  Instead, dPAC recommended a new fee schedule with a ten-year term.  The fee schedule would maintain primary care payments at current rates and reduce rates for other providers by 5.9% for three years followed by a seven year payment freeze.  The American dical Association, the American College of Cardiology and other physician organizations issued statements opposing dPAC’s recommendation.  Although most support abandoning the SGR system, most physician organizations assert that a new fee schedule should not include payment reductions to providers, especially given the payment reductions included in the Affordable Care Act and contemplated by the National Deficit Reduction Plan. 

    The measure received support from the National Coalition on HealthCare (NCHC).  NCHC noted that the dPAC proposal is the first one to seriously address the provider payment problem.  NCHC believes that the only way to reduce rising health care costs is to redesign the provider payment system by encouraging value and quality for patients.
  • National Deficit Reduction Plan:   As previously reported, Congress passed the much anticipated debt ceiling relief bill on August 2, 2011, which will raise the nation’s debt ceiling in several steps until 2013 and reduce the federal budget by about $2.1 trillion over the next 10 years.  The first stage of the bill requires $917 billion in federal spending reductions over the next ten years in exchange for a $900 billion increase in the national debt ceiling.  The second stage of the bill requires a special joint committee of Congress to recommend by late November an additional $1.2 trillion to $1.5 trillion in additional spending cuts to be implemented over ten years.  If the committee’s recommendations are enacted by late December, then the debt ceiling can be raised by an amount equal to the spending cuts.  If the committee’s recommendations are not enacted, then the debt ceiling will increase by $1.2 trillion, and $1.2 trillion in mandatory spending reductions - evenly divided between defense and non-defense spending - will be implemented, too.  Cuts to Social Security, dicaid, veterans' benefits and pensions, food stamps and Supplemental Security Income are exempt from the mandatory cuts.  However, cuts to the dicare system are not exempt, and dicare payments to providers may be cut by up to 2%.

    The committee is considering reduced funding for graduate medical education (GME), together with other payment reductions under dicare and dicaid.  Premier, the American Hospital Association and other hospital organizations continue to urge the committee to oppose proposals that would threaten the ability of providers to continue to provide care to their patients.  The Health Coalition for Liability and Access, a national advocacy coalition representing a large number of physician organizations, has requested that the committee consider medical liability reforms, include caps on noneconomic damages, as a method to reduce healthcare costs.