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Government Relations Update - May 15, 2012

Pennsylvania Issues


Certificate of Need: On May 2, 2012, Senator Kim Ward (R-Westmoreland) announced that she intends to introduce legislation to reenact the certificate of need (CON) program for health care facilities located in Pennsylvania. The prior CON requirements in Pennsylvania expired in 1997. Senator Ward asserts that CON programs prevent unnecessary healthcare spending, while opponents of CON programs generally argue that they limit competition and thereby increase healthcare costs. The Hospital & Healthsystem Association of Pennsylvania (HAP) has strongly opposed efforts in prior legislative sessions to reinstate CON requirements.


S.B. 1466: General Fund Act. On May 8, 2012, Senator Jake Corman (R-Centre, Juniata, Mifflin, Perry, Union), Chairman of the Senate Appropriations Committee, introduced a 2012-2013 state budget proposal that would increase spending by $500 million as compared to the Governor's budget proposal. The bill would mostly restore funding to higher education, basic education and county-run human services programs. In addition, the proposal would fully restore hospital supplemental payments for obstetrics and neonatal services, as well as payments to burn centers, critical access hospitals and trauma centers. Finally, Department of Public Welfare (DPW) program funding would be slightly restored. According to Senator Corman, the Commonwealth is experiencing better than anticipated revenues, which enables significant funding improvements as compared to the Governor's proposal without the need to raise taxes. On May 9, 2012, the Senate approved the bill by a vote of 39 to 8, and it has been sent to the House for consideration. Every senator from the Lehigh Valley voted in favor of the legislation. HAP commented that the Senate budget proposal is more favorable than the Governor's proposal, but HAP continues to advocate for full restoration of all hospital funding.

H.B. 495: Apology/Benevolent Gesture Act. As previously reported, the House passed the Apology/Benevolent Gesture Act by a vote of 171 to 27 on March 1, 2011. The legislation would make an apology by a healthcare provider or healthcare employee inadmissible in any subsequent medical malpractice action. The bill has been sitting idle in the Senate Judiciary Committee since passage in the House. On April 27, 2012, a group of fifty business and health care organizations, including HAP, sent a letter to Senator Alloway (R-Adams, Franklin, York), Chairman of the Senate Judiciary Committee, urging consideration of the bill. HAP and other advocates assert that the bill would reduce medical malpractice cases by encouraging communication between patients and providers following adverse events. Thirty-five states, including Ohio, Delaware and Maryland, have enacted similar legislation. Senator Alloway has not yet responded.

New Jersey Issues


Health Insurance Exchanges: The Patient Protection and Affordable Care Act (PPACA) creates statewide health insurance exchanges by 2014 for individuals and small businesses to compare health insurance plans and rates. If a state fails to create an exchange, the federal government will design one for it in accordance with PPACA. On March 15, 2012, the New Jersey legislature passed the New Jersey Health Benefits Exchange Act to develop a health insurance exchange in accordance with PPACA. On May 10, 2012, Governor Christie (R) vetoed the legislation and stated that it would be irresponsible to enact the law while the constitutionality of PPACA remains uncertain. Governor Christie ensured that New Jersey would comply with PPACA if upheld by the United States Supreme Court. Democratic legislative leaders criticized the Governor's decision and warned that it would create unnecessarily delays in the state's implementation of PPACA. Governor Christie is only the second governor to veto legislation establishing a state insurance exchange. New Mexico Governor Susana Martinez vetoed similar legislation last year.


New Jersey Primary Election: The New Jersey primary election will be held on June 5, 2012. Voters will select party candidates for President, United States Congress and several state and local races. Incumbent Congressman Leonard Lance (NJ-7-R) faces challenger David Larsen, an entrepreneur and businessman, in the Republican primary election for United States Congress. The successful candidate will oppose current New Jersey Assemblyman Upendra Chivukula (D-Somerset) in the November general election. Assemblyman Chivukula has been a member of the General Assembly since 2002 and currently serves as the Deputy Speaker. As a result of legislative redistricting, St. Luke's Hospital - Warren Campus moves from New Jersey's 5th Congressional district into the 7th Congressional district. Warren County Freeholder Everett Chamberlain (R), who has been in office since 2003, is being challenged in the primary election by Ed Smith. Mr. Smith previously served as Chief of Staff to New Jersey State Senator Michael Doherty (R- Hunterdon, Somerset, Warren). There is no Democratic candidate.

Federal Issues


H.R. 5707: The Reforming Medicare Physician Payment Act. The Sustainable Growth Rate (SGR) formula was devised in 1998 as a method to control healthcare spending by tying Medicare costs to growth in the economy. However, as medical costs increased more quickly than inflation, the SGR formula would have caused physician payment reductions through Medicare each year since 2002. In response, Congress has passed bills routinely to delay or avert the implementation of the payment reductions, thereby avoiding the impact of the SGR formula. On February 17, 2012, Congress most recently delayed the impact of the SGR formula and extended the then current Medicare physician fee schedule rates through December 31, 2012. If Congress fails to act again, the Medicare physician fee schedule will reduce physician payments by 32% on January 1, 2013.

On May 9, 2012, Representatives Allyson Schwartz (PA-13-D) and Joe Heck (NV-3-R) introduced legislation to repeal the SGR formula. The proposed legislation would: (1) avoid the 32% reduction in physician reimbursements under Medicare scheduled for January 1, 2013; (2) provide annual increases in physician Medicare payments for four years; (3) ensure access to preventative care and primary care services for seniors through increased primary care physician payments; (4) require the evaluation of new physician payment and delivery models; and (5) stabilize payment rates for providers who demonstrate quality and efficiency. The estimated cost to repeal the SGR formula is $300 billion over ten years. In order to pay for the repeal, Representatives Schwartz and Heck propose using projected savings from the scheduled troop withdrawal from Iraq and Afghanistan. The American College of Physicians, the American College of Cardiology, the American Academy of Family Physicians and Premier all support the legislation. However, the House Republican leadership argues that the projected troop withdrawal savings are overestimated. The bill has been referred to the House Committee on Energy and Commerce, the House Committee on Ways and Means, and the House Budget Committee.

S. Con. Res. 37: Restoring Balance. On April 18, 2012, Senator Toomey (R-PA) introduced a legislative proposal that would balance the federal budget over the next eight years. The budget proposal would achieve this objective largely through reductions to discretionary spending programs, which the Senator believes has been the primary driver of federal deficits throughout the last decade. The proposal would also repeal PPACA and the SGR formula and implement medical malpractice reforms, including caps on damages and abbreviated periods for actions to be filed. Although the Senate is not expected act on the proposal, Senator Toomey plans to force the Senate to vote on the measure by taking advantage of an obscure rule allowing any senator to offer a budget proposal if the budget committee fails to act. Senate Majority Leader Harry Reid (D-NY) does not plan to introduce a budget proposal to the Senate floor, since the Budget Control Act approved last August already determines the 2013 federal fiscal year spending plan.