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Government Relations Update - June 12, 2012

Pennsylvania Issues


Telemedicine Initiative: On May 23, 2012, Governor Tom Corbett (R) announced the expansion of the Pennsylvania Medicaid program to cover more telehealth services from additional types of specialty physicians. The program previously covered only telehealth consultations by specialists in obstetrics and gynecology, pediatrics, psychology and psychopharmacology, and a referring physician was required to be present during the virtual consultations. Under the expansion, the program now: (1) also covers telehealth consultations with cardiologists and neurologists; (2) requires only a medical professional, such as a nurse, to be present during a telehealth consultation; and (3) allows physicians to use telehealth meetings to diagnose patients, recommend and monitor treatments, order tests and prescribe medicine. Pennsylvania officials commented that the move aims to increase access to specialized care for individuals in rural areas. The Hospital & Healthsystem Association of Pennsylvania (HAP) supports the initiative.

Institutions of Purely Public Charity Act (Act 55 of 1997): The Pennsylvania Constitution provides that "institution[s] of a purely public charity" are entitled to exemption from real estate taxes. In 1985, the Pennsylvania Supreme Court adopted a test (HUP Test) to determine that an institution is one of purely public charity when it: (a) advances a charitable purpose; (b) donates or renders gratuitously a substantial portion of its services; (c) benefits a substantial and indefinite class of persons who are legitimate subjects of charity; (d) relieves the government of some of its burden; and (e) operates entirely free from private profit motive. In 1997, the Pennsylvania General Assembly enacted the Institutions of Purely Public Charity Act (Act 55), which clarified part (d) of the HUP Test by defining broadly the requirement to relieve the government of some of its burden. On April 25, 2012, the Pennsylvania Supreme Court revisited the HUP Test in a tax exemption appeal. The court determined that a party must meet the HUP Test to be eligible for tax exemption, and, if it fails to do so, the applicant's ability to comply with Act 55 is meaningless. As a result, applicants for tax exemption can no longer rely on the certainty and flexibility created by Act 55. In response, Senators Brubaker (R-Lititz) and Scarnati (R-Jefferson) announced their intent to introduce an amendment to the Pennsylvania Constitution to preserve the General Assembly's role in determining whether an institution is a purely public charity. HAP supports the proposed legislation.

Avoidable Hospital Readmissions: On June 7, 2012, the Pennsylvania Health Care Cost Containment Council (PHC4) released a study concluding that approximately one of every eight adult inpatient stays in Pennsylvania general acute care hospitals in 2010 were potentially preventable. Potentially preventable hospitalizations are identified through a set of indicators developed by the United States Department of Health and Human Services Agency for Healthcare Research and Quality. Using the condition and diagnosis codes under which patients are admitted, the indicators point to hospitalizations that were potentially avoidable with timely and effective outpatient care or disease management. The three conditions with the highest percent of potentially preventable hospitalizations were heart failure, asthma and pneumonia.


S.B. 1466: General Fund Act. As previously reported, Senator Jake Corman (R-Centre, Juniata, Mifflin, Perry, Union), Chairman of the Senate Appropriations Committee, introduced a 2012-2013 state budget proposal on May 8, 2012 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. On May 22, 2012, the House Appropriations Committee, under the leadership of Appropriations Chairman William Adolph (R-Delaware), passed the Senate bill without amendments. HAP and the entire hospital community continue to advocate for full restoration of all hospital funding. Governor Corbett continues to support his spending plan and asserts that the Commonwealth cannot afford the additional expenditures contemplated by the Senate bill.

New Jersey Issues


State Tax Revenues: On February 21, 2012, Governor Christie proposed a $32.1 billion budget for the 2013 fiscal year. The budget plan, which would reduce personal income taxes, increase funding to public schools and maintain funding for New Jersey hospitals, represents a 3.7% spending increase compared to the current budget. The Governor commented in February that the additional expenditures are possible as a result of the improving economy and two years of prudent fiscal management. During the four months since the budget announcement, New Jersey revenues have continued to soften, and the New Jersey Department of Treasury recently announced a $230.3 million collection deficit compared to its earlier projections. Although revenues from state sales taxes exceeded projections by 2.9%, the Department of Treasury reported that revenues from gross income taxes were 2.8% below budget and revenues from business taxes were 22.1% below budget. Given the more recent financial performance, certain state leaders have begun threatening budget cuts in 2013. The New Jersey Hospital Association continues to advocate for the maintenance of hospital funding in the 2013 state budget.

New Jersey Primary Election: During the New Jersey primary election held on June 5, 2012, Ed Smith defeated incumbent Everett Chamberlain to become the Republican nominee for Warren County Freeholder. Mr. Smith, former Chief of Staff for State Senator Michael Doherty (R-Warren, Hunterdon), will face Democrat Tom Palmieri in the fall election. Mr. Palmieri, who won as a write-in candidate, is an insurance agent and a member of the Warren County Economic Development Corporation.

Federal Issues


H.R.5651: The Food and Drug Administration (FDA) Reform Act of 2012. On May 30, 2012, the House approved legislation intended to alleviate the impact of prescription drug shortages on hospitals and patients. The bill would require manufacturers to provide early notification to the FDA of pending shortages, enable the FDA to expedite applications for manufacturing changes for drugs in shortage, and improve the FDA's recordkeeping for prescription drugs in shortage. Congressmen Dent (R-15-PA), Fitzpatrick (R-8-PA), Holden (D-17-PA) and Lance(R-7-NJ) supported the bill. On May 24, 2012, the Senate approved similar legislation, with Senators Casey (D-PA), Toomey (R-PA), Lautenberg (D-NJ) and Menendez (D-NJ) voting in favor of the bill. The bills now proceed to a joint conference committee for reconciliation. Leaders expect that a reconciled bill will be ready for the President's signature prior to the July 4th recess. HAP supports both bills.


Congressional Academic Medicine Caucus: On May 17, 2012, Congresswoman Allyson Schwartz (D-13-PA) and Congressman Phil Roe (R-1-TN) announced the reinstatement of the Congressional Academic Medicine Caucus (CAMC). The CAMC is a bipartisan group of House members focused on graduate medical education (GME) funding and other issues relating to physician training. The CAMC was initially formed in 2009, although it has not been an active caucus during this legislative session. Congresswoman Schwartz explained that the CAMC was reinstated given the impending physician shortage. The Association of American Medical Colleges (AAMC) issued a statement supporting the CAMC and its mission.

New Jersey Primary Election: State Senator Joseph Kyrillos (R-Monmouth) won the Republican primary for United States Senate and will face Senator Robert Menendez (D-NJ) in the general election. Senator Menendez was first elected to the United States Senate in 2006 following terms in the New Jersey General Assembly and the New Jersey State Senate and seven terms in Congress. Senator Kyrillos has been a member of the New Jersey General Assembly since 1988 and is also a commercial real estate broker. Congressman Leonard Lance (R-7-NJ) defeated his primary challenger and will face New Jersey Assemblyman Upendra Chivukula (D-Somerset) for the 7th Congressional District seat in the fall. Assemblyman Chivukula has been a member of the General Assembly since 2002 and currently serves as the Deputy Speaker.