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01-08-2013

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Government Relations Update - January 8, 2013

Pennsylvania Issues

Legislation

Apology/Benevolent Gesture Act: Senator Pat Vance (R-Cumberland) announced plans to reintroduce legislation which would make an apology by a healthcare provider or healthcare employee inadmissible in any subsequent medical malpractice action. HAP supports the proposed bill and asserts that it 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. The House passed a similar bill on March 1, 2011, but the Senate failed to consider it.

Breast Cancer Screening: Pennsylvania law currently requires insurers to cover all costs associated with a mammogram every year for women 40 years of age or older and any mammogram based on a physician's recommendation for women less than 40 years of age. Senator Bob Mensch (R-Bucks, Lehigh, Montgomery, Northampton) announced plans to reintroduce legislation requiring health insurers to also provide coverage for breast ultrasound screening and breast magnetic resonance imaging if determined necessary by a medical professional. The Pennsylvania Breast Cancer Coalition is expected to support the bill. HAP is reviewing the proposal.

New Jersey Issues

Miscellaneous

Phillipsburg Town Council: On January 1, 2013, Phillipsburg Town Councilman Bernie Fey, Jr. became president of the Phillipsburg Town Council. Councilman Fey supported St. Luke's in its efforts to affiliate with Warren Hospital.

Federal Issues

Legislation

H.R.8: The American Tax Payer Relief Act of 2012. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012 (ATRA). In addition to making well-publicized changes to the tax code, the new law includes numerous Medicare payment provisions. Most notably, the law includes a one-year Medicare physician fee schedule (MPFS) fix that is paid for by approximately $30 billion in other health care (mainly Medicare) spending reductions over 10 years. ATRA also delays until March 2013 the automatic "sequestration" cuts in federal spending imposed by the Budget Control Act of 2011, which are expected to reduce Medicare provider payments by more than $11 billion in fiscal year 2013 and $123 billion between fiscal year 2013 and fiscal year 2021. The delay in sequestration, coupled with the government again reaching its debt ceiling, sets up another near-term battle on federal spending, during which Medicare, Medicaid and other health care programs could be targeted for even more significant cuts. The following are highlights of the health policy and payment provisions of ATRA:

  • Medicare Physician Payments: ATRA overrides a 26.5% across-the-board cut in MPFS payments that were scheduled to be imposed for calendar year 2013 under the statutory sustainable growth rate (SGR) formula. Instead, ATRA provides for a zero percent conversion factor update, which essentially extends 2012 rates through 2013. The Congressional Budget Office estimates that the SGR fix will increase Medicare spending by $25.2 billion over 10 years.
  • Hospital Payment Extensions: ATRA extends an add-on payment available to qualifying low-volume hospitals that have fewer than 1,600 Medicare discharges and that are at least 15 miles away from another acute care hospital through December 31, 2013. ATRA also extends the Medicare-dependent hospital (MDH) program for rural hospitals until October 1, 2013. St. Luke's Hospital - Miners Campus (SLM) is one of 13 Pennsylvania hospitals and 200 hospitals across the country designated as a MDH.
  • Ambulance Add-On Payments: ATRA extends the add-on payment for ground ambulance services through December 31, 2013 and the air ambulance add-on payment until June 30, 2013. It also requires a national study of ambulance service costs.
  • Outpatient Therapy Services: ATRA extends the Medicare outpatient therapy cap exceptions process through December 31, 2013 (for physical therapy and speech language pathology services combined, the 2013 cap is $1,900, and the separate cap for occupational therapy services is $1,900). In addition, ATRA extends through December 31, 2013 the requirement that Medicare perform manual medical review of therapy services when an exception is requested for cases in which the beneficiary has reached a specified dollar aggregate threshold ($3,700 for physical therapy services and speech language pathology services combined, and $3,700 for occupational therapy services). ATRA also extends the therapy caps and manual medical review thresholds to services furnished in hospital outpatient department settings through December 31, 2013.
  • IPPS Documentation and Coding Adjustment: ATRA requires the Secretary of the Department of Health & Human Services to continue to reduce Medicare inpatient prospective payment system (IPPS) payments to hospitals to account for changes in hospital documentation and coding practices associated with implementation of the Medicare severity diagnosis-related groups (MS-DRGs) system in fiscal year 2008 that do not reflect real changes in patient case-mix. Specifically, the law authorizes the Secretary to make adjustments to payments for fiscal year 2014 through 2017 to fully offset $11 billion (which Congress asserts represents the full amount of the increase in aggregate payments from fiscal year 2008 through fiscal year 2013 for which an adjustment was not previously applied). The legislation prohibits the Secretary from fully recouping past overpayments related to documentation and coding changes from fiscal years 2008 and 2009, but it does not limit the Secretary's authority to make prospective documentation and coding adjustments. This provision is expected to reduce Medicare spending by $10.5 billion over 10 years - the single largest Medicare payment cut in the bill.
  • Revisions to the ESRD Bundled Payment System: ATRA requires the Secretary to adjust the Medicare end-stage renal disease (ESRD) bundled payment amount to account for reductions in utilization of certain ESRD drugs and biologicals, since the Medicare ESRD payment bundle was expanded to include these items (for which Medicare previously had paid separately). The adjusted amounts will apply to services furnished on or after January 1, 2014. This provision responds to a recent GAO report suggesting that the bundled Medicare payment for dialysis care over-compensates dialysis facilities for ESRD drug costs.
  • Equipment Utilization Rate for Advanced Imaging Services: ATRA increases from 75% to 90% the equipment utilization rate assumption for calculating practice expense RVUs for the technical component portion of reimbursement for expensive (more than $1 million) diagnostic imaging equipment used in diagnostic CT and MRI services, effective beginning in 2014. This provision applies to services performed in physician offices and independent diagnostic testing facilities and is expected to reduce Medicare spending by reducing the practice expense component of these advanced diagnostic procedures by approximately $800 million over 10 years.

    Senators Toomey (R-PA), Casey (D-PA) and Menendez (D-NJ), and Congressmen Dent (R-15-PA), Fitzpatrick (R-8-PA), Holden (D-17-PA) and Lance (R-7-NJ), voted in favor of the legislation. Senator Lautenberg (D-NJ) was absent and did not cast a vote on the bill.

Advocacy

113th Congress: Senator Pat Toomey has been appointed to the Senate Finance Committee. The committee has jurisdiction over Medicare, Medicaid and the Children's Health Insurance Program. Senator Toomey is one of only two freshman Senators on the committee, which is considered the most influential in the Senate.