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Government Relations Update – April 16, 2013

Pennsylvania Issues


Medicaid Expansion: As previously reported, Medicaid is scheduled to expand significantly on January 1, 2014 pursuant to the Patient Protection and Affordable Care Act (PPACA), unless states elect to opt out. The federal government will match additional state funding for the first three years following the expansion and then gradually reduce the matching rate to 90% by 2020. On February 5, 2013, Governor Corbett (R-PA) announced that the Commonwealth of Pennsylvania would elect to opt out.

On April 2, 2013, Pennsylvania Corbett met with Kathleen Sebelius, Secretary of the Department of Health and Human Services (HHS). The Governor proposed using the federal government's expansion money to fund private market insurance coverage for Pennsylvania's uninsured citizens. Other states, including Arkansas and Tennessee, are also exploring this approach. Following the meeting, the Governor said that the Secretary seemed supportive of his proposal, and the Governor appeared willing to permit the expansion subject to this condition.


H.B.118: Whistleblower Law. The Pennsylvania Whistleblower Law was enacted in 1986 and provides protection from retaliation for public employees who report fraud, waste or abuse of public money. On January 16, 2013, Representative Brian Ellis (R-Butler) introduced legislation to amend the law to protect employees of not-for-profit and private sector companies. The bill would also increase penalties from $500 to $10,000 per offense and increase the suspension of service in public office from six months to seven years. The bill was passed unanimously by the House of Representatives on February 5, 2013. It has been sent to the Senator Labor and Industry Committee for consideration. Representatives Clymer (R-Bucks), Hahn (R-Northampton), Knowles (R-Berks, Schuylkill) and Schlossberg (D-Lehigh) serve as co-sponsors of the legislation.


Lehigh County Executive: The Pennsylvania primary election will be held on May 21, 2013 and voters in Lehigh County will select party candidates for County Executive. Tom Muller (D), who currently serves as Lehigh County's Director of Administration, is seeking the Democratic nomination for the office. Prior to his position with the county, Mr. Muller held sales and marketing positions with Binney & Smith for 23 years. Dean Browning (R) has announced his candidacy as the Republican nominee for County Executive. Mr. Browning previously served as a Lehigh County Commissioner, but he lost his reelection bid in the 2011 Republican primary. He is a former accounting manager for Air Products and currently serves as the chief financial officer for New World Aviation in Allentown. Current Lehigh County Commissioner Scott Ott (R) is also seeking the Republican nomination. In November 2009, Mr. Ott ran for Lehigh County Executive and came within 900 votes of defeating then incumbent County Executive Don Cunningham. The Lehigh County Executive position is now held by Bill Hansell (D), who is completing Mr. Cunningham's unexpired term. Mr. Cunningham resigned his position in July 2012 to become President & CEO of the Lehigh Valley Economic Development Corporation.

New Jersey Issues


Legislative Visit: On April 4, 2013, United States Congressman Leonard Lance (R-7-NJ) and New Jersey State Assemblyman Erik Peterson (R-Hunterdon, Warren) toured St. Luke's Hospital – Warren Campus. The Congressman and the Assemblyman met with Jim Swick, Tom McGinley, Scott Wolfe, Rick Anderson and Robby Wax, along with several members of the St. Luke's Hospital – Warren Campus medical staff, to discuss capital investment initiatives at the campus. Congressman Lance, who serves on the House Energy and Commerce Committee, also discussed the President's federal budget proposal, efforts by Congress to repeal the Sustainable Growth Rate formula, and attempts by Congress to resolve the sequestration budget reductions. Assemblyman Peterson observed that St. Luke's Hospital – Warren Campus has been developing a positive working relationship with his office.

Federal Issues


Federal Budget: On April 10, 2013, President Obama released his proposed 2014 federal fiscal year budget. The $3.77 trillion budget proposal includes approximately $400 billion in reductions to Medicare and Medicaid, including $306 billion in payment reductions to providers. The President’s proposal would reduce bad debt and graduate medical education payments and decrease reimbursement for certain advanced imaging services. The proposal would also provide $803.5 million for the operation of insurance exchanges pursuant to PPACA. Initial budget proposals are rarely enacted. Rather, the proposal is intended to form the basis for budget negotiations with Congress.

Republican leaders largely dismissed the proposal since it would raise taxes for high income earners and increase federal spending. In response, House Budget Committee Chairman Paul Ryan (R-WI) introduced a budget proposal intended to eliminate the federal deficit in 10 years by overhauling Medicare and Medicaid and significantly reducing domestic spending.

Sequestration: Beginning April 1, 2013, Medicare provider payments were reduced by 2% as a result of the sequestration cuts that became effective on March 1, 2013. Unless Congress acts, Medicare provider payments will be reduced by more than $11 billion in federal fiscal year 2013 and $123 billion between federal fiscal year 2013 and federal fiscal year 2021.


Confirmation Hearing: Marilyn Tavenner has served as the Acting Administrator of the Centers for Medicare & Medicaid Services (CMS) since 2011. On April 9, 2013, the Senate Finance Committee held a hearing regarding her nomination as Administrator. She received praise from both parties and faced no opposition during the hearing. The committee is expected to vote on her nomination during the week of April 15th. Premier, the New Jersey Hospital Association (NJHA), the Hospital & Healthsystem Association of Pennsylvania (HAP) and the American Hospital Association (AHA) support her nomination.