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Government Relations Update – September 17, 2013

Pennsylvania Issues


Medicaid Expansion: The federal Medicaid program is scheduled to expand state medical assistance programs 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. Governor Corbett (R-PA) has announced that Pennsylvania will reject the expansion plan, unless it includes job search requirements for, and cost sharing (i.e., co-pays) by, Medicaid enrollees. The state governments of Iowa and Arkansas are also exploring this approach. The Hospital & Health System Association of Pennsylvania (HAP) strongly supports Medicaid expansion. HAP asserts that expansion will strengthen the economy, decrease hospital uncompensated care costs and improve the quality of life for the uninsured. HAP expects the Governor to make a final decision by the end of September. Governor Chris Christie (R-NJ) previously announced that New Jersey would expand its Medicaid program.


H.B. 1631: Nurse Safe Staffing Legislation. On August 2, 2013, Representative Maureen Gingrich (R-Lebanon) introduced legislation requiring Pennsylvania hospitals to develop, implement and monitor a professional nurse staffing plan for each hospital unit based on patient acuity, patient volumes, experience of the nursing staff and support services available to the nurses. The plan would be developed by a professional nurse staffing committee, and the majority of the committee members would be professional nurses currently providing direct patient care in the hospital selected by their peers to serve on the committee. Hospital and nursing administration and the elected chairperson of the professional nurse staffing committee would determine other staff to be represented on the committee. SEIU Healthcare Pennsylvania, the Pennsylvania State Nurses Association, the American Nurses Association and other regional nursing associations support the bill. HAP opposes the bill, since it would create new administrative burdens on hospitals while limiting their ability to adjust staffing to meet changing patient needs. At minimum, HAP recommends the following modifications to the bill: (1) the nurse staffing committee would serve only in an advisory capacity; (2) hospitals would determine the method to select members of the committee; and (3) exemptions would be permitted for hospitals that have achieved certain nursing designations, such as the Magnet Program or the Pathway to Excellence Program through the American Nurses Credentialing Center. Representatives Julie Harhart (R-Lehigh, Northampton), Paul Clymer (R-Bucks) and Michael Schlossberg (D-Lehigh) serve as co-sponsors of the bill, which has been referred to the House Committee on Health. St. Luke's discussed its concerns regarding the bill with these members. Representative William Adolph, Jr. (R-Delaware) introduced a similar bill in the prior legislative session, but it did not pass.

H.B. 1656: Repeal of Consent for Treatment of Breast Disease (Act 213 of 1984). The Pennsylvania Consent for Treatment of Breast Disease Act of 1984 requires a separate consent form for the treatment of breast disease. On August 26, 2013, Representative Becky Corbin (R-Chester) introduced legislation to repeal the law. According to Representative Corbin, the law is no longer relevant and fails to address new and less invasive breast disease treatments. Susan York, Director of Accreditations and Standards for St. Luke's University Health Network, assisted HAP and Representative Corbin draft the legislation. HAP and the Pennsylvania Breast Cancer Coalition support the bill, which has been referred to the House Committee on Health. Representative Schlossberg serves as a co-sponsor of the bill.

Act 60 of 2013: Hospital Licensure. On July 9, 2013, Governor Corbett signed the Health Care Facilities Act into law. As previously reported, the Act exempts accredited hospitals from routine licensure renewal surveys conducted by the Pennsylvania Department of Health (DOH). The Act requires the DOH to recognize reports from national accrediting organizations as acceptable for meeting licensure requirements, as long as the accrediting organization's standards are equal to or more stringent than those of the DOH. Hospitals not meeting accreditation criteria are still be subject to the current licensing requirements of the DOH. In addition, the DOH maintains full authority to inspect a hospital based on patient complaints. The Act was passed unanimously in both the House and the Senate and takes effect on January 5, 2014.


2014 Gubernatorial Election: On September 8, 2013, Allentown Mayor Ed Pawlowski (D) announced that he will seek the Democratic nomination for Pennsylvania Governor. Congresswoman Allyson Schwartz of Montgomery County, York County businessman Tom Wolf, former Secretary of the Pennsylvania Department of Environmental Protection Kathleen McGinty, and former Secretary of the Pennsylvania Department of Environmental Protection John Hanger have also announced their intent to run. State Treasurer Rob McCord is expected to declare his candidacy soon, and former Auditor General Jack Wagner is also considering whether to enter the race. The Pennsylvania Gubernatorial election will be held on May 20, 2014.

New Jersey Issues


Imputed Rural Floor Wage Index: Medicare payments for the delivery of inpatient hospital services are made in part pursuant to a prospective payment system (PPS), which pays hospitals a fixed amount for each Medicare inpatient discharge based upon patient diagnosis and certain other factors used to classify each patient into a Diagnosis Related Group (DRG). Congress adopted an “imputed” floor in the 2005 inpatient PPS rule as a temporary three year regulatory measure to address a concern that certain hospitals in New Jersey were disadvantaged by the absence of rural hospitals to set a wage index floor for purposes of determining the PPS payments to those hospitals. The imputed floor policy only benefits New Jersey hospitals, which raised the risk that the Centers for Medicare and Medicaid Services (CMS) would change or eliminate the funding mechanism. The imputed floor was originally scheduled to expire on September 30, 2013. However, on August 4, 2013, CMS extended it until September 30, 2014. The entire New Jersey delegation, including Senator Robert Menendez (D-NJ) and Congressman Leonard Lance (R-7-NJ), were supportive of the extension.

Federal Issues


Children's Health Insurance Program (CHIP): PPACA requires that children currently covered by a state's medical assistance program transition to the expanded federal Medicaid program by January 1, 2014. Governor Corbett sought an exception to the ruling by arguing that Pennsylvania's Children's Health Insurance Program (CHIP) offered access to more doctors and hospitals than the federal Medicaid program. CMS rejected the request and explained that coverage is better aligned when children and parents share the same insurance program.


H.R. 2810: Medicare Patient Access and Quality Improvement Act of 2013. 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. The current Medicare physician fee schedule rate expires on December 31, 2013. If Congress fails to act, physician payments through Medicare will be reduced by 24.4%, and St. Luke's Physician Group will experience an annual payment reduction of more than $10 million. On July 24, 2013, Congressman Michael Burgess (R-26-TX) introduced legislation to repeal the SGR formula and create a new physician payment system. The legislation would increase physician Medicare payments by 0.5% annually from 2014 until 2018 and establish a new payment system in 2019. The new payment system would penalize physicians who fail to report quality measures or who perform worse than their peers. The House Committee on Energy and Commerce unanimously approved the bill on July 30, 2013, and the bill will be forwarded to the House. The Congressional Budget Office (CBO) estimates that the cost of repealing the current payment formula would be $139 billion over 10 years, which is significantly less than the previous CBO estimate of $300 billion over 10 years. The American Medical Association (AMA), HAP and Premier support the legislation.