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Government Relations Update – March 18, 2014

Pennsylvania Issues


Medicaid Expansion: As reported previously, the federal Medicaid program expanded state medical assistance programs significantly on January 1, 2014, unless states elected to opt out. The federal government began matching additional state funding for three years as of January 1st and will reduce the matching rate gradually to 90% by 2020. In response, Governor Tom Corbett (R) has consistently announced that Pennsylvania would reject the expansion plan, unless Pennsylvania was permitted to include job search requirements for, and cost sharing (i.e., monthly premiums and co-pays) by, Medicaid enrollees.

On December 6, 2013, Governor Corbett released his proposal for Medicaid expansion through the “Healthy PA” program. In addition to the job search and cost sharing provisions, the Healthy PA program proposed to increase Medicaid coverage beginning in January 2015 for about 500,000 Pennsylvanians by using federal funds to cover costs through the private insurance exchange system, rather than simply expanding Medicaid to additional enrollees. In order to implement the plan, the Centers for Medicare & Medicaid Services (CMS) required that Pennsylvania submit a waiver application for review and approval.

On February 19, 2014, following seven statewide hearings, two webinars and testimony by the Hospital & Health System Association of Pennsylvania (HAP), the Pennsylvania Medical Society (PAMED) and other organizations, Pennsylvania finally submitted its waiver application to CMS. The proposal included several changes from the original announcement, including the delay of job search and cost sharing requirements until 2016 and the participation of the Commonwealth's 200 federally qualified health centers in the private insurance exchange system. In addition, the proposal would require the Pennsylvania Department of Public Welfare (DPW) to reimburse hospitals for treating low-income patients who are later determined to be eligible for the private insurance exchange coverage. CMS is required to approve or reject the waiver application after a 15-day review period and a 30-day public comment period. If the waiver application is approved, the expanded coverage would begin on January 1, 2015. Only two states, Arkansas and Iowa, have received approval for alternative coverage plans.


H.B. 1907: Patient Notice of Observation Status. On December 11, 2013, Representative Stan Saylor (R-York) introduced legislation requiring hospitals to provide notice to a patient receiving care under observation status rather than being admitted as an inpatient. The bill would also require hospitals to explain the financial consequences of observation status to the patient. Supporters of the bill, including the Pennsylvania Health Care Association and the Center for Assisted Living Management, assert that the bill protects seniors from unexpected and expensive hospital bills. HAP is unopposed to the bill. On March 12, 2014, the House Aging and Older Adult Services Committee unanimously approved the bill, which will now be sent to the House of Representatives for consideration. Representatives Joe Emrick (R-Northampton), Mario Scavello (R-Monroe) and Rosemary Brown (R-Monroe) serve as co-sponsors of the bill.

H.B. 1063: Modernization of the Professional Nursing Law. Nurse practitioners in Pennsylvania may treat patients and prescribe medications only through collaborations with physicians. On July 19, 2013, Senator Pat Vance (R-Cumberland, York) introduced legislation to allow nurse practitioners to perform these tasks independently and without the collaboration of a supervising physician. Eighteen other states and Washington, D.C. have passed similar legislation. Several physician groups, including the PAMED and the American Academy of Family Physicians, oppose the bill and express concerns regarding patient safety. HAP is reviewing the legislation. The bill has been assigned to the Senate Consumer Protection and Professional Licensure Committee. Senator Pat Browne (R-Lehigh, Monroe, Northampton) serves as a co-sponsor of the bill.


Elected Official Visit: On March 17, 2014, newly elected Northampton County Executive John Brown (R) toured St. Luke's Hospital – Anderson Campus. The County Executive met with Rick Anderson, Ed Nawrocki, Robby Wax and Jane George, along with several members of the St. Luke's Hospital – Anderson Campus medical staff, to discuss expansion plans at the campus.

New Jersey Issues


State Budget: On February 25, 2014, Governor Chris Christie (R) proposed a $34.4 billion budget for the upcoming state fiscal year. The budget plan proposes 4.2% in additional spending compared to the current budget, although it would include only modest increases for schools and the state's Medicaid program. The budget plan relies on projected revenue growth of 5.8%. If the plan is approved, it would be the state's largest budget and the first since 2008 to spend more than $33.6 billion. State funding for New Jersey hospitals would remain unchanged from the current fiscal year, although the plan would shift $25 million from the state charity care program to University Hospital in Newark. The New Jersey Hospital Association (NJHA) largely praised the early budget details, but requested additional information from the budget office to understand the changes to the charity care program. The Democratic controlled New Jersey state legislature must adopt a budget by July 1st, which is the beginning of the state fiscal year.

Federal Issues


Federal Budget: On March 4, 2014, President Obama (D) released his proposed 2015 federal fiscal year budget. The $3.9 trillion budget proposal includes approximately $402 billion in reductions over 10 years to Medicare and Medicaid, including $354.1 billion in payment reductions to providers. The proposal would reduce bad debt and graduate medical education payments and introduce additional bundled payment programs for post-acute care services. The proposal would also increase premiums that wealthier beneficiaries would pay for Medicare Parts B and D, which would save the program $52.8 billion over 10 years. Finally, new Medicare enrollees would be charged a co-payment for home health services, which is intended to save an additional $820 million over 10 years. House Budget Committee Chairman Paul Ryan (R-WI) criticized the President's budget proposal since it includes $56 billion for new spending programs and requires high income earners to pay more in the form of premiums and co-pays. Congressman Ryan instead suggested that the President reduce funding to anti-poverty programs, including Pell Grants for college students and food stamp programs. Initial budget proposal are rarely enacted. Rather, the proposal is intended to form the basis for budget negotiations with Congress.


S. 2082: The Two-Midnight Rule Coordination and Improvement Act of 2014. As reported previously, the final 2014 federal fiscal year Medicare inpatient prospective payment system rule established new criteria for determining the appropriateness of inpatient admissions. In general, CMS will presume that surgical procedures, diagnostic tests and other treatments provided in a hospital are appropriate for Medicare Part A inpatient hospital payments when a physician admits a patient based on the expectation that the patient will require a stay extending through at least two midnights. Following significant concern from hospitals and lawmakers, CMS delayed enforcement of the policy through September 30, 2014. On March 5, 2014, Senators Robert Menendez (D-NJ) and Deb Fischer (R-NE) introduced legislation that would require CMS to delay enforcement of the policy until new guidelines and payment methodologies for Medicare beneficiaries requiring short impatient hospitalizations are established. The American Hospital Association (AHA), NJHA and HAP support the legislation. Congressman Jim Gerlach (R-6-PA) has introduced similar legislation in the House, and Congressmen Charlie Dent (R-15-PA) and Mike Fitzpatrick (R-8-PA) serve as co-sponsors.