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Government Relations Update – April 29, 2014

Pennsylvania Issues


40th Senate District: As previously reported, Pennsylvania lawmakers are required to redraw federal and state legislative districts every ten years based on the most recent national census data. On June 8, 2012, the Pennsylvania Legislative Reapportionment Commission approved new maps for Pennsylvania house and senate districts in accordance with the latest census data. On May 8, 2013, the Pennsylvania Supreme Court unanimously approved the plan, which moves the 40th Senate District from Allegheny County to parts of Monroe County and Northampton County. As a result, the St. Luke's Wind Gap Medical Center and the proposed site for St. Luke's Hospital – Monroe Campus shift from Senator Browne's (R-Lehigh, Monroe, Northampton) district into the new 40th Senate District. State Representative Mario Scavello (R-Monroe) is running unopposed for the newly created Senate seat in the Republican primary. Candidates for the Democratic nomination include Bangor Mayor Joe Capozzolo, Allentown attorney Mark Aurand and Northampton County Councilman Scott Parsons.

Federal Issues


Two-Midnight Rule Challenges: As previously reported, the final 2014 federal fiscal year Medicare inpatient prospective payment system rule established new criteria for determining the appropriateness of inpatient admissions. In general, the Centers for Medicare & Medicaid Services (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 April 14, 2014, the American Hospital Association, the Greater New York Hospital Association, the Healthcare Association of New York State, the New Jersey Hospital Association, the Hospital & Healthcare Association of Pennsylvania, Wake Forest University Baptist Medical Center, Mount Sinai Hospital, Banner Health and Einstein Healthcare Network filed two related lawsuits against the U.S. Department of Health and Human Services (HHS). The lawsuits contend that several provisions included in the final 2014 federal fiscal year Medicare inpatient prospective payment system rule burden hospitals with unlawful arbitrary standards and documentation requirements and deprive hospitals of proper Medicare reimbursement for caring for patients. In particular, the suits challenge the “two-midnight” rule and request that it be invalidated. The lawsuits were filed in the U.S. District Court for the District of Columbia.

Health Insurance Marketplace Enrollment: As previously reported, uninsured individuals seeking health care coverage through the health insurance marketplace were required to enroll by March 31, 2014 in order to avoid incurring a penalty. President Obama announced that eight million individuals selected health plans through the marketplace as of April 1, 2014, exceeding the administration's target by one million participants. However, according to HHS, in order for the exchange concept to avoid significant losses, 40% of the enrollees should be between the ages of 28 and 34. As of April 1, 2014, only 28% of the individuals enrolled were within this age group. As a result, the administration conceded that insurance premiums in the marketplace may increase next year.

Hospital Outpatient Surgery Payments: On April 17, 2014, the Office of the Inspector General (OIG) released a report recommending that CMS seek permission from Congress to reduce rates payable to hospital outpatient surgery departments for certain low risk surgeries to equal those received by stand-alone ambulatory surgery centers (ASCs). The report estimates that the change would reduce CMS payments by about $15 billion and save Medicare patients $4 billion in copayments during a six year period.

Typically, ASCs are paid 30% to 50% less than hospital outpatient surgery departments, so the proposal would have a significant adverse impact to hospitals. Hospital associations oppose the recommendation, since ASCs are not required to carry operating expenses similar to hospitals or provide other costly but essential services. Marilyn Tavenner, the Administrator for CMS, cautioned that the proposal would be difficult to implement, since it is unclear how certain procedures would be identified as “low risk.”

Standard of Care Protection Act of 2013; Saving Lives, Saving Costs Act: Several bills have been introduced this Congress to reform the medical liability system. On April 10, 2013, Representative Phil Gingrey (R-MD) introduced the Standard of Care Protection Act of 2013, which would prohibit the development, recognition or implementation of any guideline or other standard under any provision of the Patient Protection and Affordable Care Act from being used to establish the standard or duty of care owed by a health care provider to a patient in any medical malpractice action. Senator Pat Toomey (R-PA) introduced the bill in the Senate on November 21, 2013. Likewise, on February 27, 2014, Representative Andy Barr (R-KY) introduced the Saving Lives, Saving Costs Act, which would offer physicians who document adherence to certain evidence based clinical practice guidelines a safe harbor from medical malpractice litigation. The American Medical Association supports both bills.


Secretary Sebelius Resignation: On April 11, 2014, HHS Secretary Kathleen Sebelius announced her resignation following months of intense criticism over the launch of the online insurance marketplaces last fall. Secretary Sebelius served in the position for five years. President Obama has nominated Sylvia Mathews Burwell, the current Director of the Office of Management and Budget (OMB), to replace Secretary Sebelius. Ms. Burwell, a native of West Virginia and a graduate of Harvard University and Oxford University, previously served as White House Deputy Chief of Staff during the Clinton Administration. She also held positions at the Treasury Department and the National Economic Council. Prior to working for the government, she worked for the Bill & Melinda Gates Foundation and was President of the Walmart Foundation.

Although Ms. Burwell's nomination to OMB was approved by the Senate in April 2013 by a unanimous vote, she is expected to face resistance during her confirmation hearing from Republican Senators, who are expected to use the forum as an opportunity to voice continued disapproval of the Affordable Care Act. Ms. Burwell will undergo hearings in the Finance Committee and the Health, Education, Labor and Pensions Committee. The hearings are expected to take place in early May, and Ms. Burwell is likely to face a full Senate floor confirmation vote in late May or early June.

Medicare Chief Resignation: Marilyn Tavenner, the Administrator for CMS, announced on April 22, 2014 that Jonathan Blum will leave CMS effective May 16, 2014. Mr. Blum has served as the Principal Deputy Administrator of CMS since 2009. He is most notably credited with overseeing the release of the Medicare physician data for 880,000 physicians earlier this month. Mr. Blum will be replaced by Sean Cavanaugh, who has worked at CMS since 2011 and currently serves as the Deputy Director of the Center for Medicare and Medicaid Innovation. Prior to joining CMS, Mr. Cavanaugh was the Director of Health Care Finance at the United Hospital Fund in New York City and held positions at Lutheran Healthcare in Brooklyn, the New York City Mayor's Office of Health Insurance Access and the Maryland Health Services Cost Review Commission.

HIPAA Settlement: On April 22, 2014, the HHS Office for Civil Rights (OCR) reported that it entered into a $1.73 million settlement with Concentra Health Services to resolve alleged violations of the Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules. OCR opened its review upon receipt of a report that an unencrypted laptop was stolen from one of Concentra's physical therapy facilities. According to OCR, the enforcement action underscores the significant risk to the security of patient information posed by unencrypted laptop computers and other mobile devices.