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Government Relations Update – May 13, 2014

Pennsylvania Issues


H.B. 804: Clear and Convincing Standard.  On February 25, 2013, Representative Bryan Cutler (R-Lancaster) introduced legislation to change the standard for medical malpractice actions arising from the provision of emergency medical care, including care provided in an emergency department, an obstetrical unit or in a surgical suite following the evaluation of a patient in an emergency department.  The bill provides that no physician or other health care provider in these settings would be liable for any act or failure to act unless it is proven by clear and convincing evidence that the physician or health care provider’s actions or omissions were grossly negligent, which is a much higher requirement than standard negligence.  Supporters of the bill, including the Hospital & Healthsystem Association of Pennsylvania (HAP) and the Pennsylvania Medical Society, argue that emergency providers make quick decisions under difficult time constraints.  Opponents assert that patients who have been victimized by medical error, in any venue, deserve appropriate financial compensation.  On April 2, 2014, the House Insurance Committee held a hearing on the bill, and HAP testified in support of passage.  Similar legislation has been enacted in Arizona, Texas, Florida, Georgia, South Carolina, Utah and West Virginia.


State Tax Revenues:  The Commonwealth collected $3.4 billion in General Fund revenue in April, which was $328.3 million, or 8.8%, less than anticipated.  The year-to-date collections are currently $23.9 billion, which is $424.5 million, or 1.7%, below budget.  All three of the Commonwealth’s major tax sources (sales, personal and corporate taxes) have produced less revenue year-to-date than anticipated.  The Rockefeller Institute of Government in New York suggests that all states, including Pennsylvania, are experiencing declines in personal income taxes since taxpayers sold securities in 2012 to avoid higher federal tax rates on capital gains in 2013.  The Commonwealth’s Legislature Independent Fiscal Office is projecting a $1 billion end-of-year shortfall.  As a result, Governor Tom Corbett (R-PA) has met with Republican lawmakers to discuss solutions, which may include implementing new or higher taxes and possibly taxing the natural gas industry.  HAP has expressed concerns that cuts to hospitals may be one way lawmakers address these fiscal challenges.

2014 Pennsylvania Primary:  The Pennsylvania primary election will be held on May 20, 2014.  The entire state House of Representatives is being elected or reelected, and Senators who represent even numbered districts will also be on the ballot.  Senators Boscola (D-Lehigh, Northampton, Monroe), Browne (R-Lehigh, Northampton, Monroe) and Mensch (R-Bucks, Lehigh, Montgomery, Northampton) represent even numbered Senatorial districts and are running unopposed in the primary election.  Governor Corbett is seeking a second term in office and does not have a primary election opponent.  Democratic candidates for Governor include York County businessman Tom Wolf, United States Congresswoman Allyson Schwartz, former Pennsylvania Department of Environmental Protection Secretary Katie McGinty, and Pennsylvania State Treasurer Rob McCord. 

New Jersey Issues


State Tax Revenues:  As previously reported, Governor Chris Christie (R-NJ) proposed a $34.4 billion budget for the upcoming state fiscal year.  Since the budget announcement, however, New Jersey revenues have declined.  Total anticipated revenues for fiscal year 2014 are about $31.8 billion, or 2.5% less than originally projected, representing a shortfall of $807 million.  As a result, the state’s credit rating was downgraded for the third time in three weeks to single A status.  Only Illinois and California have lower state credit ratings.  Governor Christie has stated that he will be forced to consider reductions or delays to managed care and hospital payments and changes to the state mandated pension program.  The New Jersey Hospital Association (NJHA) is advocating for the maintenance of hospital funding in the 2015 state budget. 

Federal Issues


Medicare Regulation Changes:  On May 7, 2014, the Centers for Medicare & Medicaid Services (CMS) issued a final rule designed to revise regulations identified as unnecessary, obsolete or overly burdensome for hospitals and providers.  The new rule: (1) permits a multi-hospital system to use a unified and integrated medical staff structure for its member hospitals; (2) eliminates a requirement that physicians travel to rural or federally qualified health clinics at least once every two weeks; (3) authorizes registered dieticians and qualified nutritionists to prescribe diets for patients without a physician’s prior approval; (4) gives more flexibility to ambulatory surgical care facilities that have to meet supervision requirements for radiological services; (5) allows nuclear medicine technicians in hospitals to prepare radiopharmaceuticals without the constant supervision of a doctor or pharmacist; and (6) eliminates a repetitive data submission requirement and survey process for transplant facilities.  The new rule is the result of an executive order that President Obama (D) issued in 2012, which required federal agencies to eliminate outdated regulations.  Agency officials estimate that the changes will result in approximate annual savings of $660 million.  The final rule will take effect on July 11, 2014.

Health Insurance Marketplace Premiums:  As of April 15, 2014, only 67% of individuals enrolled through the health insurance marketplaces had paid their first monthly premium, according to data collected by the House Energy and Commerce Committee.  Although President Obama had previously announced that eight million individuals selected health plans through the marketplace, Republicans have argued that the enrollment process is incomplete until the first premium is paid.  Republicans further assert that without payment, consumers do not have coverage and, therefore, reported enrollment numbers are inaccurate.  The Obama administration and Democrats maintain that due dates for premiums vary and that most premiums were first payable after April 30, 2014.  Testimony provided by representatives from WellPoint, Aetna and Blue Cross Blue Shield support this position.  In response, the Chair of the House Energy and Commerce Committee has agreed to update the report on May 20, 2014, when deadlines for payments will have passed for most insurance plans.

ICD-10:  As reported previously, the recently enacted Protecting Access to Medicare Act delayed the final ICD-10 implementation date until October 1, 2015.  The American Hospital Association (AHA), HAP, the American Health Information Management Association (AHIMA) and the NJHA opposed the delay.  They argued that healthcare systems, third party payers and physician offices made significant investments to prepare for the original October 1, 2014 deadline.  Following the delay, Premier and other provider groups have been petitioning CMS to announce its plans for ICD-10 and for guidance regarding the transition to the new code sets.  On April 25, 2014, during the AHIMA ICD-10-CM/PCS and Computer-Assisted Coding Summit, CMS official Denise Buenning announced that interim final regulations for the coding set would be issued soon.  She also informed participants that there would be no additional delays and that CMS would require the use of ICD-10 beginning on October 1, 2015.  According to AHIMA, ICD-10 will improve patient care, reduce costs and maximize the investments made to electronic health records.

Pennsylvania 8th Congressional District:  Voters residing in Pennsylvania’s 8th Congressional District will select candidates for United States Congress during the primary election.  Small business owner Shaughnessy Naughton and former Army Ranger and CIA analyst Kevin Strouse are each seeking the Democratic nomination for the seat.  The winner will face incumbent Congressman Mike Fitzpatrick (R-8-PA) in the November general election.  St. Luke’s Hospital – Quakertown Campus is located in the 8th Congressional District.

Price Transparency Requirements: On April 30, 2014, CMS published a proposed rule that would require hospitals to publish a standard list of prices for inpatient health services and procedures.  CMS explained that it intends to increase its oversight of hospital charges and to promote price transparency in accordance with the Affordable Care Act.