Government Relations Update – October 19, 2010

State Issues

Legislation

• S.B. 1280: Extension of the Mcare Act. The Medical Care Availability and Reduction of Error Fund (Mcare) was created by Act 13 of 2002 and signed into law on March 20, 2002. The Mcare Fund is a medical liability coverage fund administered by the Commonwealth of Pennsylvania. Currently, Pennsylvania physicians are required by law to have $500,000 in primary liability coverage plus $500,000 in excess coverage. Physicians can obtain the first $500,000 coverage layer either in the private market or through the Joint Underwriting Association (JUA), a non-profit association created by the Mcare Act to provide professional liability coverage to health care providers who cannot obtain medical professional liability insurance in the private market. Physicians obtain the second layer of coverage from the Mcare Fund.

  The Mcare Act mandates that the Mcare Fund will be eventually retired in two steps. The Pennsylvania Insurance Commissioner determines whether each step is implemented based upon a review of whether the private market can bear increased primary limits. In the first step, Mcare coverage would be stepped down to $250,000, pushing the level of primary insurance to $750,000. When the Commissioner implements the second step, physicians would be required to have $1 million in primary coverage and Mcare coverage would cease. The Commissioner is required to make this determination by July 2011.

  On September 29, 2010, the Pennsylvania Senate approved a bill to delay the Commissioner’s determination regarding a phase out of the Mcare Fund until 2018. Senators Argall (R-Berks, Carbon, Lehigh, Monroe , Northampton ), Boscola (D-Lehigh, Monroe, Northampton ), Browne (R-Lehigh, Monroe , Northampton ) and Mensch (R-Bucks, Lehigh, Montgomery, Northampton ) supported the legislation. They assert that the extension is necessary to develop a plan to pay for claims arising during the period of Mcare coverage but filed after cessation of Mcare coverage. On October 5, 2010, the bill passed in the House, with Representatives Beyer (R-Lehigh, Northampton), Brennan (D-Lehigh, Northampton), Freeman (D-Northampton), Grucela (D-Northampton), Mann (D-Lehigh) and Samuelson (D-Lehigh, Northampton) supporting the bill. Representatives Day (R-Berks, Lehigh), Hahn (R-Northampton), Harhart (R-Lehigh, Northampton ) and Reichley (R-Berks, Lehigh) voted against the bill. The Hospital & Healthsystem Association of Pennsylvania (HAP) and the Pennsylvania Medical Society opposed the bill and continue to support an earlier phase out of the Mcare fund. Despite its opposition, HAP was able to secure an amendment to the bill requiring that any surplus funds generated by Mcare must be used to reduce future Mcare assessments. Last year, the Commonwealth used a $100 million Mcare Fund surplus to address the state’s budget shortfall. It is unclear whether the Governor will sign or veto the legislation.

• H.B. 1482: Health Care Worker Identification. As previously reported, Representative Mann (D-Lehigh) introduced legislation on June 23, 2010 establishing new photo identification requirements for health care workers. Representative Mann’s bill seeks to ensure proper identification of health care workers in a hospital setting or when providing in-home services and would be effective as of June 1, 2015. On July 1, 2010, the House approved the legislation. On October 13, 2010, the Senate unanimously passed the bill. The Governor is expected to approve and sign the legislation into law. HAP supported the bill.

Miscellaneous

• Department of Health Appointment: On September 29, 2010, Governor Rendell appointed Michael K. Huff, R.N. as the acting Secretary of the DOH. Secretary Huff previously served as the DOH’s Deputy Secretary for Health Planning and Assessment and is the first registered nurse to lead the DOH. Secretary Huff replaces Everette James, who left the Rendell administration on October 1, 2010 to become the Associate Vice Chancellor for Health Policy and Planning at the University of Pittsburgh. James will also be a Professor of Health Policy and Management at the University’s Graduate School of Public Health, where he will teach and advise the university on legal issues related to health reform. James served as Secretary from 2008 to 2010, during which time he assisted the Commonwealth in its implementation of a statewide smoking ban, designed a program to reduce hospital-acquired infections, and created stringent nutrition and physical education standards in Pennsylvania ’s public schools.

Federal Issues

Miscellaneous

• Center for Medicare & Medicaid Services (CMS) Appointment: On September 27, 2010, Dr. Donald Berwick, Administrator for the Centers for Medicare and Medicaid Services (CMS), announced that Richard Gilfillan, M.D.will bethe newActing Director of the Center for Medicare and Medicaid Innovation. Dr. Gilfillan currently directs the CMS performance-based payment policy staff. The Patient Protection and Affordable Care Act (PPACA) established the Center for Medicare and Medicaid Innovation to test new innovative payment and service delivery models intended to reduce program costs while preserving quality care.

  Before joining CMS,Dr. Gilfillan was a consultant for Geisinger Consulting Services. From 2005 to 2009,Dr. Gilfillan was presidentand CEOof Geisinger Health Plan and the executive vice president of insurance operationsfor Geisinger Health System. While at Geisinger, Dr. Gilfillan helped design a bundled payment system, an episode of care reimbursement system and an acute surgical and medical care program rewarding providers for achieving high quality outcomes. He also directed the development of Geisinger’s ProvenHealth Navigator medical home model and was a team member of Geisinger’s CMS Physician Group Practice Demonstration Project. Dr. Gilfillan began his career as a family practice physician and served as the medical director of two primary care group practices.

• Midterm Elections: The general election will be held on November 2, 2010. In Pennsylvania polls will be open from 7 AM until 8 PM. Pennsylvania residents will elect candidates for the United States Senate and House of Representatives and for Pennsylvania Governor and Lieutenant Governor, together with candidates for Pennsylvania ’s Senate and House of Representatives.