Government Relations Update – March 8, 2011

State Issues

Advocacy

• State Budget: On March 8, 2011, Governor Corbett is expected to present the 2011-2012 state budget to the General Assembly. The Governor estimates that the Commonwealth will experience a revenue shortfall of $4 to $5 billion during the upcoming fiscal year, but the Governor has pledged not to raise taxes to address the deficit. Instead, the Governor will likely propose reduced funding to certain programs and services. Hospitals throughout the Commonwealth are preparing to advocate against any hospital payment reductions included in the proposed budget. The Governor, together with Republican leadership in the House and the Senate, promised to approve a budget on time this year. Pennsylvania has failed to meet the June 30^th constitutional deadline for budget passage for eight consecutive years.

Legislation

• H.B. 495: Apology/Benevolent Gesture Act. On March 1, 2011, the House passed the Apology/Benevolent Gesture Act by a vote of 171 to 27. The legislation declares an apology by a healthcare provider or healthcare employee inadmissible in any subsequent medical malpractice action. Thirty five states have passed similar legislation with the goal of encouraging communications between patients and providers and reducing the number of medical malpractice cases. Every Lehigh Valley representative voted in favor of the bill, except Representative Freeman (D-Northampton). HAP supports the bill, which now proceeds to the Senate Judiciary Committee for consideration.

• H.B. 225: Certificate of Need. On January 25, 2011, Representative Mundy (D-Luzerne) reintroduced legislation to reinstate the certificate of need program for healthcare facilities, which would be administered by the Department of Health. Representative Mundy submits that certificate of need requirements would control costs and stop unnecessary testing. The former certificate of need requirements in Pennsylvania expired in 1997. Representatives Brennan (D-Lehigh, Northampton ) and Freeman (D-Northampton) serve as co-sponsors of the legislation, which is currently in the House Health Committee. HAP opposes the bill.

• H.B. 42: Freedom of Choice in Health Care Act. On January 19, 2011, Representative Baker (R-Tioga) introduced legislation prohibiting any law which would force individual Pennsylvanians, healthcare providers or employers from being forced to participate in any healthcare system. The bill is intended to invalidate penalties under the Patient Protection and Affordable Care Act (PPACA) for failure to comply with the individual mandate requiring Americans to purchase health insurance. Similar legislation has been introduced in 38 other states and has been enacted into law in six other states. The bill would create a conflict between state and Federal law. Representatives Clymer (R-Bucks), Harhart (R-Lehigh, Northampton ), Knowles (R-Berks, Schuylkill), Reichley (R-Berks, Lehigh), Simmons (R-Lehigh, Northampton ), and Toepel (R-Montgomery) serve as co-sponsors of the bill. On February 7, 2011, the House Health Committee approved the bill, which has been referred to the House Appropriations Committee.

• S.B. 201: Access to Community Services. On January 19, 2011, Senator Rafferty (R-Berks, Chester , Montgomery ) introduced legislation to prevent health plans from requiring covered individuals to fill prescriptions through mail order pharmacies. Senator Rafferty asserts that his bill protects independent pharmacies and provides freedom of choice to consumers. Senators Argall (R-Berks, Carbon, Lehigh, Monroe , Northampton ), Boscola (D-Lehigh, Monroe, Northampton ), and Mensch (R-Bucks, Lehigh, Montgomery, Northampton ) serve as co-sponsors of the bill, which is currently being considered by the Senate Banking & Industry Committee. HAP is reviewing the bill and has not announced its position.

Federal Issues

Advocacy

• Constitutional Challenges to PPACA: On January 31, 2011, Judge Vinson of the United States District Court for the Northern District of Florida ruled that the individual mandate provision of PPACA violated the Constitution by regulating economic inactivity. Judge Vinson also ruled that the mandate is not severable from PPACA and thus found the entire statute unconstitutional. Judge Vinson did not issue an injunction halting the law, which created some ambiguity regarding enforcement of PPACA during the expected appeal process. On March 4, 2011, Judge Vinson issued a stay, allowing implementation to proceed while his ruling is being appealed, provided that the Federal government appeals the ruling on or before March 10, 2011. The Federal government is expected to file its appeal later this week.

Legislation

• H.R. 4: Small Business Paperwork Mandate Elimination Act. On March 3, 2011, the House voted to repeal the provisions within PPACA requiring that all businesses, charities and local and state governments file 1099 tax forms if they purchase $600 or more in goods from another business throughout the year. The provision was originally designed to recover taxes on unreported income and raise $22 billion in additional revenue over ten years to support PPACA. However, most Americans consider the rule unduly burdensome. Congressmen Dent (R-15), Fitzpatrick (R-8) and Holden (D-17) were co-sponsors and voted in favor of the legislation. The bill has been sent to the Senate for consideration.

Miscellaneous

• Centers for Medicare & Medicaid Services (CMS): As reported previously, CMS has lacked a permanent administrator since the resignation of Mark McClellan in 2006. On July 7, 2010, President Obama bypassed Congress and used the “recess appointment” process to name Dr. Donald Berwick as the new Administrator of CMS. However, unless Dr. Berwick is formally confirmed by the Senate, his appointment will terminate at the end of this year. On March 3, 2011, 42 Senate Republicans, including Senator Toomey (R-PA), sent a letter to President Obama requesting the withdrawal of Dr. Berwick’s nomination. Republicans criticize Dr. Berwick’s support of the British healthcare system and claim he lacks experience with insurance regulation issues. Republicans only need 40 votes to block Dr. Berwick’s confirmation, which would severely jeopardize the implementation of PPACA. The Obama administration continues to support Dr. Berwick and has refused to withdraw his nomination.

• National Health Information Technology (HIT) Coordinator: Dr. David Blumenthal served as the National Coordinator for Health Information Technology since March 2009. On February 3, 2011, Dr. Blumenthal announced his resignation. In a memo to his staff members, Dr. Blumenthal stated that he is returning to his faculty position at Harvard University.
  
  Dr. Blumenthal had been appointed to lead the government’s healthcare system modernization efforts through the adoption of interoperable health information technology. His department developed the qualifications for health providers to receive incentive payments. Although his efforts have been supported by vendors, doctors and hospitals have criticized the complexity of the rules. According to the American Hospital Association, less than two percent of hospitals currently qualify for the incentive payments, despite significant information technology investments. Dr. Blumenthal is the second recent senior healthcare official to announce plans to return to Harvard, where rules require that faculty return within two years to retain tenure. Dr. Blumenthal insists that returning to Harvard was part of his plan when he originally accepted the position.