Government Relations Update – March 22, 2011

State Issues

Advocacy

• State Budget: On March 8, 2011, Governor Tom Corbett (R) delivered his first budget address to the Pennsylvania General Assembly. The spending plan, which includes no new taxes or any fee increases, totals $27.3 billion, representing a decrease of $866 million, or 3.1 percent, from this year. The Governor defends the budget by stating that the Commonwealth must control spending and stop introducing new taxes. The Governor has vowed to veto any budget that spends more than $27.3 billion.
  
  Governor Corbett’s proposed budget responds to the estimated $4 billion to $5 billion revenue shortfall compared to the current year through significant reductions to education and economic development programs. The proposal also consolidates existing state programs, targets spending inefficiencies and eliminates discretionary grants. In addition, the proposal would reduce Medicaid reimbursements to Pennsylvania hospitals by $150 million, which would also cause hospitals to experience a forfeiture of $183 million in federal matching funds.
  
  Following the Governor’s budget address, the Hospital Association of Pennsylvania (HAP) issued a statement criticizing the proposed budget and emphasizing the number of jobs created by Pennsylvania hospitals. The statement further stressed the need for legislators to maintain hospital funding at current levels to ensure that hospitals remain able to meet the health care needs of their communities. HAP cautions that the proposed reductions will lead to hospital closings in low income communities. Other critics question the proposed reductions to basic and higher education programs while avoiding natural gas extraction taxes or any increases to the corporate tax rate. Conversely, supporters of the budget assert that the cuts are necessary to avoid significant tax increases.
  
  The proposed budget will be debated and modified during the next few months. As previously reported, the Governor and the Republican leadership have promised to approve a budget on time this year. Pennsylvania has not met the June 30^th constitutional deadline for budget passage for eight consecutive years.

Legislation

• H.B. 1065: Medical Safety Automation Program. On March 15, 2011, Representative Cutler (R-Lancaster) introduced legislation to establish the Medical Safety Automation Program. The program would provide financial assistance in the form of grants to health care facilities implementing health information technology. The Commonwealth would utilize $25 million in federal stimulus dollars to fund the program. Representative Cutler asserts that the program is necessary since health information technology protects patients and reduces cost. Representative Clymer (R-Bucks) serves as a co-sponsor of the bill, which was referred to the House Health Committee.HAP supports the bill.
• S.B. 500: Joint and Several Liability Reform. On January 18, 2011, Senator Corman (R-Centre) reintroduced the Fair Share Act, which would reform the doctrine of joint and several liability in Pennsylvania and hold a defendant liable only for its proportionate share of the total verdict amount. On February 11, 2011, Senator Greenleaf (R-Bucks, Montgomery) introduced legislation to compete with the Fair Share Act. Senator Greenleaf’s bill would abolish the current rule of joint and several liability only in the remote circumstance where a defendant percentage share of liability is less than the percentage share attributed to the plaintiff. If the plaintiff is not negligent, or if the defendant’s liability exceeds the plaintiff’s liability, then the doctrine of joint and several liability would still apply. HAP opposes Senator Greenleaf’s bill and continues to support passage of the Fair Share Act. Senator Boscola (D-Lehigh, Monroe, Northampton) serves as a co-sponsor of Senator Greenleaf’s bill, which has been assigned to the Senate Judiciary Committee. Senator Greenleaf serves as chairman of the committee.

Miscellaneous

• Pennsylvania Primary Elections: The Pennsylvania primary election for county, municipal and certain other local positions will be held on May 17, 2011. In Lehigh County and Northampton County, voters will select candidates in races for the Court of Common Pleas, County Council, District Attorney and City Council. The last day to register, switch parties or change address before the primary is April 18, 2011. Absentee ballots may be requested before May 10, 2011 and must be received by May 13, 2011.

Federal Issues

Advocacy

• Medicare Physician Fee Schedule: As previously reported, President Obama signed into law the Medicare and Medicaid Extenders Act of 2010 on December 15, 2010. The Act averted for one year a 25% decrease in Medicare payments to physicians. On March 10, 2011, Medicare officials reported that without legislative action physicians should expect a 29.5% payment reduction beginning on January 1, 2012. The American Medical Association has sent letters to House and Senate leaders urging them to begin working on a bipartisan solution. President Obama has announced his commitment to fix the payment formula permanently.

Legislation

• H.R. 1041: Fairness in Medicare Bidding Act. On January 1, 2011, the Centers for Medicare and Medicaid Services (CMS) established new bidding requirements for home medical equipment, referred to as the Medicare Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS) competitive bidding program. The bidding program is currently active in nine metropolitan areas (Charlotte, Cincinnati, Cleveland, Dallas-Fort Worth, Kansas City, Miami, Orlando, Pittsburgh, and Riverside, California) and will expand to an additional 91 areas later this year. The bidding applies to medically required oxygen therapy, enteral nutrients (tube feeding), continuous positive air pressure (CPAP) and respiratory assistive devices, power wheelchairs, walkers, hospital beds and support surfaces, and mail-order diabetic supplies.
  
  The bidding program was intended to reduce beneficiaries’ out-of-pocket expenses and reduce costs to the Medicare program. However, Medicare patients, providers and case managers have reported difficulties finding local equipment and service providers, delays in obtaining medically-required equipment, longer-than-necessary hospital stays due to discharge confusion, and few selection choices.
  
  On March 11, 2011, Congressmen Thompson (R-5-PA) and Altmire (D-4-PA) introduced legislation to repeal the competitive bidding program. The Fairness in Medicare Bidding Act would eliminate the program immediately and terminate previously awarded contracts. The Pennsylvania Association of Medical Suppliers, the American Association of Homecare, the National Association for Homecare and Hospice and several consumer groups support the legislation to eliminate the current program.
  
  The bill has been assigned to the House Energy and Commerce Committee, the Appropriations Committee and the Ways and Means Committee.