Government Relations Update – May 3, 2011

State Issues

Legislation

• H.B. 1: Fair Share Act. 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. However, the doctrine of joint and several liability would still apply if a defendant is held responsible for 60% or more of the verdict, as well as situations involving intentional torts, certain environmental cleanups and specific liquor law violations. On April 11, 2011, the Pennsylvania House of Representatives passed the bill by a vote of 122 to 88. Every Republican House member from the Lehigh Valley voted in favor of the bill. All Democratic members from the Lehigh Valley voted against it, except for Representative Jennifer Mann (D-Lehigh). Representative Mann was one of four Democrats to break party lines. The bill has been sent to the Senate and assigned to the Senate Judiciary Committee.

  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's 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.

  On April 11, 2011, the Senate Judiciary Committee held a public hearing on the Fair Share Act and Senator Greenleaf's bill. Seymour Traub, former Senior Vice President & General Counsel for St. Luke's Hospital & Health Network, testified at the hearing in favor of the Fair Share Act and in opposition to Senator Greenleaf's bill. Attorney Traub informed committee members that most states have abolished or modified the joint and several liability doctrine. According to Attorney Traub, the Fair Share Act would bring parity to Pennsylvania law as compared to the laws of most other states, whereas Senator Greenleaf's bill would be ineffective. In response, representatives from the Trial Lawyer's Association and the Pennsylvania Bar Association testified against the Fair Share Act and in favor of Senator Greenleaf's bill.

  Both bills remain in the Senate Judiciary Committee, and no votes have been scheduled. The Hospital Association of Pennsylvania (HAP) supports the Fair Share Act and opposes Senator Greenleaf's bill.

• Senate Resolution 84: Physician Shortage Issues. On April 14, 2011, Senator Mensch (R-Bucks, Lehigh, Montgomery, Northampton) introduced a resolution directing the Legislative Budget and Finance Committee to study the number of physicians in Pennsylvania. The resolution instructs the committee to assess whether a physician shortage exists in Pennsylvania and to provide a report to the Senate no later than November 30, 2011. The Legislative Budget and Finance Committee is a joint committee of the Pennsylvania legislature charged with finding bipartisan solutions to problems facing the Commonwealth. Senator Mensch is a member of the committee. Senators Argall (R-Berks, Carbon, Lehigh, Monroe, Northampton) and Browne (R-Lehigh, Monroe, Northampton) serve as co-sponsors of the resolution, which has been referred to the Senate Public Health and Welfare Committee. HAP supports the resolution.

Miscellaneous

• 2012 Attorney General Race: On April 20, 2011, former Congressman Patrick Murphy (D-8) announced his candidacy for Pennsylvania Attorney General in 2012. Mr. Murphy received endorsements from several members of the Democratic party, including Congressman Tim Holden (D-17) and former Democratic Governor candidate Dan Onorato. Mr. Murphy is currently a partner in the Philadelphia law firm of Fox Rothschild, where his wife was formally an associate. He is a graduate of King's College and earned his law degree from Widener University School of Law.

Federal Issues

Advocacy

• Physician Payment Reform: In late December 2010, President Obama signed a bill into law averting for one year the expected 25% decrease in Medicare physician payments then scheduled to take effect on January 1, 2011. If the system is not corrected and if the decrease is not averted, physicians will experience a 29% decrease in Medicare payments in 2012. Costs to correct the system are estimated to be about $300 billion.

  On March 28, 2011, House Energy and Commerce Subcommittee on Health sent a letter to major physician, hospital and other healthcare groups soliciting input on methods to correct the payment system. The American Medical Association recommends an immediate repeal of the current system, the implementation of a five-year period of stable payments, and a testing period for new payment models. The Association of American Medical Colleges (AAMC) suggests a system that adequately compensates physicians and accounts for increased costs due to inflation and the complexity of patients served. The AAMC also urges a transition period with stable and predictable physician payments. The American Hospital Association acknowledges that the system is flawed but cautions against solutions resulting in reduced payments to other providers. On May 5, 2011, the Subcommittee will hold a hearing to address these responses.

• Physician Owned Hospitals: The Patient Protection and Affordable Care Act (PPACA) severely limited the development of new physician owned hospitals by eliminating the applicable exception to the Stark Law for physician ownership of hospitals. As previously reported, the Physician Hospitals of America (PHA) recently filed a federal lawsuit before the U.S. District Court for the Eastern District of Texas seeking to have the PPACA limitations on physician owned hospitals declared unconstitutional. On March 31, 2011, the District Court upheld the PPACA limitations on physician owned hospitals. The PHA is expected to appeal the decision.

Legislation

• H.R. 1473: After Congress passed several temporary spending measures earlier this year, President Obama signed a measure on April 15, 2011 funding the federal government through September 30, 2011, which marks the conclusion of the current federal fiscal year. The bill reduces spending for federal programs by roughly $39 billion, including decreases to the Children Health Insurance Program (CHIP), community health center funding and some programs created through PPACA. Congressmen Dent (R-15), Fitzpatrick (R-8) and Holden (D-17) voted in favor of the bill, together with Senator Casey (D-PA). Senator Toomey (R-PA) voted against the bill, stating that the spending reductions were insufficient to restore fiscal responsibility.

Miscellaneous

• Proposed Rule for Medicare Inpatient Payment Changes for FFY 2012. On May 5, 2011, the Centers for Medicare & Medicaid Services (CMS) will publish its proposed rule relating to hospital inpatient payments for federal fiscal year 2012. CMS estimates that overall payments to general acute care hospitals will decrease by $498 million under the proposed rule.

  The proposed rule includes a number of hospital quality initiatives. It would expand various quality reporting requirements but streamline them in an effort to reduce the burden on participating hospitals.

  CMS also proposes implementing PPACA's Hospital Readmissions Reduction Program as of October 1, 2013. The program will reduce payments to certain hospitals that have excess readmissions for certain selected conditions. CMS is proposing measures regarding rates of readmissions for acute myocardial infarction, heart failure and pneumonia, along with a methodology for calculating excess readmission rates.

  Comments to the rule will be accepted until June 20, 2011.