Government Relations Update - May 1, 2012

Pennsylvania Issues

Advocacy

• Newborn Payment Policy: On June 30, 2011, the Pennsylvania General Assembly enacted significant changes to the statute known as the Public Welfare Code, 62 P.S. § 101 - 1503, which governs many Department of Public Welfare (DPW) programs, including Medicaid, and these changes were signed into law by Governor Corbett as Act 22 of 2011. These changes grant DPW the authority to make significant changes to Medical Assistance (MA) benefits and provider reimbursement rates without the usual oversight by the General Assembly or the Independent Regulatory Review Commission. In the past, when expenditures, especially for Medical Assistance, exceeded the amount appropriated in the budget, the Governor would ask for one or more "supplemental appropriations" to fund the additional costs. Act 22 requires that DPW not exceed its budget as passed on June 30, 2011, although DPW may reallocate funds within its budget.

  As previously reported, DPW responded to budgetary pressures by announcing proposed payment changes on February 18, 2012 for normal MA births allowing providers a single payment equal to the existing maternal case rate for both delivery and subsequent care for the mother and newborn, as opposed to the historically separate and additional payment for newborn care. St. Luke's submitted comments to DPW urging that the payment changes be reversed, and the Hospital Association of Pennsylvania (HAP) offered similar comments on behalf of its members. Despite these efforts, the new policy became effective on April 1, 2012.

Legislation

• H.B. 153: Reducing the Size of the General Assembly. On April 3, 2012, House Speaker Sam Smith (R-Armstrong, Indiana, Jefferson) introduced legislation to reduce the size of the House of Representatives and the Senate from 203 members to 153 members and from 50 members to 38 members, respectively. Speaker Smith asserts that the reduction would make the legislative process more efficient and cost effective. On April 4, 2012, the House passed the bill, with every Lehigh Valley legislator voting in favor, except Representatives Freeman (D-Northampton), Mann (D-Lehigh), and Samuelson (D-Lehigh, Northampton). Representative Simmons (R-Lehigh, Northampton) serves as a co-sponsor of the bill, which has been sent to the Senate for consideration. Because the change would also require an amendment to the Pennsylvania constitution, the bill must pass in two consecutive legislative sessions and then be approved by referendum.
• H.B. 1329: Amending the Prevailing Wage Act. On February 13, 2012, Representative Keller (R-Franklin, Perry) introduced legislation to amend the Pennsylvania Prevailing Wage Act. The Pennsylvania Prevailing Wage Act, which was enacted in 1961, generally requires that prevailing minimum wages be paid for any construction work financed by public funds where the estimated cost of the total project exceeds $25,000. The Secretary of the Department of Labor and Industry is charged with the responsibility of determining prevailing minimum wage rates for each craft within each locality. Representative Keller's legislation would raise the project cost threshold to $185,000. Proponents of the bill assert that the prevailing wage mandate raises the cost of taxpayer-funded construction projects by 5 percent to 30 percent. The Pennsylvania Chamber of Commerce and other business organizations are urging the legislature to pass the bill before the current legislative session expires on December 31, 2012.

Miscellaneous

• Retirement: On April 14, 2012, HAP announced that its President and Chief Executive Officer, Carolyn F. Scanlan, will retire as of December 31, 2012. Ms. Scanlan has served in the role since 1995. The HAP Board of Directors has formed a search committee to identify a successor.

• Pennsylvania Primary Election: During the Pennsylvania primary election held on April 24, 2012, Kathleen Kane defeated former Congressman Patrick Murphy to become the Democratic nominee for Pennsylvania Attorney General. Ms. Kane, a former Lackawanna County prosecutor, will face Republican David Freed, who currently serves as the Cumberland County District Attorney. State Senator Dave Argall (R-29) defeated Brian Rich to remain the Republican senatorial candidate in the 29th District. Senator Argall is seeking a full four year term following the partial term he is currently completing as the successor to Senator James Rhoades, who tragically died while in office. Senator Argall will face Democrat Tim Seip, a former state representative. Allentown City Councilman Michael Schlossberg (D) did not face any opposition in the primary and does not have an opponent in the general election to replace Representative Jennifer Mann. Every other House member from the Lehigh Valley will face a general election opponent, except Representatives Harhart (R-Lehigh, Northampton) and Freeman (D-Northampton).

  In a special election for the 134th House District seat, Republican Ryan Mackenzie, a previous policy director at the Pennsylvania Department of Labor and Industry, was elected to succeed former Representative Doug Reichley. Reichley vacated the seat when he was elected as a judge to the Lehigh County Court of Common Pleas in November 2011.

New Jersey Issues

Advocacy

• Wage Index Reform: Medicare reimburses hospitals based on national payment rates adjusted by a wage index to reflect local labor costs. The current wage index system uses the metropolitan statistical area (MSA) labor market definition based on a hospital's location as a starting point to establish the wage index, but the system is subject to various adjustments and does not reflect the true cost of hospital labor. The Patient Protection and Affordable Care Act (PPACA) requires that the United States Department of Health and Human Services (HHS) provide Congress with a comprehensive plan to reform the Medicare wage index system. On April 12, 2012, HHS issued a report to Congress recommending the use of commuting data to characterize hospital labor markets. The proposed Commuting Based Wage Index (CBWI) would incorporate wage data based on the location of employees, rather than the location of a hospital, thus preventing the sharp reimbursement differences sometimes created in the current wage index system when competing hospitals are located in adjacent MSAs. Congress would need to amend the Medicare statutory framework to implement the new system, which is unlikely during the next few months. However, Congress may be willing to extend Section 508 reclassifications that expired on March 31, 2012 while a new wage index system is being adopted.

Federal Issues

Miscellaneous

• Pennsylvania Primary Election: Coal mine owner Tom Smith won the Republican primary for United States Senate and will face Senator Bob Casey (D-PA) in the general election. Congressman Tim Holden (D-17), the longest serving member of Pennsylvania's congressional delegation, was defeated by Lackawanna County personal injury attorney Matt Cartwright in the Democratic primary. Mr. Cartwright will face Republican Laureen Cummings in the general election. Ms. Cummings is a nurse and small business owner. St. Luke's Hospital - Miners Campus, St. Luke's Hospital - Anderson Campus and St. Luke's Wind Gap Medical Center are within the 17th Congressional District. Congressman Charlie Dent (R-15) did not have a primary challenger, but he will face Democrat Richard Daugherty for the 15th Congressional District seat in the general election. Mr. Daugherty has been the executive director of the Lehigh County Senior Center since 1995. St. Luke's Hospital - Allentown Campus and St. Luke's Hospital - Bethlehem Campus are within the 15th Congressional District. In the race for the 8th Congressional District, Congressman Mike Fitzpatrick (R-8) will face Democrat Kathy Boockvar. Boockvar is an attorney who previously operated a small law practice. St. Luke's Hospital - Quakertown Campus is within the 8th Congressional District.