Government Relations Update - October 3, 2012

Pennsylvania Issues

Legislation

H.B. 1880: Professional Nurse Staffing Standards. As previously reported, State Representative William F. Adolph, Jr. (R-Delaware) introduced legislation on September 29, 2011 which would require each Pennsylvania hospital to develop, implement and monitor a professional nurse staffing plan for each hospital unit based on patient acuity, patient volumes, experience of the nursing staff and support services available to the nurses. SEIU Healthcare Pennsylvania, the Pennsylvania State Nurses Association (PSNA), the American Nurses Association and other regional nursing associations support the bill. On September 24, 2012, the PSNA began asking staff nurses to contact elected officials, hospital presidents and the Hospital Association of Pennsylvania (HAP) to seek support for the bill. HAP opposes the bill, since it would create new administrative burdens on hospitals while limiting their ability to adjust staffing to meet changing patient needs. St. Luke's recently contacted each member of the Pennsylvania legislature within our service area to oppose the bill.

Miscellaneous

133rd House District: State Representative Joseph Brennan (D-Lehigh, Northampton) has withdrawn his candidacy for reelection in November. Daniel McNeill (D), a former union leader and Whitehall Township commissioner, has been selected as the Democratic candidate to replace Representative Brennan in the general election. He will face Dave Molony (R), owner of the Lehigh Valley Acupuncture Centre. St. Luke's University Hospital - Bethlehem Campus is located within the133rd District.

HAP Appointment: On September 25, 2012, HAP announced the appointment of Andrew (Andy) W. Carter as its new President and Chief Executive Officer. Mr. Carter will succeed Carolyn F. Scanlan, who will retire on December 31, 2012 following nearly 18 years of service with HAP. Mr. Carter has served as the President and Chief Executive Officer of the Visiting Nurse Associations of America (VNAA) since 2007. Prior to his role at the VNAA, he served as the President of the Ohio Children's Hospital Association and held several positions in the Department of Public Welfare for the Commonwealth of Massachusetts. Mr. Carter holds a Master of Public Policy degree from Harvard University's John F. Kennedy School of Government and a Bachelor of Arts degree from Georgetown University.

New Jersey Issues

Miscellaneous

Legislative Visit: On September 21, 2012, Warren County Freeholder Richard Gardner (R) visited St. Luke's Hospital - Warren Campus and met with Scott Wolfe and Jane George to discuss relevant issues. Mr. Gardner has been a Warren County Freeholder since 2005 and is currently the President of the New Jersey Association of Counties.

Federal Issues

Advocacy

Medicare Provider Payment Reductions: On August 2, 2011, Congress passed the Budget Control Act of 2011, which raised the nation's debt ceiling in several steps until 2013 and reduced the federal budget by about $2.1 trillion over the next 10 years. The first stage of the bill required $917 billion in federal spending reductions over the next ten years in exchange for a $900 billion increase in the national debt ceiling. The second stage of the bill increased the debt ceiling by $1.2 trillion and required $1.2 trillion in mandatory spending reductions to be evenly divided between defense and non-defense spending. Cuts to Social Security, Medicaid, veterans' benefits, food stamps and Supplemental Security Income are exempt from the mandatory spending reductions. However, cuts to the Medicare system are not exempt, and annual Medicare payments to providers may be reduced nationally by up to 2%, or $11 billion, as of January 1, 2013. The timing of the mandatory budget cuts are even more concerning given the scheduled 32% Medicare physician fee schedule reduction set to become effective on January 1, 2013, the expiration of the Medicare Dependent Hospital Program, and the expiration of Section 508 of the Medicare Modernization Act of 2003. Although the physician fee schedule problem has been temporarily corrected each of the last few years, Congress may be unable to do so this year given its budget constraints. When coupled with the possible reductions to provider payments under the Budget Control Act of 2011, physicians may experience a 30% to 40% Medicare reimbursement cut, which could lead to a massive exodus of participating physicians from the Medicare system.

On September 14, 2012, the White House Office of Management and Budget (OMB) urged Congress to pass legislation that would delay or reduce the scheduled Medicare cuts. The American Hospital Association projects that the reductions will result in more than 766,000 healthcare and related job losses by 2021. New Jersey could lose more than 14,000 healthcare and related jobs in 2013. Pennsylvania would be one of the hardest hit states and could lose more than 24,000 healthcare and related jobs in 2013.

Pay for Performance: On October 1, 2012, Medicare implemented two new programs created through the Patient Protection and Affordable Care Act (PPACA) intended to reward hospitals for good clinical practices and penalize hospitals for high readmission rates. Pursuant to the Value Based Purchasing Program, Medicare will retain 1% of total hospital Medicare payments and redistribute the funds based on hospital performance relating to certain clinical guidelines and patient satisfaction surveys. Medicare estimates that about $850 million will be reallocated among hospitals in the first year under the Value Based Purchasing Program. The Readmissions Reduction Program penalizes hospitals with higher than expected readmission rates. Hospitals with the highest rates for readmissions relating to heart attack, heart failure and pneumonia patients will forfeit up to 1% of their Medicare payments during the federal fiscal year ending September 30, 2013. During the second and third years of the Readmissions Reduction Program, the maximum penalty will increase to 2% and 3% of hospital payments, respectively. Medicare estimates that hospitals will forfeit about $280 million in the first year of the Readmissions Reduction Program.

Health Insurance Exchanges: As previously reported, PPACA creates statewide health insurance exchanges by 2014 for individuals and small businesses to compare health insurance plans and rates. If a state fails to create an exchange, the federal government must design one for it. As an initial step, states were required to submit to the Department of Health & Human Services (HHS) by October 1, 2012 an Essential Health Benefits (EHB) plan establishing the amount and types of coverage to be included in their exchange. Only 13 states submitted EHB plans by the deadline. Participating states must submit their final Health Insurance Exchange blueprint to HHS by November 16, 2012 demonstrating that the planned exchange will meet all applicable legal and operational requirements. Six states have already announced that they will opt out of the Health Insurance Exchange program. Governors Corbett (R-PA) and Christie (R-NJ) have not yet announced whether they will participate in the Health Insurance Exchange program.

Miscellaneous

Legislative Visit: On September 18, 2012, United States Congressman Mike Fitzpatrick (R-8) and State Senator Bob Mensch (R-Bucks) visited St. Luke's Hospital - Quakertown Campus and met with administrators to discuss relevant issues. John Sylvia provided a tour of the hospital, and Dr. Bonnie Coyle explained our community health program and provided a tour of a St. Luke's mobile dental van.