Government Relations Update – May 14, 2013

Pennsylvania Issues

Advocacy

Medical Assistance Modernization Act of 2010: The Medical Assistance Modernization Act of 2010, also known as Act 49, authorizes the Pennsylvania Department of Public Welfare (DPW) to impose a statewide assessment based on net operating revenues derived from inpatient services provided by licensed acute care hospitals in Pennsylvania. The Hospital & Healthsystem Association of Pennsylvania (HAP) supported the passage of Act 49, since it serves as a mechanism for the Commonwealth to secure additional federal matching funds, which are then distributed in part to hospitals through increased medical assistance payments and retained in part by the Commonwealth in its General Fund. The Act became effective on July 1, 2010 and will generate $339 million for the Commonwealth's General Fund and $1.4 billion to Pennsylvania hospitals through June 30, 2013.

The tax assessment rate imposed under Act 49 increased from 2.9% for the state fiscal year ending June 30, 2011 to 3.22% for the state fiscal year ending June 30, 2012. The rate remained at 3.22% for the state fiscal year ending June 30, 2013.

Governor Tom Corbett's (PA-R) budget proposal for the state fiscal year ending June 30, 2014 anticipates that Act 49 would be reauthorized, but the Governor plans to retain an additional $49 million to support the General Fund, thereby further decreasing hospital distributions. HAP and hospitals throughout Pennsylvania oppose this plan. On May 7, 2013, Jane George met with state legislators to discuss the Network's concerns.

Legislation

H.B. 1190: Hospital Licensure. As previously reported, Representative Bryan Cutler (R-Lancaster) has introduced legislation to exempt hospitals from routine licensure renewal surveys conducted by the Pennsylvania Department of Health (DOH). If enacted, the bill would require the DOH to recognize reports from national accrediting organizations as acceptable for meeting licensure requirements, as long as the accrediting organization's standards are equal to or more stringent than those of the DOH. Hospitals not meeting accreditation criteria would still be subject to the current licensing requirements of the DOH. In addition, the DOH would maintain full authority to inspect a hospital based on patient complaints. On May 6, 2013, the House passed the bill unanimously, and it has been sent to the Senate, where it is expected to pass. HAP strongly supports the bill.

Miscellaneous

Nomination: As previously reported, former State Representative Beverly Mackereth has served as the Acting Secretary of DPW since March 2013 following the resignation of Gary Alexander. On April 30, 2013, the Governor nominated Ms. Mackereth as the Secretary. Ms. Mackereth had served as DPW's Deputy Secretary for the Office of Children, Youth and Families since November 2011. She also previously served as the Executive Director of the York County Department of Human Services, the Executive Director of the Healthy York County Coalition with WellSpan Health System and the Deputy Director of the Governor's Community Partnership for Safe Children under former Governor Tom Ridge (R). DPW employs 17,000 workers, has a budget of more than $26 billion and serves 2.2 million low-income, elderly and disabled Pennsylvanians. The Senate is expected to confirm Ms. Mackereth's nomination within the next few months.

New Jersey Issues

Legislation

A. 4092: Local Hospital Fee Pilot Program. On May 6, 2013, Assemblywoman Grace Spencer (D-Newark) introduced legislation to permit select municipalities and counties the right to establish a local hospital tax as a method to secure additional federal matching funds. The funds would then be redistributed to hospitals through increased Medicaid payments and to the participating municipalities. Advocates of the proposed legislation assert that the additional federal money would offset funding decreases to the Medicaid program and help meet increased patient demand resulting from the Patient Protection and Affordable Care Act (PPAPCA). On May 6, 2013, the Assembly Health and Senior Services Committee approved the bill, and it has been referred to the Assembly Budget Committee for consideration. Similar legislation has been introduced in the Senate by Senator Paul Sarlo (D-Bergen, Passaic) and assigned to the Senate Health, Human Services and Senior Citizens Committee.

The New Jersey Hospital Association (NJHA) opposes the bill in its current form. As currently drafted, the bill does not limit the amount local governments can collect before redistributing the funds to hospitals and does not contain an opt-out provision for hospitals choosing not to participate. However, if amendments are added to address these concerns, the NJHA would support its passage.

The proposed bill is similar to Act 49 in Pennsylvania, but Act 49 allows the state – not select municipalities – to govern the program. In addition, Act 49 permits hospitals to opt out of the assessment.

Federal Issues

Legislation

S.842: Rural Hospital Access Act of 2013. The Centers for Medicare & Medicaid Services (CMS) define a Medicare Dependent Hospital (MDH) as one that: (1) is located in a rural area; (2) has 100 or fewer beds: (3) is not classified as a sole community hospital; and (4) attributes at least 60% of its inpatient days or discharges to Medicare beneficiaries. St. Luke's Hospital - Miners Campus is one of 13 Pennsylvania hospitals and 200 hospitals across the country designated as a MDH. CMS has historically paid MDHs an increased rate to offset their inpatient operating costs. Some MDHs have also qualified for a low-volume hospital payment adjustment by CMS for hospitals experiencing a significant volume decrease.

On April 25, 2013, Senator Charles Schumer (D-NY) introduced legislation to extend the programs for twelve months, with Senator Chuck Grassley (R-IA) as a co-sponsor. Similar legislation has been introduced in the House by Congressman Tom Reed (R-23-NY). HAP and the American Hospital Association support the legislation. Jane George has contacted Senators Bob Casey (D-PA) and Pat Toomey (R-PA) and Congressmen Charles Dent (R-15-PA) and Matt Cartwright (D-17-PA) to request their support for the extension.

Miscellaneous

Retirement: On April 23, 2013, Senate Finance Committee Chairman Max Baucus (D-MT) announced that he was retiring and would not seek a seventh term in the Senate. The Senator is the sixth sitting Democratic member of the Senate to announce his retirement upon the conclusion of his current term. Senator Frank Lautenberg (D-NJ) similarly announced his plans to retire on February 14, 2013. The Senate Democrats currently hold 53 seats, compared to 45 held by the Senate Republicans.