Government Relations Update – April 15, 2014

Pennsylvania Issues

Advocacy

Tobacco Settlement Funds: Pursuant to a 1998 settlement with four of the largest tobacco manufacturers, 46 states and the District of Columbia will receive an estimated $206 billion over 25 years. Pennsylvania has received about $300 million annually and has used the funds exclusively for health care purposes, including support for medical assistance programs, reimbursement to hospitals for uncompensated care costs and funding for cancer research and tobacco cessation programs. Recently, fifteen states, including Pennsylvania, became involved in a dispute with the tobacco companies. More specifically, the tobacco companies argued that Pennsylvania failed to properly enforce settlement provisions involving the taxation of nonparticipating manufacturers. On September 11, 2013, an arbitration panel ruled that Pennsylvania's payments for 2014 would be reduced from $300 million to $120 million. Following the decision, the Corbett administration announced that it would eliminate funding for hospital uncompensated care and health research programs and discretionary funding for tobacco prevention and cessation programs. On November 7, 2013, Pennsylvania Attorney General Kathleen Kane appealed the ruling. On April 10, 2014, the arbitration panel's decision was upheld in part and reversed in part. Subject to further appeal, the annual payment to Pennsylvania will be reduced by $60 million. The Governor has not announced whether he will allocate the reestablished funds to public health programs.

Legislation

H.B. 1907: Patient Notice of Observation. As reported previously, Representative Stan Saylor (R-York) introduced legislation which would have required hospitals to: (1) provide notice to a patient when receiving care under observation status rather than being admitted as an inpatient; (2) explain the financial consequences of observation status to the patient; (3) obtain the signature of the patient or the patient's representative acknowledging that the information had been provided by the hospital; and (4) train hospital staff to provide the information. The Hospital & Healthsystem Association of Pennsylvania (HAP) did not oppose the bill. However, St. Luke's University Health Network led a group of hospitals and health systems, including the University of Pittsburgh Medical Center, Temple University Health System, Albert Einstein Healthcare Network, WellSpan Health, Geisinger Health System, Commonwealth Health, Sacred Heart HealthCare System and Lehigh Valley Health Network, in an effort to oppose the bill, since it would have created an unnecessary burden to hospitals. Following a meeting among certain of the hospitals, HAP, lobbyists representing skilled nursing facilities and Representative Saylor's staff, Representative Saylor agreed to support an amended version of the bill, which removed the signature requirements, training mandates and the requirement that hospitals explain financial consequences of observation status. The amended version was passed unanimously by the House, and the bill has been sent to the Senate for consideration.

Miscellaneous

Pennsylvania Primary Election: The Pennsylvania primary election will be held on May 20, 2014, and Pennsylvania voters will select party candidates for United States Congress, Governor, Lieutenant Governor and representatives for the Pennsylvania House and Senate. On January 24, 2014, State Representative Paul Clymer (R-Bucks) announced that he will not seek an 18th term in office. One Republican and three Democrats have announced their candidacies for the open seat. St. Luke's Hospital – Quakertown Campus is located within Representative Clymer's district.

New Jersey Issues

Advocacy

State Budget: As previously reported, Governor Chris Christie (R-NJ) has proposed a $34.4 billion budget that maintained hospital funding at current levels for the fifth consecutive year. However, the proposed budget would decrease the charity care program by $25 million, and University Hospital in Newark would have its aid increased by the same amount. The New Jersey Hospital Association (NJHA) has urged legislators to reject this portion of the proposed budget, since it would unfairly benefit one hospital disproportionately. The New Jersey legislature must adopt the final budget by July 1st, which marks the beginning of the New Jersey fiscal year.

Legislation

S. 1183: Nurse Staff Ratio Bill. On January 30, 2014, Senators Joseph Vitale (D -Middlesex) and Loretta Weinberg (D-Bergen) introduced legislation which would require certain nurse-to-patient staffing ratios in various units of New Jersey hospitals as a condition to continued licensure by the Department of Health. Senator Weinberg asserts that higher staffing levels would result in improved patient outcomes. The Health Professionals and Allied Employee union, which represents 12,000 nurses and healthcare workers in New Jersey and Philadelphia, supports the bill. The NJHA opposes mandatory nurse ratios, since they would create new administrative burdens on hospitals and reduce the ability of hospitals to adjust to changing staffing needs. Governor Christie has assured the hospital community that he will veto the bill if presented to him.

Miscellaneous

New Jersey Primary Election: The New Jersey primary election will be held on June 3, 2014, and New Jersey voters will select party candidates for United States Senate and Congress. Congressman Leonard Lance (R-7-NJ), who is currently serving his third term in office, will face business owner David Larsen in the Republican primary. Mr. Larsen unsuccessfully challenged the Congressman in 2010 and 2012. There is not a Democratic candidate for the seat. Newly elected Senator Cory Booker (D-NJ) does not have a Democratic opponent during the primary election. However, he will face the winner of the Republican primary in November.

Federal Issues

Advocacy

Medicare Physician Data: On April 9, 2014, the Centers for Medicare and Medicaid Services (CMS) publicly released physician specific payment data for the first time since 1979. According to CMS, it paid $77 billion in 2012 to more than 880,000 physicians for more than 5,000 procedures, drugs and other treatments. Consumer and public interest groups had pressured CMS to release the data so that patients and insurers could make informed decisions. The American Medical Association (AMA) opposed the release, since CMS failed to explain the data adequately. Certain physicians were surprised by the release and responded that the payments did not reflect their net income derived from the Medicare system, but rather the cost of drugs provided to their patients and reimbursed by CMS.

Legislation

H.R. 4302: Protecting Access to Medicare Act of 2014. On April 1, 2014, President Obama (D) signed into law the Protecting Access to Medicare Act of 2014, which contains numerous important health care provisions. The Act delays for one year the 24.4% decrease in Medicare physician payments originally scheduled to take effect on April 1, 2014. The bill continues the prior 0.5% physician payment increase through December 31, 2014 and provides no payment increase from January 1, 2015 through March 31, 2015. The Act also extended until April 1, 2015 the Medicare Dependent Hospital (MDH) program, which was scheduled to expire on March 31, 2014. St. Luke's Hospital – Miners Campus (SLM) is one of 13 Pennsylvania hospitals and 200 hospitals across the country designated as a MDH. SLM receives an annual payment adjustment of nearly $1.7 million pursuant to the program. In addition, Act prohibits recovery audit contractors from conducting patient status reviews pursuant to the “two-midnight policy” for inpatient claims with dates of admission from October 1, 2013 through March 31, 2015. Finally, the Act delays the implementation of ICD-10 for one year until October 1, 2015.

Congressmen Dent (R-15-PA), Fitzpatrick (R-8-PA), Cartwright (D-17-PA) and Lance (R-7-NJ), along with Senators Casey (D-PA), Menendez (D-NJ) and Booker (D-NJ), voted in favor of the legislation. Senator Toomey (R-PA) opposed the bill. The American Hospital Association, HAP, the American Health Information Management Association and the NJHA opposed the delay of ICD-10, since most healthcare systems, third-party payers and physician offices made significant investments to prepare for the deadline. Both the AMA and the Pennsylvania Medical Society opposed the bill given the temporary solution to the Medicare physician payment formula.