Government Relations Update – June 10, 2014

Pennsylvania Issues

Advocacy

State Tax Revenues: The Commonwealth of Pennsylvania collected $1.9 billion in General Fund revenue in May, which was $108 million, or 5.5%, less than expected. This is the sixth consecutive month that revenues have not met budget projections, and the year-to-date collections are $532.5 million, or 2%, below budget. The Pennsylvania Legislature Independent Fiscal Office now projects that the end of the year revenue shortfall will exceed $1.3 billion. Following a three week recess, state elected officials returned to Harrisburg on June 2nd with the goal of approving a balanced budget by the state constitutional deadline of June 30th. Leaders in both the House and Senate expect difficult budget decisions, including possible hospital payment reductions, the introduction of natural gas extraction taxes and additional tobacco taxes.

Pennsylvania Medicaid Tax Violated Rules: On May 30, 2014, the Office of Inspector General (OIG) for the United States Department of Health & Human Services (HHS) reported that Pennsylvania's gross receipts tax on Medicaid managed care organizations (MCOs) is an impermissible healthcare related tax. Pennsylvania collected gross receipts tax revenues of $1.76 billion from its Medicaid MCOs between 2009 and 2012 and applied those revenues to reduce its share of HealthChoices Medicaid managed care costs. Pennsylvania then included in its capitation rates a supplemental payment to Medicaid MCOs to reimburse $1.6 billion of the tax. The OIG concluded that the tax was impermissible because it was not applicable to all MCOs and because the Medicaid MCOs were held harmless through the supplemental payment. Under Medicaid rules, revenues from an impermissible tax may not be used to finance the Commonwealth's share of Medicaid expenditures. Rather than penalize the Commonwealth, the OIG has instructed the Centers for Medicare and Medicaid Services to clarify its regulations regarding approved tax structures.

Legislation

H.B. 1492: Expand Medicaid in Pennsylvania. As reported previously, the federal Medicaid program expanded state medical assistance programs significantly on January 1, 2014 pursuant to the Patient Protection and Affordable Care Act (PPACA), unless states elected to opt out. The federal government began matching additional state funding for three years as of January 1st and will reduce the matching rate gradually to 90% by 2020. In response, Governor Tom Corbett (R) has consistently announced that Pennsylvania would reject the expansion plan, unless Pennsylvania was permitted to include job search requirements for, and cost sharing (i.e., monthly premiums and co-pays) by, Medicaid enrollees.

On June 4, 2014, Representative Gene DiGirolamo (R-Bucks) introduced legislation that would immediately expand the state's Medicaid program to more than 500,000 uninsured Pennsylvanians. Representative DiGirolamo asserts that the expansion would generate $500 million for the Commonwealth to provide healthcare for low income residents. On June 4, 2014, the House Human Services Committee approved the bill, which will now be sent to the full House for consideration. The Hospital & Healthsystem Association of Pennsylvania (HAP) strongly supports the bill. However, House Majority Leader Michael Turzai (R-Allegheny) has opposed efforts to bring the bill to the House floor for a vote. The Senate approved a similar Medicaid expansion bill last June, but the House rejected it.

Miscellaneous

Pennsylvania Primary Election: The Pennsylvania Primary Election was held on May 20, 2014. Democrats selected former Department of Revenue Secretary and York County businessman Tom Wolf as their nominee for Governor and State Senator Mike Stack (D-Philadelphia) as their nominee for Lt. Governor. Incumbent Governor Tom Corbett and current Lt. Governor Jim Cawley were chosen as the Republican candidates. A post-election poll conducted by Rasmussen Reports indicates that Tom Wolf has a twenty point lead over Governor Corbett and would easily defeat him if the election were held today.

Senators Boscola (D-Lehigh, Northampton, Monroe), Browne (R-Lehigh, Northampton, Monroe) and Mensch (R-Bucks, Lehigh, Montgomery, Northampton) were unopposed in the Primary Election. Senator Browne will face former Allentown Police Officer Walter Felton in the November General Election, while Senators Mensch and Boscola are unopposed. In the newly drawn 40th State Senate District, which includes St. Luke's Wind Gap Medical Center and the proposed site for St. Luke's Hospital – Monroe Campus, State Representative Mario Scavello (R-Monroe) ran unopposed for the Republican nomination and will face Democratic primary winner Mark Aurand, an attorney from Allentown.

In the United States congressional races, Pennsylvania voters residing in the 8th Congressional District selected former Army Ranger and CIA analyst Kevin Strouse as the Democratic nominee. Mr. Strouse will face incumbent Congressman Mike Fitzpatrick (R-8-PA), who did not have a primary challenger. St. Luke's Hospital – Quakertown Campus is located in the 8th Congressional District. In the 17th Congressional District, Republican voters nominated Schuylkill County Coroner and Radiation Oncologist David Moylan, who will face incumbent Congressman Matt Cartwright (D-17-PA) in November. Congressman Charlie Dent (R-15-PA) did not have a primary opponent and does not have an opponent in the fall election.

New Jersey Issues

Legislation

2955: Patient Designated Caregiver Law. On May 22, 2014, the New Jersey Assembly unanimously approved legislation permitting patients admitted to New Jersey hospitals to designate a caregiver to provide assistance upon discharge. The designated caregiver's contact information would be entered into the patient's medical record. Within 24 hours of discharge, the hospital would provide the caregiver with detailed instructions on how to care for the patient. Assemblyman Daniel Benson (D-Mercer, Middlesex), who is one of six sponsors of the bill, asserts that the bill will reduce preventable hospital readmissions and better coordinate care, especially for patients without nearby family members. The New Jersey Hospital Association opposes the bill, since it creates unnecessary and burdensome requirements on hospitals. The bill was introduced and drafted at the request of AARP. The bill has been sent to the State Senate and has been assigned to the Senate Health, Human Services and Senior Citizens Committee for consideration.

Miscellaneous

New Jersey Primary Election: On June 3, 2014, New Jersey voters selected party candidates for United States Senate and Congress. Senator Cory Booker (D-NJ) did not have a Democratic opponent during the primary election. He will face Republican Jeff Bell, a conservative Washington policy analyst and former Ronald Reagan speech writer, in the November election. If elected, Mr. Bell would be the first Republican Senator from New Jersey to serve since 1972. Congressman Leonard Lance (R-7-NJ) easily defeated his primary challenger and will run against Clinton Mayor Janice Kovach in the November election.

Federal Issues

Miscellaneous

Legislative Visit: On June 4, 2014, Congressman Cartwright toured St. Luke's Hospital –Anderson Campus and met with Ed Nawrocki, Robby Wax, Bob Martin and Bill Moyer to discuss issues relevant to the Congressman's district, which includes St. Luke's Hospital – Anderson Campus, St. Luke's Hospital – Miners Campus and the proposed site for St. Luke's Hospital – Monroe Campus.

HHS Secretary Confirmation: On June 5, 2014, the Senate confirmed Sylvia Mathews Burwell as the Secretary of HHS. She replaces Secretary Kathleen Sebelius, who resigned in April. Ms. Burwell previously served as the White House budget director. Senators Booker (D-NJ), Casey (D-PA), Menendez (D-NJ) and Toomey (R-PA) all voted in favor of the appointment.