June 17, 2005

TO: Board of Directors

FR: Kevin J. Burke
Director, Division of Government Relations

CC: Doug Henley
Todd Dicus
Rosi Sweeney

RE: State and Federal Legislative Update (Week of June 13)

On Thursday, June 12, the House Appropriations Committee approved the FY 2006 spending bill for Labor/HHS/Education. The committee did not change any of the subcommittee’s appropriations levels: Family medicine and primary care training, AHECs, and rural programs are all still zeroed out. However, Reps. Bonilla (R-TX), Boyd (D-FL) and Peterson (R-PA) spoke in opposition to the subcommittee’s zero allocation for Title VII’s Health Professions Grants.

The House of Representatives is scheduled to take up the bill on Thursday, June 23.

On Thursday, June 16, Senators Bill Frist (R-TN), the Senate Majority Leader, and Hillary Clinton (D-NY) introduced the Health Technology to Enhance Quality Act (S. 1262). The bill would promote a national interoperable health information technology infrastructure and allow hospitals to share HIT systems with local physicians. The bill also includes provisions to establish pay-for-performance pilot programs in Medicare, Medicaid and federally qualified health centers.

On Tuesday, June 14, the House Small Business Committee held a hearing entitled, “Are Skyrocketing Medical Liability Premiums Driving Doctors away from Underserved Areas?” Dr. Larry Fields, AAFP President-elect, testified, along with the president of the National Medical Association, the president of the National Hispanic Medical Association, an endocrinologist from the Cleveland, Ohio, Medical Center and a trial attorney from Columbus, Mississippi. Rep. Donna Christensen (D-VI), who is an AAFP member, asked for suggestions to control medical liability premiums beyond capping non-economic damages. While some suggested no-fault insurance or federal catastrophic payments, no other method was shown to affect premiums.

In hearings before the Senate Finance Committee and the House Energy and Commerce Committee, Governors Mark Warner (D-VA) and Mike Huckabee (R-AR) offered the recommendations of the National Governors Association (NGA) for Medicaid reform. The NGA called for higher rebates from drug companies and increased use of generics. The governors also recommended tiered co-payments for beneficiaries. The plan included provisions to make it more difficult to transfer assets to become qualified for Medicaid.

Next Week in Congress:

As of June 17, legislatures in California, Delaware, Louisiana, Maine, Massachusetts, Michigan, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, and Wisconsin and the District of Columbia are in regular session. Thirty-two have adjourned for the year. Minnesota remains in a special session convened May 24 with no set adjournment date, Oklahoma in currently in recess from a special session and expected back June 20, and Vermont started a special session on June 16.

Arizona: The Arizona legislature passed a bill that places new restrictions on expert witnesses and allows for expressions of sympathy. The new criteria include a provision that an expert must:

Connecticut: The Senate passed a medical liability bill with little time to discuss the measure in the House prior to the session’s end. The bill included sympathy language that has been included in similar legislation passed in Missouri, Georgia, South Carolina and Illinois. However, the bill does not cap non-economic damage awards.

Colorado: Gov. Bill Owens (R) signed several bills dealing with Medicaid, including substance abuse outpatient treatment as a new option benefits; obesity coverage; and a legislative direction for the tobacco tax to provide medical coverage for the disabled, uninsured, extending Medicaid coverage to more children and restoring coverage for illegal immigrants. He vetoed a bill to join a multi-state purchasing pool for prescription drugs for Medicaid patients, a discounted prescription program for middle income families and a bill that would authorize the state to publish a list of employers that offer little or no insurance coverage.

Connecticut: Appropriations and Human Services Committees approved a Medicaid waiver to reform mental health services for children and parents under the HUSKY insurance programs. The state proposes to have a single entity, rather than several managed care organizations, manage the delivery of mental health services to children and parents enrolled in the HUSKY programs.

Florida: Gov. Bush (R) signed legislation on Wednesday, June 1, that allows year-round enrollment in KidCare, the state's health insurance program for children between the ages of 5 and 18 whose families do not have access to employer-sponsored health insurance and are not eligible for Medicaid. In addition, the governor suggested that the legislature meet in special session this fall to approve the Medicaid managed-care pilots outlined in a recently enacted Medicaid reform bill, S.B. 838, which mandated legislative approval following the expected federal approval of the proposal.

Georgia: Gov. Perdue (R) met with federal officials to discuss the Georgia Medicaid reform plan. HHS Secretary Leavitt, and the Administrator of CMS, Dr. Mark McClellan, attended the meeting. The Atlanta Journal-Constitution had obtained a copy of the unreleased report indicating the plan:

Illinois: The legislature passed and sent to the governor a measure directing the Department of Public Aid to evaluate the current standards of treating asthma for beneficiaries. The review may include state-of-the-art programs in asthma disease management, as well as evidence-based best practices for the early diagnosis, treatment and control of asthma, particularly in children. The review also will assess the available methods of implementing and funding asthma treatment under Medicaid.
The Senate approved a bill that creates a three-year tax assessment on hospitals. The tax would garner $470 million annually for hospitals and $130 million for the state in new, federal Medicaid dollars. All but 23 of the state's hospitals would recoup at least their original contributions with nearly $470 million extra to be distributed among them. The remaining $130 million would be used for health care needs and most likely would be distributed to nursing homes, specifically to programs for the developmentally disabled and mentally ill and to pay off some of the $1.5 billion Medicaid shortfall. Twenty-three hospitals will pay more in assessments than they will get back.

Iowa: Human Services Department announced that all prescriptions for Medicaid enrollees will be limited to a 30-day supply. The Department wants to make dispensing uniform at 30 days before the implementation of the Medicare Part D on January 1, 2006, when the state will be assessed a monthly charge for each dual eligible Medicaid enrollee based on drug usage in 2003.

Louisiana: The Senate passed a bill which will direct the Medicaid program to develop expanded coverage for certain low-income, uninsured citizens through a Medicaid waiver. In late May, the Department of Health and Hospitals proposed reducing reimbursement rates by 25 percent for targeted case management services for infants and toddlers up to 3 years old. The department anticipates implementation of this rule will decrease reimbursement for targeted case management services (33 providers serving approximately 4,500 recipients) by $0.5 million for FY 2005, $1.3 million for FY 2006, and $1.3 million for FY 2007.

On June 1, the House Ways and Means Committee approved the governor’s proposed hospital provider tax designed to raise $300 million. The bill would impose an $87 million provider tax on hospitals that would draw down $203 million in federal matching funds. Hospitals would pay a 1.5 percent tax on net patient revenue, based on 2001 government cost reports. Exempted from paying the tax would be LSU's public hospitals, rural hospitals, federal, rehabilitation and psychiatric hospitals and separately licensed long term acute care hospitals.

Maine: Gov. Baldacci (D) proposed delaying payments to hospitals, taxing services for the mentally retarded and reducing funding for the Department of Health and Human Services to make up a $73 million shortfall in the Medicaid program.

Minnesota: Gov. Pawlenty (R) called the legislature into special session because it has not passed a FY 2006-2007 budget. The governor has proposed an additional tax on cigarette wholesalers to provide $100 million. House lawmakers have proposed reducing hospital reimbursement rates by 5 percent and requiring higher co-payments.

Mississippi: Legislators passed a $4.6 billion FY 2006 budget which cuts the state's Medicaid program by $166 million to $493 million.

Nebraska: The legislature called for public hearings in the state's study of ways to control Medicaid costs. A final report is due to the legislature by December 1.

Nevada: Senate and House committees approved a Medicaid budget that was $7 million short of the governor’s recommendation of $830.5 million over the next two years. The committees did approve a recommendation from the governor to expand health care coverage for pregnant women and employees of small businesses by tapping into about $90 million in federal matching funds over the next five years.

New Hampshire: The Senate approved a look-back bill that will extend the period of review for Medicaid eligibility back to five years in regard to asset transfers in the case of long-term care. The bill also provides long-term care insurance incentives, elder care assessment prior to entering a nursing home and the expansion of home care services.

Oklahoma: Legislators passed a one-year Medicaid funding bill that will spend $63 million in natural gas revenue to leverage almost $200 million in federal Medicaid funds. The plan also creates a task force to look for $100 million in excess administrative costs, program abuses and other savings.

Tennessee: The Senate Finance Committee approved a $103 million safety net program to provide health care to people losing TennCare coverage. The Sixth U.S. Circuit Court of Appeals recently ruled that the state's procedure of dropping people from TennCare is constitutionally sound because it protects TennCare enrollees’ due process rights. The ruling allows the state to start notifying people that they could lose their TennCare eligibility.

Wisconsin: The Joint Finance Committee approved the governor’s plan to give Medicaid patients the option of moving out of nursing homes and into residential facilities. The Department of Health and Family Services expects that over two years more than 1,400 people will make the transition saving the Medicaid program more than $11 million. The Assembly Medicaid Reform Committee recently recommended that Medicaid enrollees should file a living will or another legal health care directive like a power of attorney to direct how their care should be managed if they become incapacitated. According to the state Department of Health and Family Services, the state paid $6.3 million in 2004 for the 116 Medicaid patients who were considered to be in a persistent vegetative state or about $54,500 for each patient.

On May 27, the U.S. Department of Health and Human Services (HHS) approved a plan by three states--Louisiana, Maryland and West Virginia--to pool their collective purchasing power to buy cheaper prescription drugs for their state Medicaid programs.

This is the second multi-state purchasing plan approved by HHS. The first multi-state plan was approved in April 2004 and originally included five states: Michigan, Vermont, New Hampshire, Alaska and Nevada. Since its approval, Hawaii, Minnesota and Montana have joined the pool.