(Previous Issues)

November 1, 2002

Federal News
CMS issued final outpatient rule.
Lame Duck mission to commence after election.

Medical Liability
Pennsylvania Medical Society declares "Code Blue Emergency".
Governor Signs Venue Bill.

State News
Bioterrorism Preparedness funding to be released soon.
State Lobby Law Declared Unconstitutional.
Williams introduces Medical Liability Court legislation.
White introduces Pennsylvania Health Care Cost Containment Council bill

In other news
HAP 2003 Achievement Awards--entries sought.


This week elections for both State and Federal offices will be held. According to the American Hospital Association, Congress is expected to return after the elections to pass another continuing resolution, which would continue funding at current levels for a specified amount of time - possibly into the new year. State officials are also expected to return shortly after the election for a lame duck session.

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Federal News
CMS issued final outpatient rule. CMS recently issued its final outpatient prospective payment system (OPPS) rule, which takes effect Jan. 1 2003. Included in the final rule are the following provisions:

  • Provides the congressionally mandated 3.5% inflationary update to hospitals' Medicare outpatient payment rates for FY 2003.
  • The net effect of all provisions in the rule is 3.1% increase from last year for urban hospitals and a 6.2% increase for rural hospitals. However, aggregate Medicare outpatient payments are still significantly less than costs.
  • Does not include a pro-rata reduction in pass-through payments for certain new and high-cost devices, drugs, and biologicals.
  • Lowers the outlier threshold from 3.5 to 2.75 times the Ambulatory Payment Classification amount, enabling hospitals to reach the outlier threshold sooner. However, outlier reimbursement will drop from 50% to 45% of costs above the threshold amount.
It is also important to note that CMS has postponed the implementation of the physician payment rule, which was expected to include an additional 4.4% payment reduction beginning in Jan. 1, 2003.


Lame Duck mission to commence after election. Despite attempts to attach Medicare relief legislation to the continuing resolution, it was removed following objections from the White House. In the Senate, attempts by Senator Max Baucus (D-MT) to move Medicare relief legislation were again blocked by Republican senators. Another casualty of Congress' failing to act is funding for the Nurse Reinvestment Act. In addition, funding for new health programs is also held up. We expect Congress to take up these provider bills after the election. We will continue to advocate for passage of these relief measures.

Medical Liability

Pennsylvania Medical Society declares "Code Blue Emergency". The PMS house delegates recently approved a strategic plan to keep physicians in Pennsylvania and save critical medical services. The following points are included in the plan:

  • Lower the total insurance level for physicians and prohibit other entities from requiring additional coverage above the state limit.
  • Provide immediate financial relief for physicians facing another massive increase in the Mcare Fund surcharge by committing substantial public monies to reduce the Mcare surcharge, or declare the Mcare Fund insolvent and have future losses covered through the Pennsylvania Insurance Guaranty Association.
  • Suspend the requirement for Mcare Fund payments to maintain licensure until there is adequate medical liability reform and tort reform.
  • Support the requirement for Mcare Fund payments to maintain licensure until there is adequate medical liability insurance reform and tort reform.
  • Support and quickly pass an emergency amendment to the state constitution to remove the prohibition against caps on non-economic awards and call on the legislature to limit attorneys' contingency fees.
  • Immediately require the Joint underwriting Association (JUA) to reduce premium levels to level comparable to the private insurance market until such time that private insurance carriers return to Pennsylvania and the JUA is again an insurer of last resort.
  • Quickly develop a long-term solution involving fundamental system changes in the out-of-control judicial system, including the society's proposal to eliminate the common law cause of action and replace it with a statutory system that would include patient compensation fund.
  • Focus efforts on having the court reinstate the rule, suspended under Act 135, involving early expert report as a means to dismissing non-meritorious cases.
  • Call on health insurance companies to improve payment levels for physicians so that they are at the least comparable to the national median.
  • Call on legislators to quickly pass legislation voiding provisions in health insurer contracts that prevent physicians from adding a liability cost surcharge on bills for medical services.
Many of the provisions raise difficult issues for hospitals. We will work closely with HAP as discussions on the PMS proposal continue.


Governor Signs Venue Bill. Recently Governor Mark Schweiker signed into law Senate Bill 138. Under this law venue will be restricted to the county in which the cause of medical malpractice action arose. The new law, Act 127 of 2002, is effective for cases that occurred 60 days after enactment.

State
Bioterrorism Preparedness funding to be released soon. The Pennsylvania Department of Health (DOH) has finalized the elements of the memorandum of agreement (MOA) acute care general hospitals must sign to entitle them to funding through the Health Resources and Services Administration (HRSA) Disaster Preparedness Cooperative Agreement for bioterrorism and infectious disease outbreak preparedness.

State Lobby Law Declared Unconstitutional. The Pennsylvania Supreme Court recently denied the state's request for re-argument of a two-month old decision, which declares Pennsylvania's lobbyist disclosure law unconstitutional. Commonwealth Court struck down the law in May 2000, saying the General Assembly's effort to monitor the activities of lobbyists amounted to illegal regulations on the practice of law.

Williams introduces Medical Liability Court legislation. Senator Connie Williams (D-Montgomery) has introduced Senate Bill 1534 that would establish a Medical Professional Liability Court.

White introduces Pennsylvania Health Care Cost Containment Council bill. The bill which was introduced by Senator Mary Jo White (R-Butler) would continue the Pennsylvania Health Care Cost Containment Council. Current law requires the legislature to reauthorize the PHC4 in 2003.

In other news
HAP 2003 Achievement Awards--entries sought. The program recognizes health care professionals and their organizations that have developed innovative, adaptable projects that enhance patient satisfaction and health care quality, and that produce cost savings and other efficiencies. For more information please contact HAP directly or Shelly Krycia at UPHS Government Relations.


The Government Relations Weekly Update is provided by the Office of Government Relations of the University of Pennsylvania Health System.

Shelly Krycia or Alan N. Rosenberg
Government Relations Office
University of Pennsylvania Health System
2021 Penn Tower/4385
Phone: 215-349-5136
Fax: 215-662-3910

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