December 20, 2004

Medical Liability
$1.2 million awarded in medical liability case.

State News
Mid-year budget updated delivered, rising health care costs cited..
Trauma Protocol Revised.

Federal portion of Trauma Center funding approved.
Report on states' public health bioterrorism released.

Federal News
Leavitt nominated to head HHS.

MedPAC draft payment recommendations favorable for hospitals.
Grim Forecasts for 109th Congress.

Medical Liability
$1.2 million awarded in medical liability case. In one of the first cases to be addressed by the venue legislation, a Delaware County jury has awarded $1.195 million to the estate and mother of a 25-year-old man who died of complications from dehydration after a week's stay in the hospital. The case was originally filed in the Philadelphia Court of Common Pleas, but was transferred to Delaware County about a year ago as a result of the "venue state law" passed in 2002 requiring cases to be filed in the venue where the alleged malpractice occurred.

State News
Mid-year budget updated delivered, rising health care costs cited.
Last week, State Budget and Administration Secretary Michael Masch delivered the mid-year budget update to legislative leaders. According to the Secretary, the 2003-2004 and 2004-2005 budgets would have been in deficit if the Commonwealth had not received emergency federal "fiscal-relief" or non-recurring funding in both of those years. Masch expects the 2005-2006 budget, especially for the Department of Public Welfare and its Medical Assistance Program, to be a challenge now that the fiscal-relief program has been discontinued. Leadership of UPHS and other hospitals and health systems met recently with Estelle Richman, the Secretary of the Department of Public Welfare, regarding the challenges facing hospitals that provide care to disproportionate number of Medical Assistance and charity care patients if cuts are made to the Medical Assistance program.

Trauma Protocol Revised. The Department of Health has issued a revised Trauma Patient Destination/Statewide Air Ambulance Transport protocol that will become effective January 1, 2005. The protocol is to be used by emergency medical services (EMS) ground personnel to triage patients with acute traumatic injuries to appropriate receiving facilities and to determine when air medical transport of these patients is appropriate.

Federal portion of Trauma Center funding approved. The Department of Public Welfare recently announced that the Centers for Medicare & Medicaid Services (CMS) has signed the state plan amendment establishing accredited trauma centers as a new class of disproportionate share hospitals, enabling the federal portion of payment authorized by the Trauma Stabilization Act to be disbursed to qualifying trauma centers. The state payments were made earlier this year to Level II and I. According to DPW, the payment of the federal portion will occur as soon as they can complete the process, probably in late December. HUP's Trauma program has already received $340,162 for the Pennsylvania State portion and is expected to receive $411,744 now that the federal match has been approved.

Report on states' public health bioterrorism released. A report released by the Trust for America's Health concludes that nearly one-third of states cut their public health budgets in fiscal year 2004, while federal funds for bioterrorism preparedness distributed to states by the Centers for Disease Control and Prevention decreased. Pennsylvania was one of four states to score a four out of ten. Pennsylvania is one of nearly one-third of states that cut their public health budget between fiscal year 2003-2004 and federal bioterrorism funding decreased by over $1 million per state in 2004. The report was based on measures such as state public health spending and workforce levels and whether the state uses the Internet to track disease outbreak information or has a flu pandemic plan.

Federal News
Leavitt nominated to head HHS. On December 13th, EPA Administrator Michael O. Leavitt was nominated by President Bush to replace departing Health and Human Services (HHS) Secretary Tommy Thompson. Before joining the Environmental Protection Agency a little over a year ago, Leavitt was governor of Utah for about 11 years.

MedPAC draft payment recommendations favorable for hospitals. The Medicare Payment Advisory Commission (MedPAC) discussed draft policy recommendations that will be finalized and sent to Congress in January. Among those recommendations was a full market-basket update for Medicare inpatient and outpatient prospective payments for fiscal year 2006. MedPAC staff presented 2003 data showing a negative 1.5 percent average Medicare margin for all hospitals. In addition, MedPAC is considering a draft recommendation that would ask Congress to increase Medicare physician payments by 2.7 percent in 2006. The recommendations also call for eliminating the whole-hospital exception from the Stark law - a loophole that has led to the proliferation of specialty hospitals. Ralph Muller serves as a member of MedPAC.

Grim Forecasts for 109th Congress. Key congressional staff from the Senate Finance Committee, House Ways and Means Committee and House Energy and Commerce committees confirm cutting the deficit in half is a top priority for leadership. According to the Congressional staffers, leadership could seek as much as $55 billion in Medicare cuts and $27 billion in Medicaid cuts over the next five years to help reduce the federal deficit. Medicaid "reform" could also be a way to reduce federal cost by providing more flexibility over the program. National associations including AHA and AAMC are gearing up for a difficult budget battle this coming year.


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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