January 19, 2005
We would like to wish you a Happy New Year. The 109th US Congress and the 2005-2006 session of the Pennsylvania General Assembly convened earlier this month.
State revenue exceeds expectations. State Secretary of Revenue Greg Fajt this week said that revenue collections for the first six months of the fiscal year are running 2.5 percent over estimate - exceeding forecasts by more than $250 million. However, projections of structural deficits in excess of $1.5 Billion for the Department of Public Welfare in FY 2006 portends significant cuts in Medical Assistance payments to hospitals and the possibility of eligibility and/or benefits cuts. We are already engaged in an advocacy effort to forestall such cuts, and expect to participate in an aggressive campaign to rollback such cuts if proposed by Governor Rendell.
Septa solution may be in sight? Earlier this month Governor Rendell and state lawmakers met to try to develop a solution to the mass transit-funding crisis. No legislative solution was reached, but the Governor is hoping to find a solution by the end of February to avert fare increases and service cuts which are scheduled for March.Inpatient Hospital Service notice published. The Department of Public Welfare (DPW) recently published intent to revise its payment method for inpatient hospital services on or after January 1, 2005. The revisions will affect acute care general hospitals, private psychiatric hospitals, and psychiatric units of general hospitals, rehabilitation hospitals and rehabilitation units of general hospitals. Key revisions include the following:
DPW receives federal approval for managed care assessment. Last week, Governor Rendell announced a commitment from Secretary of Health and Human Services Tommy Thompson for approval on the assessment on Medicaid managed care programs in the Commonwealth. The assessment will provide Pennsylvania $163 million annually and will allow rates for the Medicaid managed care plans to be increased.
joins HAP. Former Pennsylvania House Appropriations Director and Deputy
Budget Secretary Robert E. Greenwood has joined the Hospital and Healthsystem
Association of Pennsylvania (HAP). He will be the Vice President of Health
Care Finance and Insurance.
Pennsylvanians added to key committees. Earlier this month the House Republican Conference confirmed its committee appointments and Pennsylvania's representation increased on two key health care committees. Representative Melissa Hart (R-Bradford) joins Representative Phil English (R-Erie) on the Ways and Means Committee, and Representative Tim Murphy (R- Upper St. Clair) joins Representative Todd Platts (R-York) on the Energy and Commerce Committee.
MedPAC Action. Last month, the Medicare Payment Advisory Commission developed draft recommendations calling on Congress to give hospitals a full market basket update for FY 06, basing its recommendation on increasing negative hospital operating margins. However, the Commission reversed that position at its January meeting, recommending Congress provide hospitals with an FY06 update of market basket minus 0.4 for inpatient and outpatient services. Ralph Muller, a member of MedPAC, put forward a full market basket update, but it was not acted on by the MedPAC members. Muller cited increases in medical malpractice premiums, nursing costs, and prescription drug cost increases as justification for the full increase.
MedPAC also recommended that Congress increase physician payments by 2.7 percent for FY 06. Even if Congress adopts the Commission's recommendation, physician payments remain tied to the sustainable growth rate formula, which calls for payment reductions if spending for physician services exceed SGR projections. This adjustment will require changes to leadership's current budget plans.
Finally, in an attempt to level the playing field between physician-owned specialty hospitals and full-service hospitals, MedPAC developed several recommendations for Congressional consideration. Congress could revise the way Medicare reimburses services under the DRG system by moving to a cost-based rather than a charged-based reimbursement system. MedPAC also proposed extending the current specialty hospital moratorium as mandated by the Medicare Modernization Act until Jan. 1, 2007. Another recommendation would allow hospitals and physicians to enter into gain sharing agreements.
If you would like
a copy the most recent listing of RFAs, notices, and program announcements
relating to federal research funding opportunities prepared by the University
Office of Government, Community and Public Affairs, please email Shelly
The Government Relations Weekly Update is provided by the
Office of Government Relations of the University of Pennsylvania Health System
Krycia or Alan N. Rosenberg