15 , 2005
US House panel holds hearing on medical liability.
Medical liability legislation introduced in the US Senate.
Blue cross and blue shield reach six-year agreement.
committee releases employer immunity bill.
Class action measure
passes in Senate.
Last week both the Federal and State Budgets were proposed
by President Bush and Governor Rendell, respectively. Drastic cuts to
Medicaid and other programs were outlined in each budget. Working with
national and state advocacy groups, UPHS will participate in an advocacy
campaign over the next several months working to avoid these devastating
The Governor's proposed
budget calls for $580 million in cuts in the Department of Public Welfare
(DPW) - with more than $380 million through hospital payment reductions;
recipient benefit changes (including limits on inpatient admissions and
outpatient visits), co-payments, prescription drug efficiencies, and capitated
plan rate cuts. Payments that are targeted for cuts include outpatient
disproportionate share, medical education, community access fund, uncompensated
care, and the tobacco settlement for charity care patients. The Department
of Public Welfare proposes for the first time to means test these supplemental
or disproportionate payments to otherwise qualifying hospitals. This means
testing will preclude payment to any hospital whose previous fiscal year's
operating margin is one percent or greater.
Almost half of all Pennsylvania hospitals - including HUP and Pennsylvania
Hospital, which previously qualified for such payments, would not receive
any disproportionate payments for FY 2006. These payments are intended
for those hospitals that treated a disproportionate level of Medicaid
and charity care patients. We are in the process of determining the precise
impact of the proposed payment cuts and benefit reductions on the Health
System and our patients. It is clear that these cuts will have a devastating
impact on patients, hospitals and the communities they serve across the
In addition, the Governor also recommended restructuring the tobacco settlement
and using funds from Blue Cross and Blue Shield plans to meet the increased
demands for health care services for low-income and uninsured Pennsylvanians.
Of obvious concern is that the restructuring of the tobacco funds could
compromise research funding provided by the state.
On February 7th,
President Bush introduced his fiscal year 2006 budget plan. His plan is
being driven by a goal of cutting the federal deficit in half by fiscal
year 2009. President Bush called for $60 Billion in Medicaid cuts over
ten years through a series of Medicaid "reform" measure. These
include further restrictions on a state's ability to increase federal
financial participation, including continued scrutiny of intergovernmental
transfers and upper payment limits as a means of drawing federal dollars
into state programs.
Other key health-related areas in the President's budget include Nurse
Education, Bioterrorism Preparedness, Health Information Technology, and
Health Centers. The budget proposes $483 million in fiscal year 2006 in
preparedness funding to continue progress toward having all states possess
the necessary surge capacity plans in preparation for a possible emergency
event. This figure is actually a reduction of $8 million from last year's
budget. The President also requested a total of $150 million for nursing
education programs, which increases support for basic nursing education
and retention by $10 million. The administration will also seek to refine
the inpatient hospital payment system and related provisions to ensure
a more level playing field between specialty and acute-care hospitals.
In addition, the President requested $28.8 billion for the National Institutes
of Health (NIH). This is only a 0.7% increase of $196 million over the
current year's funding and far below the projected biomedical inflation
rate of 3.5%. If enacted, it would be the first time since 1964 that NIH
received an annual increase of less than 1%.
* If you have a specific area that you would like budget information about
please contact the office.
US House panel holds hearing on medical liability. The US House
and Energy Committee Subcommittee on Health recently held a medical liability
hearing that focused on testimony from patients, physicians, academics,
the American Tort Reform Association and the Texas insurance commissioner.
The discussions focused on caps on damages and pharmaceutical companies.
We expect medical liability to again be an issue this session, however,
we do not expect sweeping reforms to be enacted.
Medical liability legislation introduced in the US
Senate. Earlier this month, Senators Judd Gregg and John Ensign introduced
the Help, Efficient, Accessible, Low-Cost, Timely Healthcare Act. If enacted,
the bill would cap non-economic damages in health care lawsuits at $250,000
and place restrictions on punitive damages; impose a three-year statue
of limitations on the filing of health care lawsuits, with an exception
of children under six, and limit attorney contingency fees based on a
sliding scale. It is unlikely that there will be sufficient votes in the
Senate to pass this bill.
Blue cross and blue shield reach six-year agreement. Last week Governor
Rendell announced an agreement with the state's four Blue Cross and Blue
Shield plans on community health reinvestment. The reinvestment is estimated
to total $150 million and will be made solely within the plan's service
areas. The agreement establishes a formula to calculate each plan's annual
community reinvestment. Sixty percent of which will be used to subsidize
adultBasic or other insurance or for low-income families and forty percent
for other community health care related expenditures. The level of surpluses
of the Blue Cross and Blue Shield plans have been under scrutiny for several
years with consumer groups and other health advocacy groups claiming the
plans had accumulated inappropriately high surpluses and the funds should
be used for other health-related purposes. The agreement with the Governor
does not significantly reduce those surpluses.
committee releases employer immunity bill. The state Senate Judiciary
Committee recently released SB 60, the employer immunity bill that was
introduced by Senator Pat Vance (R-Cumberland). The bill would amend current
law by providing for employer immunity from liability for disclosure of
information about former or current employees as long as the employer
is not intentionally giving out false information.
Class action measure
passes in Senate. Last week the US Senate easily passed legislation
that shifts class action lawsuits from state to federal courts. The legislation
applies to those class action suits where the defendant and any of the
plaintiffs live in different states, and the total amount of the dispute
exceeds $5 million. The House is expected to take up the measure this
week without any changes to the bill. The expected enactment of this legislation
is a key element of the President's overall liability reform initiative
that also includes medical liability reform.
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
Krycia or Alan N. Rosenberg
Government Relations Office
University of Pennsylvania Health System
2021 Penn Tower/4385