The Rationale for this Proposal has been detailed elsewhere.  Essentially, it is drawn from a number of bills that call for the establishment of a Health Care Ombudsman and that call for use of Tobacco Settlement Money to assist low-income individuals [e.g., HB 511, HB 2125 and SB 75 (Session of 1999)].  The Text of Act 68 is not readily available, nor are the Rules and Regulations generated therefrom; this is why a generic suggestion has been made regarding how this document is to be implemented within that context.    Because naming the governing entity after one of these bills (a “Health Care Coordinating Council”) could cause confusion with the Health Care Cost-Containment Council, the word “Quality” has been invoked.  And because this Council must be empowered to function within a solitary administrative department,       the Health Department has been invoked to assume responsibility for overall coordination of its activities. Also, inasmuch as this Proposal will require revision (invoking, for example, the recent legislation passed in Philadelphia—but vetoed by Mayor Rendell—calling for creation of a Health Care Advocate), its level of detail belies the fact that it should best be viewed as a First Draft implementing the following concepts:

1. The creation of a user-friendly system for the assessment of health care quality concerns.
2. The creation of a fund devoted exclusively to Medicaid-related health care expenses.
3. The creation of a fund devoted exclusively to Tobacco Control programs.
4. The creation of an administrative infrastructure that encompasses these concerns and ensures they are mainstreamed throughout governmental and non-governmental health care delivery structures.

*

PRINTER'S NO. ---

THE GENERAL ASSEMBLY/SENATE OF PENNSYLVANIA

HOUSE/SENATE BILL

No. --- Session of 2000

INTRODUCED BY ---, [date]

REFERRED TO [HOUSE] COMMITTEE ON HEALTH AND HUMAN SERVICES,
REFERRED TO [SENATE] HEALTH AND WELFARE COMMITTEE,
[date]

AN ACT

Providing for appropriating Tobacco Settlement Monies towards the establishment of a Health Care Quality Council, the financing of Medicaid-associated expenditures, the financing of a Tobacco Control Program; and imposing additional powers and duties on the Department of Health, the Insurance Department and the Department of Public Welfare.

Section 1.  Short title
Section 2.  Legislative findings
Section 3.  Definitions
Section 4.  Health Care Quality Council
Section 5.  Tobacco Control Council
Section 6.  Medicaid-Supplement Council
Section 7.  Expenditure of Commonwealth Funds
Section 8.  Administration
Section 9.  Duties of Providers
Section 10.  Audits
Section 11.  Waiver Request
Section 12. Reports
Section 13. Effective Date

 The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:

Section 1.  Short title.
This act shall be known and may be cited as the “Health Care Quality Council Act.”

Section 2.  Legislative findings.
The General Assembly finds that:
(1) There is an urgent need to ensure Pennsylvanians continue to receive the highest-quality health care.
(2) This goal necessitates constant reassessment of the performance of all participants in the health care delivery system through a used-friendly process that acquires and processes relevant information.
(3) All patients and providers must be empowered to become involved productively in this process.
(4) The availability of Tobacco Settlement monies provides an opportunity to fund such a program, inasmuch as tobacco use remains the major preventable cause of disease, disability and death.
(5) Tobacco Settlement monies were generated based upon Medicaid expenditures for tobacco-related illnesses, and this fact must control decisions regarding how they are to be budgeted.
(6) If utilized wisely, tobacco use will decline commensurate with the need for future disbursement of Tobacco settlement monies; thus, there is no need to retain an annual tithe to preclude shortfalls.
(7) It is difficult to distinguish all health care expenditures devoted solely to a tobacco-related illness from those devoted to the maintenance of overall health; thus, deferring any effort to differentiate these categories of costs will preclude creation of an unnecessary and unwieldy bureaucracy.
(8) The Centers for Disease Control and Prevention has promulgated a “Best Practices” program that would consume 25% of the Tobacco Monies, and implementing this program would satisfy the goals of that component of the Tobacco Settlement devoted exclusively to Tobacco Control activities.
(9) Providers provide more than a billion dollars of uncompensated care annually, and this figure can be anticipated to rise as the incidence of tobacco-related illness (caused by increase tobacco use among teenagers) continues to increase; for example, hospitals provided over $704,000,000 in uncompensated care in 1998, a figure that has risen over 5% annually during the past decade.
(10) Uncompensated care is clearly related to the ability of patients to pay for care, ascribable both to low income and lack of insurance coverage; currently, nearly one of every ten Pennsylvanians does not have health insurance coverage, a figure that has also risen over the past five years.
(11) Reliable data in Pennsylvania on the geographic and demographic distribution of the uninsured are lacking; thus, surrogates have been used (e.g., income, unemployment, and Medicaid enrollment data).
(12) Pennsylvania’s Medicaid program currently provides payments to assist some hospitals with the costs of providing uncompensated care for low-income and uninsured patients; the three basic funding streams under Medicaid invoked for this purpose include inpatient disproportionate share payments, outpatient disproportionate share payments and community access fund provider payments.
(13) Of this Commonwealth’s 254 acute care hospitals, 128 received about $304,000,000 through these three programs in 1998, with the Federal government providing slightly more than did the state; this covered about 56% of the reported cost of uncompensated care at those hospitals receiving assistance.
(14) Pennsylvania does not have a public hospital system to provide charity care; in those states that do run public hospitals, uncompensated care represents about one-third of the total costs for those facilities.
(15) Tobacco Settlement monies (initially, approximately $400,000,000 annually) can be used to supplement State Medicaid spending; monies channeled through the Medicaid program would be matched with Federal funds, thus doubling their potential impact when expended in this fashion.
(16) To qualify as an “institution of purely public charity” under the act of November 26, 1997 (P.L.508, No.55), known as the Institutions of Purely Public Charity Act, an institution must (among other things) provide uncompensated goods and services equal to 3% or more of its total operating expenses.
(17) Providing compensation to providers bearing a significant financial burden from uncompensated care permits their continued viability and continued access to care for the medically indigent and uninsured.
(18) Providing such compensation also motivates them to seek the opportunity to treat these needy patients.
(19) Organizations already exist (e.g. the National Institutes of Health) that are charged with ensuring ensure adequate funding is provided to other facets of health care delivery (e.g., research); therefore, Tobacco Settlement monies must be directed towards such pursuits to the extent to which these entities are funded for activities encompassed by the Medicaid-Supplement and Tobacco Control Councils.
(20) It is unnecessary to create a new bureaucracy to govern the expenditure of Tobacco Settlement monies, noting the competence of existing entities within the administrative structures of the Commonwealth.
Section 3.  Definitions.
The following words and phrases when used in this act shall have the meanings given to them in this section unless the context clearly indicates otherwise:
--"CDC."  The Centers for Disease Control and Prevention.
--"Disproportionate share payment."  {“DiSh”} A payment made to a qualifying hospital that serves high volumes or large numbers of Medicaid and Medically Indigent patients under the Pennsylvania Medicaid program, including matching funds made available by the Federal Government pursuant to Title XIX of the Social Security Act (49 Stat. 620, U.S.C. § 301 et seq.); the term shall include any payments made to hospitals for inpatient disproportionate share, outpatient disproportionate share and community access on or before the effective date of this act.
--"Hospital."  An institution having an organized medical staff licensed by the Commonwealth to provide diagnostic and/or therapeutic inpatient medical care services, by or under the supervision of physicians.
--"Provider’s service territory."  The geographic region used by the Pennsylvania Health Care Cost Containment Council to determine the area in which the preponderance of a provider's patient load resides; determinations made with regard to hospitals may be invoked by other providers in that region.
--"Medicaid."  The State-administered program operated under sections 443.1, 443.2 and 443.3 of the act of June 13, 1967 (P.L.31, No.21), known as the Public Welfare Code.
--"Medically Indigent."  Low-income and moderate-income individuals who either lack health insurance coverage or whose health insurance coverage is insufficient to provide them with adequate coverage for the services that they require or who are enrolled in or are eligible for enrollment in the Medicaid program.
--"Tobacco Settlement Monies."  Payments derived from any damage award or settlement resulting from litigation between the Commonwealth and various defendant tobacco manufacturers
--"Uncompensated care."  Patient care for which a provider receives no compensation, including the cost of providing free inpatient and outpatient care to the medically indigent, the cost of delivering such care to patients who do not pay some or all of their charity care and other bad debt as defined by regulation of the Department of Public Welfare; the term does not include the difference between negotiated or contractual payments which are below usual and customary charges, other discounts from charges, unpaid balance- billing of Medicaid patients or the cost of community service programs, educational programs, outreach programs and other special programs, nor does it include any overdue Medicare or Medicaid payment owed by the Federal or State government of any Medicare or Medicaid contractor.

Section 4.  Health Care Quality Council.
(a) The Health Care Quality Council shall be established to ensure Pennsylvanians receive the highest quality of health care; it shall develop, implement and administer this program within the Department of Health, in cooperation with the Insurance Department and the Department of Public Welfare.
(b) The Health Care Quality Council shall be comprised of fifteen (15) voting members, three each appointed for two-year terms (to coincide with the legislative sessions) by the Governor, Senate Majority Leader, Senate Minority Leader, House Majority Leader and House Minority Leader; the Physician General shall serve as Chair and the Secretaries of Health and Public Welfare shall serve as ex officio members.
(c) The Health Care Quality Council shall invite input from both patients and providers, and such input shall be accepted 24-hours-a-day, seven-days-per-week either by-name or anonymously.
(d) Input shall be accepted through use of a toll-free telephone number (maintained by a live operator),     a toll-free FAX number, a mailing address, and an e-mail address.
(e) Following completion of its analysis of a given concern, the Health Care Quality Council shall provide feedback both to the individual who initiated the study and to all others who have been affected by it; the Health Care Quality Council shall also refer the matter to appropriate administrative entity(-ies) consistent with precedent and such statutes as have previously been enacted (e.g., Act 68).
(f) The Health Care Quality Council shall not supplant the activities of any other governmental entity.
(g) The Health Care Quality Council shall oversight the activities of the Tobacco Control Council and the Medicaid-Supplement Council, ensuring disbursement of Tobacco Settlement monies is consistent with applicable statutes, precedents, rules & regulations, state & federal laws, and judicial mandates.
 
 
 

Section 5.  Tobacco Control Council
(a) The Tobacco Control Council shall be established to ensure programs intended to minimize tobacco use are maximally effective, coordinated, non-duplicative and consistent with all national standards;    it shall report regularly through the Health Care Quality Council and secondarily to other governmental entities whenever it deems such direct communication would expedite resolution of a given problem.
(b) The Tobacco Control Council shall be comprised of fifteen (15) voting members, three each appointed for two-year terms (to coincide with the legislative sessions) by the Governor, Senate Majority Leader, Senate Minority Leader, House Majority Leader and House Minority Leader; the Physician General shall serve as Chair and the Secretary of Health shall serve as ex officio member.
(c) The Tobacco Control Council shall invite input from both patients and providers, and such input shall be accepted 24-hours-a-day, seven-days-per-week either by-name or anonymously.
(d) Input shall be accepted through use of a toll-free telephone number (maintained by a live operator),     a toll-free FAX number, a mailing address, and an e-mail address.
(e) The Tobacco Control Council shall attempt to ensure monies are expended in a fashion that is consistent with the CDC “Best Practices” Guidelines, emphasizing prevention and treatment activities.

Section 6.  Medicaid-Supplement Council
(a) The Medicaid-Supplement Council shall be established to ensure Medicaid providers are provided supplemental payments that are maximized (e.g., through acquisition of Federal matching funds) and that are disbursed so as to encourage optimal access-to-care for Medicaid recipients; it shall report regularly through the Health Care Quality Council and secondarily to other governmental entities whenever it deems such direct communication would expedite resolution of a given problem.
(b) The Medicaid-Supplement Council shall be comprised of fifteen (15) voting members, three each appointed for two-year terms (to coincide with the legislative sessions) by the Governor, Senate Majority Leader, Senate Minority Leader, House Majority Leader and House Minority Leader; the Physician General shall serve as Chair and the Secretary of Public Welfare shall serve as ex officio member.
(c) The Medicaid-Supplement Council shall invite input from both patients and providers, and such input shall be accepted 24-hours-a-day, seven-days-per-week either by-name or anonymously.
(d) Input shall be accepted through use of a toll-free telephone number (maintained by a live operator),     a toll-free FAX number, a mailing address, and an e-mail address.
(e) The Medicaid-Supplement Council shall ensure monies are expended in a fashion that is consistent with Disproportionate Share Guidelines used to qualify for Federal Medicaid matching funds; any statute intended to expand the qualifications of recipients of such monies (e.g., to Medically Indigent patients and/or providers) shall be drawn from a sequestered fund, if necessary, to ensure the capacity to obtain such matching funds is not compromised.

Section 7.  Expenditure of Commonwealth Funds
(a) Allocation.--Annually the State Treasurer shall set aside Tobacco Settlement Monies.
(b) Appropriation.--All funds set aside under subsection (a) shall be deposited on a continuing basis in Funds administered by the Departments of Health and Public Welfare as restricted-receipt accounts to implement the provisions of this act.
(c) These monies shall be disbursed to Funds administered through the aforementioned Councils by application of the following formula:  74% to the Medicaid-Supplement Council, 25% to the Tobacco Control Council, and 1% to the Health Care Quality Council.
(d) Beginning in the State fiscal year starting July 1, 2000, Disproportionate Share payments shall be deposited into the Medicaid-Supplement Fund; the initial amount deposited shall be equal to the sum of all Disproportionate Share payments made in the State fiscal year beginning July 1, 1999, or the year beginning July 1, 1998 (whichever is greater) times 1.025, plus the appropriate Federal match for that amount.
(e) These Monies shall not be employed to offset previously-established levels of funding through the General Fund until/unless a specific finding has been legislatively that the need for such funding has been determined to have decreased; thus, the General Assembly shall annually deposit an amount equal to or greater than the amount deposited during the prior year, plus the appropriate Federal match.
(f) Monies from other sources shall be deposited into these Funds as received and at the determination of the appropriate Council(s); these may be derived from voluntary contributions by other payers, from Federal matching funds, from grants, and from fines levied against those who have violated state law.

Section 8.  Administration
(a) The Departments of Health, Public Welfare and Insurance shall promulgate all rules and regulations necessary to implement the provisions of this act; pursuant thereof, they shall develop and use such forms, records and procedures as deemed necessary.
(b) The Department of Public Welfare shall have the following additional powers and duties:
(1)  In conjunction with the Medicaid-Supplement Council, adopt in regulation and use an allocation formula to distribute monies from the Fund to qualifying providers; this formula shall include the following factors:
(i)  The volume and percentage of inpatient Medicaid patient visits compared to total visits.
(ii)  The volume and percentage of outpatient encounters covered by Medicaid compared to total outpatient encounters.
(iii)  The percentage of households in the provider’s service territory at or below the Federal poverty level.
(iv)  The annual unemployment rate in the provider’s service territory.
(v)  The provider’s audited uncompensated care costs compared to the provider’s net patient revenue.
(2) Develop a definition and accounting methodology for use by the providers in determining Medicaid-related and uncompensated care levels.
(3) Recoup funds from providers that may have been overpaid for Medicaid-related medical care.
(4) Deny payment to any provider that fraudulently accepts payment under this act.
(5) Levy financial penalties and withhold in full or in part payments to providers that fail to meet their obligations under this act.

Section 9.  Duties of Providers.
(a)  Financial statement.--Providers shall annually provide the department, within 120 days of the completion of its fiscal year, a statement as to the level of Medicaid-financed and uncompensated care to the Medically Indigent Population they have provided.
(b)  Other requirements.--Qualifying providers that receive payments from the fund shall:
(1)  Accept patients regardless of their ability to pay.
(2)  Be enrolled as Medicaid providers.
(3)  Agree not to balance-bill Medicaid patients or other patients whose household income is at or below 185% of the Federal poverty level.
(4)  Submit a plan to the department for its approval that would assess the ability of low-income individuals, Medicaid beneficiaries and the uninsured residing in that provider’s service territory to access outpatient services; the plan must include a description of how that provider intends to ensure the broadest possible access to outpatient care and preventative services.
(5)  Make a good faith effort to determine if patients have health insurance coverage, and to file timely and complete claims to secure payment for services rendered.
(6)  Fulfill any other obligations imposed on providers receiving Disproportionate Share payments pursuant to Federal or State law and regulation.

Section 10.  Audits.
(a) Departmental.--The Public Welfare Department may audit the records of any provider receiving payments under this act to disapprove the allowance of any Medicaid-related or uncompensated care amount, to determine the reasonableness of any data used in calculating the allocation and distribution system, and otherwise to ensure compliance with this act; the Public Welfare Department shall have the authority to order an independent performance audit of the claims management, billing and collection processes of any provider receiving payments from the fund.
 

(b)  Auditor General.--The Auditor General may audit the records of any provider to determine compliance with this act, ensuring the satisfaction of both performance and fiscal responsibilities; the Auditor General shall periodically conduct a random audit of the uncompensated care of a select sample of providers and provide the General Assembly and the Public Welfare Department a report on the results of such audits.

Section 11.  Waiver request.
Were such an action to be determined to enhance the amount of money in the Medicaid-Supplement Fund and yield a more efficient administrative structure, the Commonwealth (through the Health and Public Welfare Departments and in cooperation with representatives of the hospital industry) shall apply to the Federal Health Care Financing Agency to request a waiver that would allow Medicare Disproportionate Share payments made to Commonwealth hospitals to be deposited into the Medicaid-Supplement Fund; any monies generated in this fashion would be earmarked exclusively for disbursement back to hospitals

Section 12.  Reports.
(a) The Health Care Quality Council shall issue an annual report to the General Assembly, encompassing both its activities and those of the two Councils reporting through it; these reports shall include a summary of the input logs maintained by all three entities, plus how the problems raised were resolved.
(b) The Tobacco Control Council shall include in its report detailed information regarding the use of and fiscal impact of tobacco products, including specific information regarding youth access thereto.
(c) The Medicaid-Supplement Council shall include in its report the following information:
(1)  The name, address and amount of Medicaid-related and uncompensated care provided by each provider in this Commonwealth.
(2)  The amount paid to each qualifying provider from the Fund.
(3)  Deposits into and disbursements from the Fund.

Section 13.  Effective date.
This act shall take effect on July 1, 2000.