EXECUTIVE SUMMARY:  The monies received through the "Master Settlement Agreement" between the Commonwealth of Pennsylvania and the Tobacco Industry must be expended in a manner that is consistent with the intent articulated in the initial Complaint.  This litigation was filed in parens patriae (as the "parent of the people") to recoup Medicaid expenses incurred by the state associated with treatment of tobacco-related disorders, and it behooves the government to focus expenditure of these dollars in order to achieve that end.  The CDC's "Best Practices" Guidelines should be followed to intervene within the context of Tobacco Control, and the remaining 75% should be directed at recompense for Medicaid expenses incurred (following a date-certain) by all health care providers who meet "Disproportionate Share" [DiSh] standards.  All these activities should be organized under a newly-created "Health Care Quality-Maximization Council" [HCQMC], charged with the dual-responsibility to accumulate relevant medical data and to ensure expenditures are directed at satisfying the "charge" embodied by its name.

*

I have submitted testimony regarding this issue to the House, Senate and Administration; the focus has been to ensure that 25% of these monies be preserved for tobacco control (principally cessation and prevention), as per recommendations issued by the Centers for Disease Control and Prevention [CDC].  Meanwhile, proposals regarding how this money should be spent have been promulgated from multiple self-interested sources, mirroring what has occurred nationally.  Although the generic commitment to limit these monies to "health" cost-centers has been made by all major parties, how this is to be defined is unclear.  In my view, principles upon which decision-making and prioritization must occur are easily drawn from the history of PA's lawsuit, merely by consulting the initial Complaint and the Master Settlement Agreement.

Thus, I will briefly cite the CDC proposal as it has been fleshed-out by the Coalition for a Tobacco Free PA,  based upon dollar-figures specifically generated for PA.  I will then cite a seminal bill that reflects the conceptual underpinning for how the remaining 75% should be expended.  I will superimpose a conceptual structural link and briefly cite worthwhile concepts that should not be included herein, for they are more properly delinked from tobacco and placed into the overall PA budget.

*

As manifest in PA, the CDC "Best Practices" proposal would direct 25% of the money to nine distinct cost-centers:
    1. Community Programs to Reduce Tobacco Use
    2. School Programs
    3. Law Enforcement
    4. Partnership Grants
    5. Counter-Marketing
    6. Tobacco Cessation Programs
    7. Tobacco Control Research
    8. Surveillance and Evaluation
    9. Administration and Management
As important as it is to flesh-out the rationale for each type of expenditure, this will be deferred because (1)--this public health proposal is unrivaled in its comprehensiveness; and (2)--no reputable body has disputed any facet thereof.  Thus, the focus of this discussion will be how to determine the proper way to budget the remaining 75% of these monies.

There is no need to generate a 10% "set-aside" tithe to anticipate costs starting in the year 2025, for these funds are to be provided by the tobacco industry beyond 25 years and much will have changed after a quarter century.  To accommodate variable funding over the interim years, it is still tempting to place some of these monies into escrow.  Nevertheless, because proper funding decisions should decrease the need for future funding (a concept drawn directly from the wise testimony of the Pennsylvania Chapter of the American Academy of Pediatrics), it is not recommended initially that any money be segregated in this fashion.

Because a key problem with segregating these monies from the General Budget is that those worthwhile entities that are funded could become dependent upon this sole-source for future support, it is vital to ensure that generic health care funding be mainstreamed. . .for its very protection.  That's why the tangential ideas (e.g., Medical Research "Bridging" Support, Super-PACE, Biotech Seed Money, Birth Defects Registry) are deferred throughout this analysis.  For example, existing mechanisms by which quality research can be peer-reviewed and fiscally-supported should not be duplicated by the state-government; we need not create a mini-NIH.  What remains, therefore, should be to fund the most potent method to maximize public health.

*

Throughout this decade, PA has employed a "Health Care Cost-Containment Council" to provide insight and guidance regarding how planners might favorably tilt the cost-benefit analysis of a given intervention.  What is proposed, now, is that PA create a "Health Care Quality-Maximization Council" under which fundamental and essential governmental interventions could be made.  The HCQMC would encompass both quality "assurance" (a dated term) and quality "improvement" (a potentially-pejorative term), inasmuch as it is mandatory that the former be provided to the public and it is mandatory that the latter continue be "continuous," as has become the behavioral norm among progressive thinkers-and-doers.  This would also provide a forum in which concerns regarding alleged "medical errors" could be aired openly and resolved expeditiously, an issue that has received recent notoriety but which has always been an underlying concern in this--as well as in every other--industry (that some would be tempted, inappropriately, to politicize).  Obviously, confidentiality would have to be maintained, for the intent of any action resulting from a given case would be generic rather than focused.

This would become the repository for all "benefits" and "coverage" filings by individual patients under Act 68, obviating the need for prior adjudication of this "distinction" for patients who rarely can detect an operational "difference" between the two categories of complaint.  Whatever might be determined by the HCQMC could then be implemented, respectively, through the Insurance and Health Departments.  None of the other components of Act 68 would be disturbed in the process.  [That the flaws of this law persist (such as the lack of definition of "medical necessity" and the unnecessary hurdles placed before an appellant) is not the subject of this presentation.]  The result would be a system that would functionally encourage reporting of concerns by all people and organizations participating in the health care delivery system (not just patients).

Funding and staffing of the HCQMC would be comparable to that of the HC4, although it would be vital to ensure greater physician input than only contributing 1/15 of the parent entity.  In addition, this body would have discretionary control of how the remaining tobacco-monies would be expended, consistent with principles to be articulated herein.  (An efficiency-of-scale could be invoked, also, because some of the monies encompassed by the CDC proposal are administrative and could be invoked as part of the HCQMC.) The legislature could exercise Constitutionally-based powers to override its decisions, and challenges thereto from the public would ultimately be processed just as are those of other regulatory bodies (i.e., through Commonwealth Court).  And the amount of money available each year for its recommended appropriations would then determine the %-age of funding provided to each applicant for such support.

*

Of all the ~60 tobacco-related bills currently pending before the legislature, only one even begins to address the key goal of providing recompense for Medicaid-related expenditures, that of Representative Kathy Manderino.  In an ideal world, those people and organizations who incurred tobacco-related "damages" during past decades would be able to apply for funding, but it easily can be anticipated that such a process would be inherently inequitable, if only because easily-identifiable "beneficiaries" are not able to seek awards (because they are deceased).  Thus, the initial decision that must be made is to dedicate these limited sums to current compensatory/punitive damages incurred by putative Medicaid recipients.

The next decision that must be faced is how to deal with organizations that seek these funds, and this is the focus of the Manderino Bill (which her legislative aide drafted).  The goal must not be to send money down pathways that already exist and that may allow it to be diverted from tobacco's victims to bricks-and-mortar.  The goal must be to honor the thrust of the CDC "Best Practices" Guidelines as they would address the fiscal needs of tobacco addicts.  That some started smoking after the Surgeon General's Warnings had been issued (starting in 1994) is mooted by the discovery that the tobacco industry has been found guilty (in 1999) of engaging subsequently in nicotine-spiking practices; this occurred in Florida, the only time when such a determination could be made in class action litigation, but its impact is national (if not worldwide).

The brilliance of the Manderino Bill will be explored, and how it might be usefully applied will be explained.  It is complemented by her 8/3/99 Written Testimony, submitted to the Governor's Office, that contains additional ideas that will not be critiqued herein (e.g., those addressed by the House Democratic Caucus).  [The only "error" therein is its citation of January 13, 1999 as the date the MSA was signed in PA.  This was the date Judge John W. Herron announced subsequent judicial approval thereof, an action that has been challenged (by myself) and that has not been effectuated (due to its pendancy before the PA Supreme Court).  Actually, the MSA was submitted to the Court (requesting its approval in the form of a consent decree) by the settling parties--the Commonwealth of Pennsylvania & the Tobacco Industry--on November 23, 1998.]

The Manderino Bill (which was introduced by a total of 34 Representatives, led by Rep. Walko) would create an "Uncompensated Care Fund" within the Department of Public Welfare, into which the tobacco monies and "DiSh" monies (Disproportionate Share) would be deposited.  Although the %-of the former is limited and although the use of the latter has precedent, it would be apt to allow the DiSh program to remain separate (and to invoke concepts therein when deciding how to use tobacco monies) rather than to integrate the two (risking the capacity of organizations to gain funding priority, at the expense of the individuals who might justifiably need support).  For now, these monies will be programmatically admixed while maintaining an internal "wall" placed between the two budgets, because the goals of their application are similar.  In the future, experience/expertise may determine a more appropriate way to accomplish the particular "ends" defined in this essay, and it may be concluded that amended accounting mechanisms be adopted to optimize funding at all levels.

There is a certain temptation, also, to use the opportunity to expend these monies to create a "demonstration project" regarding how the entire health care delivery system may be revamped.  In this regard, no future assumptions will be made; only the individual's right to attempt to function in the present system will be presumed.  Again, the discipline of honoring the "intent" of the initial litigation will be controlling, and the uncanny ability of the Manderino Bill to have reflected this goal will serve as a model for how future decisions should be made.  Finally, note that these expenditures would be determined independent of the total census of Medicaid recipients, for it would be needs-based rather than determined by a total grant.

*

Under the Manderino Bill, these monies would be provided solely to qualifying hospitals.  At first blush, this is attractive for three major reasons.  First, there is a demonstrable need to fund what obviously is occurring (and to decrease the chance that hospitals would attempt to cost-shift such responsibilities, away from the most appropriate way they can be addressed).  Second, mechanisms are extant that provide structure as to how this might be accomplished with minimal bureaucracy.  Third, expenditure of such monies will trigger provision of Federal Medicaid matching funds, yielding a multiplicative impact.

Yet, other providers are ignored, despite the fact that they have the same responsibilities (and inherent but unmet costs).  Motivating them to want to treat Medicaid recipients would be a worthwhile outcome, inasmuch as currently minuscule levels of reimbursement (and hassles associated with its acquisition) motivate many providers simply to defer billing.  This could become the optimal method to overcome the baseline discrepancy in end-point analysis (correlating lower socio-economic status with poorer medical outcome) which intransigently persists, regardless of rhetoric.  Thus, how to ensure these monies favorably affect Medicaid patients with tobacco-related illnesses must remain the goal of how to plan their expenditure.

Because it is preferable to focus on the present and future, rather than to create mechanisms by which past costs might be defrayed, the Manderino Bill establishes eligibility criteria that place into statutory language many concepts that heretofore have languished in theoretical discussions.  The factors to be weighed are both "micro" (in that hospital, volume and %-age of inpatient/outpatient Medicaid patient visits/encounters) and "macro" (in that hospital's service territory, %-age of households at-or-below Federal poverty level and/or comprised of unemployed persons).  Ultimately, to be audited would be that hospital's uncompensated care costs, compared to net patient revenue.

Yet, the Manderino Bill recognizes that this administrative technology, itself, must be generated, for it also recognizes the need to "develop a definition and accounting methodology for use by the hospitals in determining uncompensated care levels."  Indeed, it even mandates that monies be recouped if overpayment occurs, and that sanctions be levied if hospitals fail to meet their obligations.  Again, the key question that arises is whether the word "providers" could replace the word "hospitals" in each of these contexts, if only to ensure patients receive the highest quality care.

The answer is, again, in the Manderino Bill, which defines "Qualifying hospitals" thusly:
    1.  accept patients regardless of their ability to pay;
    2.  enroll health system owned physician practices and clinics as Medicaid providers;
    3.  agree not to balance-bill Medicaid patients or other patients whose household income was at or below 185% of the Federal poverty level;
    4.  submit a plan [to] assess the ability of low-income individuals, Medicaid beneficiaries and the uninsured residing in that hospital's service territory to access outpatient services.  (The plan would include a description of how that hospital would ensure broader access to outpatient care and preventative services.)
    5.  make a good-faith effort to determine if patients have health insurance coverage, file timely, and complete claims to secure payment for services rendered.
    6.  fulfill any other obligations imposed on hospitals receiving DiSh payments pursuant to Federal/State law & regulation.

The Manderino Bill even contemplates absorption of HCFA monies acquired under DiSh structures, further streamlining this process.  The only unclear caveat in the bill is quoted in its entirety (Section 9):  "No hospital shall advertise by any means the availability of uncompensated care, its designation as a hospital qualifying for uncompensated care funding, or the receipt of monies from the fund."  Although this may be intended to preclude a hospital from serving as a pass-through entity (into which excessive government costs would be sucked), it might be preferable to encourage the institution to broadcast its availability.  This would create a government-community partnership intended to maximize availability of and access to medical care.

There is a demonstrable need for inner-city and rural hospitals to gain recompense for Medicaid costs.  Yet, there is a realistic concern that such monies could be diverted, if not properly targeted.  Thus, these hospitals (which now are functioning as "hospital and healthcare systems") could gain additional recompense for specific services to the underserved through the same mechanisms that could be invoked by non-hospital providers.  For example, as services are shifted to the outpatient setting, there is nothing that would preclude a hospital-based home care entity from seeking support from this new funding stream.  The state government's focus would be upon the service rendered--regardless of the category of "billing" party--just as long as the ultimate "parent" of the "billing" party has implemented the desired societal interventions.

*

Although my testimonies regarding expenditure of tobacco monies were focused on the 25% thereof that would be intended to encompass the "tobacco control" component thereof, the Executive Summary always concluded thusly:  "You must help create societal structures that will detoxify both the populace and government through a process of reducing reliance upon tobacco and tobacco-tax money."  In other contexts, I have coined the intent to "detaxify government," inasmuch as there is "a wink and a nod" understanding between Big Government and Big Tobacco that both appear to "benefit" fiscally from the continued existence of the tobacco-use epidemic.  The time to puncture this imagery is long past.

The entire set of recommendations made regarding the Tobacco Control Advisory Board would thereby become applicable to the work of the HCQMC, for I presaged the latter by ensuring the former would "be empowered to issue recommendations regarding appropriate legislative interventions, to track governmental activities to ensure they are maximally effective, and to prioritize funding projects that would otherwise die."  This is the only way tobacco monies would become generalized beyond strict application to tobacco-related diseases, but it would be justified because integrating these two activities would allow their impact to grow exponentially; the reformulated goal would be to maximize the quality of medical care provided to victims of tobacco addiction through creation of the most potent implementation structure.

Clearly, it is unprecedented to invite non-hospital providers to apply for such reimbursement.  Clearly, also, the challenge remains as to how to ensure these monies do more than trickle-down to individuals who are in-need.  Yet, by inviting the entire health care community to join the Public Health effort to deliver its services as broadly as possible, this new program could be revolutionary in both conceptualization and realization.

The only potential fault in this proposal is that some would recoil at the creation of "another" bureaucratic entity.  Yet, this represents superimposition of a governmental organization that serves both as a user-friendly entry-level body and as a living embodiment of the intent of the tobacco litigation.  The scope of its expenditures would encompass the two major causes of preventable death in America (cancer and vascular disease), adopting "by reference" operational precedents that will have been established legislatively (e.g., DiSh) and legally (e.g., Florida's Engle Case), both in PA and elsewhere.  The HCQMC would truly make a difference, both within the Public Health realm of Tobacco Control and within the larger context of health care delivery.  Key tenets of this proposal could easily be co-adopted by other states that are debating how these monies should be spent, for the basis of this analysis (Medicaid Litigation) is common to them all, as per the MSA which has been signed by all of their Attorneys General.

In closing, multiple documents generated by the AG justify this particular approach (and only this approach) to using the monies generated through this litigation.  On the date the complaint was filed, 4/23/97, he made remarks regarding this issue that include the following key excerpts:  "Today I am filing a lawsuit on behalf of the people of Pennsylvania and the Commonwealth in Common Pleas Court in Philadelphia against the tobacco industry, fulfilling a promise I made to the people of Pennsylvania to protect their children and their tax dollars. . . .The suit also seeks to repay the taxpayers of Pennsylvania for the monies the Commonwealth has paid over the years to provide treatment to those who receive medical assistance benefits for illnesses caused by tobacco products. . . .I want to focus specifically on Pennsylvania's children, because this is a fight about protecting the public health and safety of the young people of our Commonwealth. . . .When you blow the tobacco cartel's smoke screen away, the facts of this case are clear. Big tobacco lied about the deadly nature of tobacco. They deliberately made cigarettes more addictive. And they work overtime to hook kids on smoking."

The Complaint itself states:  "The premise of this action is that the defendants, which together comprise the tobacco industry -- and not the Commonwealth, its citizens or its taxpayers -- should ultimately bear the burden of the staggering health care and insurance costs caused by the defendants' concerted illegal actions and violation of the laws and public policy of Pennsylvania. . . .The Commonwealth brings this action to protect its citizens -- including children and adolescents  -- and the public health of the Commonwealth by seeking equitable and injunctive relief as set forth below. The Commonwealth also brings this action for damages for economic injuries to the Commonwealth which were caused by the unlawful and concerted actions of the defendants, including but not limited to reimbursement for past and future expenditures for medical assistance provided under Pennsylvania's Medicaid and General Assistance programs for diagnosis and treatment of tobacco-related diseases and addiction; reimbursement for past and future costs of caring for persons with tobacco-related diseases who receive services through hospitals, health care facilities, residential facilities and other similar facilities owned, operated or maintained by the Commonwealth or facilities under contract to the Commonwealth to render such services; reimbursement for past and future costs of health care benefits for Commonwealth employees and retirees related to tobacco-related diseases and addiction, including provision of health insurance and health care services; and reimbursement for the Commonwealth's past and future increased expenditures to fund and promote wellness and healthy lifestyle programs in order to reduce health care costs, including smoking cessation. Further, the Commonwealth seeks punitive damages, civil penalties and equitable relief as set forth below. . . .Plaintiff, the Commonwealth of Pennsylvania, by D. Michael Fisher, in his official capacity as Attorney General of the Commonwealth of Pennsylvania, brings this action in its capacity as sovereign, and as parens patriae on behalf of all of its citizens, including its children and adolescents."
 
 
 

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