STATE LEGISLATIVE UPDATE

JULY 2003 STATE LEGISLATIVE UPDATE

The states had a difficult time this year balancing their budgets. Thirty-one states cut spending this year, twenty-nine states tapped reserve funds (Florida drew down $726.8 million), thirteen states utilized their rainy day funds (Texas used $811 million from theirs), eleven states fired state workers, eleven states froze hiring and three froze state employees' wages, six states expanded gambling, eight used money from their tobacco settlement fund (New York used $2.2 billion), and seventeen states instituted some form of tax hike. The National Conference of State Legislatures compiled this data before such states as California, Connecticut and Oregon passed their budget.

As of the end of the month, the following state legislatures were in regular session or in recess: CA, MA, MI, NJ, NY, OH, OR, PA, and WI. The legislatures in NC, NH and RI adjourned in July. Through July there have been 166,569 new bills introduced in the states and 37,239 have become law.

Some of the bills the Department of Socioeconomic & State Society Affairs is tracking are outlined below. If you have any questions please give Jay Fisher a call at 800-346-2267, x4336.

TORT REFORM

The Governor signed the Delaware compromise reform bill requiring an affidavit of merit be filed with a suit signed by an expert who is Board-certified in the same or similar field as the defendant. A bill was introduced in Michigan to allow recovery for a loss of opportunity to achieve a better result because of alleged negligence. The New Hampshire Governor signed legislation to overturn the judicially created rule allowing recovery for a loss of opportunity.

The Florida legislature met again in special session to try and pass a bill to address the medical liability insurance crisis and again failed to reach agreement. Governor Bush stated that he will reconvene the legislature when an agreement has been struck.

The American Medical Association added Wyoming to its list of states in crisis. Doctors in Connecticut held another rally at the state capitol and requested a special session to address the crisis. Governor Rowland supports a $250,000 cap and the idea of a special session, but would not commit to calling such a session.

The Missouri Governor vetoed the bill that would have lowered the cap on non-economic damages to $350,000 and also included other reforms. The Missouri government is considering creating a Joint Underwriting Association to provide insurance to physicians who cannot get insurance in the private market. The North Carolina Senate rejected a move to add language creating a cap on non-economic damages to an unrelated bill.

The New Jersey legislature adjourned for the summer without reaching agreement on a reform bill. The Senate is advocating caps while the Assembly is pushing for subsidization of premiums. The Governor rebuffed the medical community in New Jersey when they asked him to call a special session to consider the reform bill. The largest writer of medical liability insurance in the state, Princeton Insurance Co., announced it will stop writing new policies in August because it is having problems finding reinsurance. The state is considering whether it should offer reinsurance. In Washington, the state's largest liability insurer, Physicians Insurance, announced it had lost $21 million last year despite a 24% rate increase.

The National Conference of State Legislatures approved a resolution opposing federal tort reform efforts that preempt state laws. The United State General Accounting Office released a study that showed that the losses from medical liability claims are the primary driver of premium increases over the long term. A study by the U.S. Agency for Healthcare Research and Quality found that states with caps on non-economic damages had 12% more doctors per capita than states without caps.

SCOPE OF PRACTICE

The PT direct access bill in Louisiana became law without the Governor's signature.

PROMPT PAYMENT

Last month I mentioned the Tennessee recoupment bill. That bill limits recoupment to eighteen months after claims are paid, not twelve.

PRACTICE MANAGEMENT/REIMBURSEMENT

A bill passed both houses in North Carolina to require insurers to disclose their fee schedule and claims submission and reimbursement policies to providers. A new law in Rhode Island will prohibit "most favored rate" clauses in provider contracts.

PHYSICIAN OWNERSHIP OF HEALTHCARE FACILITIES/CON

Legislation was signed in Alabama raising the Certificate of Need (CON) threshold for major equipment from $1.5 million to $2.0 million and eliminating the requirement for a CON for MRIs. A bill was signed by the Governor in Connecticut that requires outpatient surgical centers to be licensed by the state and requires new office based surgery centers to obtain a CON.

Bills in Louisiana to add ASCs to the CON law, require physician disclosure of financial interest in a specialty hospital, and establish a new regulatory licensing category for specialty hospitals failed to pass. Bills to eliminate the CON system failed in Montana and New Hampshire. A bill passed in Vermont that adds the purchase or renovation of a facility (except for physician offices) to the CON requirement.

PATIENT PROTECTIONS

Nevada passed an external review law. External reviews are allowed for determinations by managed care organizations that deny all or part of a service on the basis that it is not medically necessary or appropriate or is experimental or investigational. The service must cost at least $500 for it to be eligible for an external review.

Other states amending existing external review laws include: Louisiana, New Mexico, Rhode Island, Texas and Utah.