STATE LEGISLATIVE UPDATE

SEPTEMBER 2003 STATE LEGISLATIVE UPDATE

September brought good news from the state of Texas. With the assistance of a grant from the AAOS Medical Liability Reform Campaign the Texas Orthopaedic Association--as part of a large coalition effort--successfully helped educate the public about the need to pass a constitutional amendment allowing a cap on non-economic damages. Great job!

As of the end of the month, the following state legislatures were in regular session or in recess: MA, MI, NJ, NY, OH, PA, and WI. The legislature in CA adjourned in September. Through September there have been 170,788 new bills introduced in the states and 40,489 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

Legislation was signed into law in Oregon creating a subsidy for medical liability insurance premiums for physicians who practice in rural areas of the state. Premium reductions for non-obstetricians will be up to 40%. The bill in Oregon that lowers the post-judgment interest rate to 5% or the Fed discount rate plus 3%, whichever is lower, was signed by the Governor.

The voters in Texas approved the constitutional amendment that allows the legislature to enact a cap on non-economic damages. The amendment passed 51%-49%. This insures that the $250,000 physician cap passed earlier in the year will withstand constitutional muster.

The North Carolina Senate passed a medical liability reform bill that does not contain any caps. Under the bill all medical liability cases would be referred to a three-person review panel before trial. At trial each party must submit a sealed amount of damages the plaintiff should be entitled to if the jury rules for the plaintiff. If the jury finds for the plaintiff then they must select either the plaintiff's proposed amount or the defendant's proposed amount of damages. The jury cannot use their own judgment.

If the jury agrees with the panel that the defendant is not liable then the plaintiff must pay the defendant's "court costs and reasonable attorneys' fees incurred after the filing of the referees' report and finding." Likewise if the jury decided in favor of the plaintiff, as did the review panel, then the defendant must pay the plaintiff's costs and fees. The House of Representatives will take up the bill in 2004.

The Florida Medical Association is going forward with an effort to amend the state constitution to limit attorney contingency fees. The FMA hopes to get the amendment on the ballot in 2004.

PHYSICIAN OWNERSHIP OF HEALTH CARE FACILITIES

The Ohio House of Representatives passed legislation requiring a moratorium on the construction of new specialty hospitals while a panel studies the effect of specialty hospitals on community hospitals. As introduced the bill would have banned all self-referrals to specialty hospitals. During the two-year moratorium hospitals are not allowed to deny privileges to physicians with financial interests in specialty hospitals. According to BNA the panel will study "the feasibility of requiring specialty hospitals to offer indigent care or subsidize emergency rooms and trauma care at community hospitals. It also would evaluate the licensing of health-care facilities and, perhaps, re-establishment of the "certificate-of-need" process."

The Ohio State Medical Association strongly opposes the bill and will fight it in the Senate. OSMA also believes the economic credentialing language in the amended bill is too weak.

REIMBURSEMENT

Legislation pushed by the Oregon Association of Orthopaedists was signed into law in September raising from $10,000 to $15,000 the allowed level of medical benefits under the personal injury protection section of auto insurance policies.

A coalition of providers in Michigan has proposed reforms to the Medicaid system. The reforms would require that Medicaid payments be raised at least to the level of Medicare payments over the next 10 years, the state must return to a system of standard published payment rates, the state should implement a single, consolidated system to perform administrative tasks such as enrollment, payment of claims, and other related functions and the state must make Medicaid payment rates meet the same tests for actuarial soundness and prompt payment as the commercial sector.

A report released in September by the Kaiser Commission on Medicaid and the Uninsured showed that in fiscal year 2004 forty-nine states froze or reduced provider payments under Medicaid. Thirty-five states reported that they froze physician reimbursement rates, three cut physician rates and eleven reported increases in physician reimbursement rates. In fiscal year 2003 physician rates were cut or frozen in forty-one states with eleven increasing rates.

WORKERS' COMPENSATION

The California legislature passed and Governor Gray Davis signed the workers' compensation reform legislation. The bill aims to cut $6.2 billion in medical costs from the system. It requires a 5% overall cut in the medical fee schedule, but procedures currently reimbursed at or below Medicare levels cannot be cut. The RBRVS reimbursement system was not adopted for workers' compensation in California. At one point there were proposals that would have resulted in a 60% reduction in physician reimbursement.

Efforts to ban referral to outpatient surgical centers where the physician has an interest failed, but physicians must disclose their interest in the center before referring workers' comp patients and also must obtain prior authorization. There currently is not a fee schedule for outpatient surgical centers. The bill creates one at 120% of Medicare. The bill caps chiropractic and physical therapy visits at 24 per injury. Employers have the right to request a second opinion before an employee has spine surgery. The legislature tried to help the physicians by lowering the time that claims must be paid from 60 days to 45 days, but they actually changed it to 45 "working days" so that the benefit is slim.