HIGHMARK-UPMC DEAL REACHED

On May 2, Governor Corbett announced a breakthrough deal between feuding Highmark and UPMC that will allow policyholders’ access to UPMC through 2014.  These policyholders include those enrolled in group and individual plans as well as seniors enrolled in Medicare Advantage.  Negotiations begin regarding access to certain UPMC services beginning in 2015 such as oncology and psychiatric care.  Current agreements stay in place for UPMC Children’s Hospital.  Other negotiations will take place regarding access to patients enrolled in CHIP, the Blues’ Special Care, and the PA Fair Care high risk pool administered by Highmark.  In making the announcement, the Governor singled out several key legislators who were instrumentally involved.  Included were Senators Don White (R-Indiana), chair Senate Banking & Insurance Committee and Jay Costa (D-Allegheny), the Senate Democratic Leader.  Recognized Representatives included GOP Majority Leader Mike Turzai, Democratic Leader Frank Dermody, and Republican Rep. Randy Vulakovich, all of whom are from Allegheny County.

One outcome seen by commercial insurers will be continued market dominance by Highmark if their rates remain lower than rates of the private sector commercial insurance carriers.

TOWING BILL PASSES HOUSE

A reform bill affecting the towing industry (House Bill 1908) sponsored by House Insurance Committee chair Nick Micozzie (R-Delaware) passed the House 172-11 and was sent to the Senate.  The legislation strengthens consumer protections such as access to the car while in storage and more publicized information about the towing operation itself.  All of the no votes were Republican.  Text of the legislation follows:  http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2011&sessInd=0&billBody=H&billTyp=B&billNbr=1908&pn=3446

TAXATION BILL MUSTERS HOUSE SUPPORT

Bipartisan House Bill 2150 (Reed-R-Indiana and Eugene DePasquale –D-York) passed the House May 2 on a 129-58 vote.  It proposes elimination of the so-called Delaware Loophole that permits larger corporations to make DE their headquarters and thus be exempted from paying some PA taxes.  At the same time it would lower corporate net income tax rates by one-third.  The vote was bipartisan with 23 Democrats joining the GOP majority.  Two northwest PA Republicans (Roae and Brooks) voted no.  It now goes to the Senate.

BUDGET OUTLOOK IMPROVES

Budget numbers for April will intensify efforts to restore some of the cuts proposed by Governor Corbett for FY 2012-13 beginning July 1.  PA collected $3.4 billion in April which was three percent more than expected.  That has the net effect of reducing the shortfall in revenues versus projected revenues to $288.4 million.  Earlier this fiscal year, the projection was an almost $700 million shortfall.  Sales tax was $35.7 million above estimate as was corporate income tax ($68.7 million above).  Other categories exceeding expectations were Motor Vehicle Fund (gasoline taxes) and realty transfer tax.  On the downside was personal income tax at $26.4 million below estimate and so-called sin taxes (casino table games, cigarettes, beer) which was $4.6 million below expectations.

POLITICS

• According to AP, embattled Senator Jane Orie (R-Allegheny) will resign her Senate seat before May 21.  A special election may not be called for sixty days leading to some speculation that the general election may also serve to fill this vacancy.
• Senate President Pro Tempore Joe Scarnati (R-Jefferson) criticized the Reapportionment Commission on its second proposed redistricting plan.  It would have moved Senator Orie’s district to Monroe County reflecting population growth in the northeast instead of moving Senator Brewster’s Allegheny County seat per the original plan.

REGULATORY UPDATE

The Insurance Department added the following coverages to the Export list:  Misc. E&O or Professional Liability except for architects, engineers, medical malpractice, lawyers, travel agents, real estate brokers, insurance producers; pollution liability and/or environmental impairment coverage; paint and coating manufacturers; change ‘tattoo parlors liability” to “tattoo parlors”; change “Day Care centers Liability including sexual abuse coverage “ to “ Day Care Centers, including sexual abuse coverage.”  The Export List means that these coverages are determined by the Department to be available only from the E&S market and that the usual three declinations from standard carriers rule does not apply.

WHAT HAPPENS IF NFIP IS NOT REAUTHORIZED?

Last week’s Leg Reg Review referenced a memo from NFIP describing how the phase out of activities would occur if the National Flood Insurance Program is not reauthorized by Congress before May 31, 2012.  NFIP followed that with a May 1 release reminding the public and insurance agents that the 30-day countdown to the start of the hurricane season has begun and that flood insurance should be purchased now before the NFIP cannot accept new business and because of required coverage for thirty days before a claim could be paid.

By request from the last issue of Leg Reg Review, following is a link to the NFIP Memo re phase out.            W-12032 April 25, 2012 MEMORANDUM FOR: W…

www.nfipiservice.com/Stakeholder/pdf/bulletin/w-12032.pdf

In a related development, Louisiana Senator David Vicker introduced S. 1958 April 24 which would authorize NFIP to function until December 31, 2012.  Presumably, this would give the Senate more time to consider HR 1309, the comprehensive flood insurance reform legislation that passed the House July 8, 2011.  Earlier, Vicker had introduced S. 1864 which would have extended reauthorization until September 30, 2012.  Details: www.thomas.gov

SENATE OKs DENTAL BILL

On May 2 the Senate approved Senate Bill 1144 (Ward-R-Westmoreland) and sent it to the House.  The bill limits dental insurer fee schedules.

UPCOMING…

The 2012 Workers Compensation Conference will be held June 11-12 in Hershey.  There are over 20 sessions on everything from medical care standards to vocational rehab to avoiding claim and litigation errors.  Details and registration online at www.dli.state.pa.us and then click on “Workers Compensation”.

POLITICS & MORE POLITICS

Now that the primary is behind us, what does that mean for the General Assembly?

• Republicans retained the Lehigh Valley seat vacated by former Rep. Doug Reichley.  Despite being hit with $100,000 worth of Planned Parenthood attack dollars, Ryan Makenzie won the special election.
• Republicans lost the seat held by former Rep. Dennis O’Brien (Philadelphia).  His replacement is Democratic IBEW union operative Ed Neilson.
• The other three special elections were won by Democrats in historically Democratic districts.
• Lackawanna incumbent Democratic Reps Ken Smith and Kevin Murphy lost their primary contests.  Both districts are traditionally Democratic.
• Insurance agent Mark Mustio did not prevail in the GOP primary for retiring Senator John Pippy’s seat but will be on the ballot in November to retain his Allegheny County House seat.
• Another licensed agent, Helen Bosley, lost in her contest against Anne Chapman in the Republican primary to face off against Democratic incumbent Steven Santarsiero in the fall for this Bucks County seat. Although she was endorsed by the party, the more conservative candidate took the primary.
• UPSETS:  Long-standing House Transportation Committee Chair Rick Geist (R-Blair) lost the Republican primary to Tea Party favorite John McGinnis.  There may be a comeback opportunity once all absentee ballots are counted or if Rep. Geist gets 300 votes to place him on the Democratic ballot…Liberal Phila. Democrat Babette Josephs lost in the primary to a local gay-rights activist who seemed to feel that she was not as zealous a lawmaker as the district needed… Incumbent Pittsburgh Democrat Joe Preston also lost in his primary…Incumbent Phila. Democrat Tony Payton was forced off the primary ballot due to a petition challenge.  The district is Democratic.
• Facing each other in the race for Auditor General are two incumbent House members, Republican John Maher (Washington) versus York County Democrat Eugene DePasquale.  Each filed for his House seat in the primary too but one seat will be vacated after the fall outcome.

The House GOP lost another seat with the resignation of Rep. Curt Schroder (R-Chester) on May 6.  He is leaving to head the Delaware Valley Healthcare Council and will be a Senior Vice President of the Hospital & Health System Association of PA.  That loss is somewhat balanced by last week’s resignation of former Speaker Bill DeWeese (D-Greene) after his conviction on political corruption charges.  The net shift is minus one for the GOP because of the special election outcome in Philadelphia (O’Brien seat)

AGENTS HURT BY CONGRESSIONAL PRIMARIES

Insurance agents will fare less well after two fiscally conservative Democrats lost their respective Democratic primaries.  Incumbent (and licensed insurance agent) Tim Holden lost when his district was shifted to eliminate much of his historic political base and adding Scranton and Wilkes-Barre and.  His opponent was Matt Cartwight, a trial lawyer from Moosic.  Holden had supported tort reform and voted against passage of the Patient Protection Affordable Care Act (PPACA).  The district will tend Democratic based on party ratio.

In western PA, incumbent Jason Altmire (Allegheny) lost against Johnstown incumbent Mark Critz after unions mounted a successful campaign to oust him.  Like Holden, Altmire voted against PPACA.  He had UPMC experience in the health arena before being elected to Congress.  Republican outlook for the fall is somewhat promising since their nominee ran before and much of Altmire’s old district is contained within the new map.

NEXT WEEK IN HARRISBURG

Non-insurance issues dominate the landscape as lawmakers return from their primary recess with attention moving towards liquor privatization, transportation infrastructure funding and of course the Budget.  Still, there are some items to note having some insurance significance.   On second consideration by the House (not quite ready to be voted on) are HB 254 (Grove-R-York) on motorcycle permits and safety instruction and HB 1908 (Micozzie-R-Delaware) on towing and towing storage.  As of COB Friday April 27, there were no relevant committee meetings scheduled.

REGULATORY UPDATE

• The PA Insurance Department announced that a public comment period on the proposed change in control of Highmark and its Pennsylvania insurance subsidiaries as well as Highmark’s plans to affiliate with the West Penn Allegheny Health System will remain open until June 1, 2012.  This follows an April 17 Pittsburgh hearing which collected input from individuals and affected groups.  Written statements should go to Robert Brackbill, 1345 Strawberry Square, Harrisburg, PA 17120 FAX 717/787-8557 or rbrackbill@pa.gov.
• The Department announced on April 16 that it approved the merger of Harleysville and Nationwide.  Under the agreement, Nationwide may not close, re-domesticate or cease business activity from the corporate office in Harleysville or any other office in PA without the Department’s approval.  In addition, business will continue being written under the Harleysville banner for two years.
• On April 23, the Department announced a settlement with MetLife and some of its subsidiaries regarding notification of beneficiaries of a life insurance policy.  The insurer will use the Social Security Administration’s “Death Master File”.  This follows a similar settlement with Prudential back in February.  Covering 20 states participating in the agreement, MetLife’s settlement amount is $40 million.

FLOOD PROGRAM ISSUES CONTINGENCY PLANS

The National Flood Insurance Program (NFIP) issued Bulletin W-12031 stating what agents and others should do in case the U.S. Congress fails to reauthorize the program by May 31, 2012.  New policies for which the application is completed on or before 5/31/12 and where application and premium is received ten days after, the policy will become effective on the requested date.  Claims under existing policies after 5/31/12 will be processed as usual.  NOTE: Make sure you note a date of April 25 as the Notice was issued the day before and then retracted for correction.

KAISER ISSUES INSURER REBATE AMOUNTS

According to the Kaiser Family Foundation, 2012 rebate estimates from health insurers to policyholders will reach $1.3 billion by this August.  Of this, $104.5 million is expected to come to Pennsylvania.  (www.kff.org/healthreform/8305.cfm )

Individual:  $24.2 million covering 99,784 lives with seven plans paying rebates

Small Group: $8.67 million covering 294,712 enrollees with three plans

Large Group: $71.6 million covering 669,523 enrollees with five plans

NOTE: Kaiser said that they were prohibited by an agreement with a partnering research entity from identifying which specific plans were required to rebate.

GENERAL ASSEMBLY RECESSES UNTIL APRIL 30

The PA General Assembly has recessed until month’s end.  In the meantime, April 24 is Primary Day.  At stake are contests for US Senator, US Congress using the NEW district lines via reapportionment and PA Senators and Representatives who are running in their OLD districts due to a court ruling against the new reapportioned district lines.  In some House districts there will be two elections.  One is the primary to select candidates for the fall election.  The second is for legislative districts where Representatives won other elections last fall, creating vacancies in the General Assembly.  Those races will decide who holds the seats this year until the fall election decides who will take their seats in the 2013-14 session of the General Assembly.

Some races of interest to the insurance community are:

-          Licensed insurance producer Rep. Mark Mustio (R-Allegheny) is running for the State Senate seat of retiring Senator John Pippy.

-          Licensed insurance producer Helen Bosley (Bucks County) is running in the Republican primary for the right to take on incumbent Representative Steven Santarsiero (D).

-          For US Congress, redistricting moved US Rep. Tim Holden’s district north to include Wilkes-Barre and Scranton where he has little political base.  He is a licensed insurance producer who voted against passage of the Patient Protection Affordable Care Act (PPACA) and for tort reform.  He is a sponsor of HR 1206 which would take agent commissions out of the Medical Loss Ratio equation.

-          Another congressional sponsor of HR 1206 who also voted against PPACA in US Rep. Jason Altmire (Allegheny County) who was redistricted into a new district where he has to fight US Rep. Mark Critz from Cambria County in the Democratic primary.

APRIL 17 DATE OF HIGHMARK HEARING                                                                                                On April 17 the PA Insurance Department will convene a public hearing in Pittsburgh on the proposed change in control of Highmark and its Pennsylvania insurance subsidiaries as well as Highmark’s plans to affiliate with the West Penn Allegheny Health System.  The hearing will be held from 9 a.m. to 5 p.m. on Tuesday, April 17, at the Westin Hotel at the Convention Center, Allegheny Ballrooms, 1000 Penn Ave, Pittsburgh.  Public comments will continue with an evening session, slated to begin at 7 p.m. Individuals who wish to offer comments at the day or evening sessions are encouraged to pre-register.  The filing, public comments and hearing registration materials are available on the Department’s website. Visit www.insurance.pa.gov  and click on Highmark/West Penn Hearing.

CALENDAR ITEMS

• Pittsburgh I Day takes place on April 26.  Details: http://www.insclubpgh.com/
• Central PA I Day takes place May 2.  Details: http://www.centralpaiday.com/
• For Marylanders, April 24 is the date set for the 2012 Maryland I Day in Towson, MD.  Sponsored by the Independent insurance Agents of Maryland, Maryland Chapter CPCU and the Insurance Women of Baltimore, details are available from Katie Caple 410/427-6430 marylandiday@yahoo.com

ELECTRONIC MEDICAL RECORDS BILL ADVANCES

Before the legislature recessed, the Senate Communications & Technology Committee moved Senate Bill 8 (Folmer-R-Lebanon) which establishes the PA eHealth Partnership Authority, an independent agency responsible for developing the state’s electronic medical information database.  This resource would be used by health care providers to examine results of recent tests to reduce the amount of repetitive diagnostic tests.  The idea is not new and Pennsylvania under former Governor Rendell secured ARRA (Stimulus package) monies to begin the process.  The real test will be how to pay for it and how to encourage doctors to actually use the resource.  One provision in the bill appears to include a hold harmless clause that shields doctors from medical malpractice accusations if they relied on others’ test results.

ADJUSTER BILL SIGNED INTO LAW

House Bill 424 (Godshall-R-Montgomery) was signed into law as Act 21 of 2012 by Governor Corbett on April 3.  This legislation makes a number of changes, some of which follow:

-          License will now be two years for a public adjusters’s license instead of one

-          Notice to insured if there is a conflict of direct financial interest with another party such as construction, motor vehicle repair shop, etc .involved in an aspect of the claim (besides the compensation stated in the contract with the insured)

-          Reduces the required bond from $40,000 to $20,000

-          Department disapproval of a contract form if it is deemed to be “unreasonable, contrary to the interests of the public, or misleading or unfair to the insured”

-          Contract revisions reducing from five days to three the period in which an insured has the right to rescind the contract; explanation of fees; insured to receive a copy of the estimate or report of losses and any supporting documentation, if requested; that the public adjuster may not assert him/herself to be a representative or employee of the insurer

-          Grounds for revocation of license now includes “misleading conduct”; non-payment of state taxes or child support, committing a misdemeanor involving misuse or theft of money or property belonging to another person; soliciting business during a disaster (“during progress of a loss-producing occurrence”); failing to notify the insurer within two days that the public adjuster has entered into a contract with the insured, etc.

TWO BILLS APPROVED BY SENATE COMMITTEE

The Senate Banking & Insurance Committee moved two bills before the recess.  They were Senate Bill 1144 (Ward-R-Westmoreland) regarding dental insurance fee schedules and Senate Bill 1464 (D. White-R-Indiana) updating the Holding Company Law with NAIC and Insurance Department changes such as acquisition and control and persons wishing to divest controlling interest in an insurer.  The term enterprise risk is introduced as one of the financial criteria examined by the Department.  It means an activity, circumstance, event or series of events involving one or more affiliates of an insurer that, if not remedied promptly, would likely have a material adverse effect on the financial condition or liquidity of an insurer or its insurance holding company system.  .

REGULATORY UPDATE

• The Department of Labor and Industry, Bureau of Workers’ Compensation gave notice of the range of fees charged by Utilization Review Organizations and Peer Review Organizations for services  performed under the Workers’ Compensation Act during 2011. The Department further provided notice of the average fee charged by each Utilization Review Organization and Peer Review Organization during 2011.  Details: www.pabulletin.com

POLITICAL NOTE: PoliticsPA reported on a Washington Post article that identified two Pennsylvania fiercely contested congressional primary contests where incumbents are threatened.  They are centrist Democratic Rep. Tim Holden versus liberal attorney Matt Cartwright and centrist Republican Tim Murphy versus former Senate staffer and Tea Party favorite Evan Feinberg

ADJUSTER BILL SENT TO GOVERNOR

House Bill 424 (Godshall-R-Montgomery) passed the House on March 26 with a concurrence vote on Senate amendments.  This public adjuster reform legislation went to Governor Corbett for his signature.  Among other things, HB 424 increases disclosures by public adjusters to consumers and notification to insurance companies that a public adjuster has been retained by a consumer.

ANTI-PPACA BILLS SEE MOVEMENT

Two Pennsylvania bills attacking the Patient Protection Affordable Care Act (PPACA) are seeing movement.  The first was Senate Bill 10 (Scarnati-R-Jefferson) which amends the PA Constitution to prohibit a health insurance individual mandate.  On March 28, the Senate passed it along party lines with Republicans voting ‘aye’.  If it also passes the House this year, it must be reintroduced and passed by the General Assembly in the 2013-14 session and then face the voters in a referendum before the Constitution is amended.

On the House side, the State Government Committee is slated to take up House Resolution 49 (Swanger-R-Lebanon) on April 3.  It is much broader in scope in that it does not specifically reference PPACA.  Rather, it aims at what it terms as a usurpation of states’ rights by the Federal Government by imposing mandates or requiring states to pass certain legislation or lose Federal funding.  Of note is that five Democrats joined 32 Republicans in sponsoring this legislation.

COMMITTEE MEETINGS

• The Senate Banking & Insurance Committee plans to meet April 3 to consider two bills.  First is legislation prohibiting insurers from setting fees for non-covered insurance services (Senate Bill 1144 sponsored by Sen. Kim Ward-R-Westmoreland).

Second is Senate Bill 1464 (D. White-R-Indiana) which “provides for group-wide supervision of       internationally active multi-jurisdictional insurance groups.”  It addresses processes and procedures re         acquisition or control or merger or consolidation with a domestic insurer.

• It is rumored that the House Insurance Committee may meet on April 4 to discuss a number of bills concerning dental insurance.
• The Senate Communications & Technology Committee will meet April 3 to consider the PA Health Information Partnership Authority to allow for an electronic means for health care providers to research previous medical treatment without exposing themselves to civil liability.  Senate Bill 8 (Folmer-R-Lebanon) also has strong language in it requiring permission by a patient for these records to be accessed.

REGULATORY UPDATE

• The PA Health Cost Containment Council (PHC4) issued its annual report on studies it has undertaken and by whom.  There were 69 special reports and requests for data from sources as varied as the Akron’s Children’s Hospital to Yale New Haven Health Services Corporation.  Government agencies and media also accounted for a number of the requests.  Details: PA Bulletin March 24, 2012 www.pabulletin.com
• The Title Insurance Rating Bureau has requested a seven percent average increase which, if approved by the Insurance Department, will be effective June 1, 2012.
• March 21 was the effective date of Act 134, the new law giving the PA Insurance Department the authority to review and approve health insurer rate increases of ten percent or more.

ABORTION FUND UPDATE

The last issue of Leg Reg Review pointed to a new controversy about PPACA, whether the new Exchange Rule forced all insurance enrollees to pay $1.00 per day into a special fund that would be used to pay for abortions.  Thanks to a reader, the actual cite is section 1303 of the Patient Protection Affordable Care Act.  When you link, note that the section begins on page 83 of the 974 page document.  It states that a qualified health plan with abortion coverage will have an Allocation Account.  This will be funded by a separate payment from each enrollee “equal to the portion of the premium to be paid directly by the enrollee for “ this coverage.

http://housedocs.house.gov/energycommerce/ppacacon.pdf

DEPARTMENT OF AGING DECIDES NO ON PLAN HEARINGS

The PA Department of Aging which has the responsibility to update a State Plan on meeting older adult service needs has chosen not to have hearings in developing the Plan.  Rather, the Administration has opted for Focus Groups which will meet through May 2012 consisting of “subject matter experts, service partners, legislators, consumers and the public (who) will be asked to provide input.”  Access points follow:

Email: RA-StatePlanOnAging@state.pa.us

Link from the Department’s home page: www.aging.state.pa.us

Comments submitted by calling 717-783-1550

I DAY SEASON IN HIGH GEAR

Several I Days are coming up soon.  They are:

-          Reading I Day in Wyomissing April 12 — 610/780-6091

-          Pittsburgh I Day April 26 —- 412/489-5626

-          Central PA I Day in Camp Hill May 2 —- slane@centralpaiday.com

AGENCIES UPDATE PPACA FAQs ON SBCs

The Departments of Labor & HHS have updated their Frequently Asked Questions on the Patient Protection Affordable Care Act to include the provisions regarding the Summary of Benefit and Coverage or SBC following the publishing of the final rule.  http://www.dol.gov/ebsa/faqs/faq-aca8.html

For a link to a sample, please visit www.dol.gov/ebsa/pdf/SBCSampleCompleted.pdf or http://cciio.cms.gov/resources/files/Files2/02102012/sample-completed-sbcfinal.pdf.pdf.

POLITICAL NOTES

• Rep. Tony Payton (D-Phila.) appears to have lost his primary standing due to a petition challenge.

A list of all primary candidates for General Assembly may be found using the Department of State link, http://www.dos.state.pa.us/portal/server.pt/community/department_of_state/12405

GENERAL ASSEMBLY NOTE:  The House and Senate will reconvene on March 26.

HHS ISSUES RULE ON EXCHANGES

On March 12, the US Department of Health & Human Services issued a Rule concerning the parameters under which states may set up Health Insurance Exchanges.  Stressing that states must comply with the Patient Protection Affordable Care Act (PPACA) but are able to have discretion in how they are established.  Examples of this state discretion would be whether the Health Information Exchange is a new government entity or works through an established agency such as the Insurance Department and of course what role insurance producers and Navigators have in the new program.  In PA, the Corbett Administration has not yet finalized its actual language but says that it will be very soon.  On March 9, the Insurance Department opted not to testify before a House Insurance Committee that would have taken place March 14 because HHS’ guidance regarding the $33 million implementation grant was unclear and because the Corbett approach had not completely jelled.

For a summary of HHS’ Exchange rule issued March 12, please link here:

http://www.healthcare.gov/news/factsheets/2011/07/exchanges07112011a.html

The link to the actual document follows:  http://www.ofr.gov/OFRUpload/OFRData/2012-06125_PI.pdf\

When referencing the 644 page document, note that HHS’ reaction to the than 24,780 comments appears first followed by the actual text of the Rule towards the end.  One caveat is that HHS puts in the changes but does not include original Rule text that was unchanged after the comment period.  This may pose difficulty in cross referencing the previous Rule proposed and this one with the final changes.   Some reference points are: Navigators starting on Page 79; Agents on Page 94.

Link to the earlier July 11, 2011 HHS draft of the Rule appears below.

http://www.regulations.gov/#%21documentDetail;D=HHS-OS-2011-0024-0001 

NOTE:  Abortion controversy also came from reaction by some right to life groups and blogs that said that last week’s Exchange Rule mandated a $1.00 fee to fund abortion coverage.  The issue is the “pre-regulatory model guidelines on segregation of funds published by the Office of Management and Budget.”  Neither the new Rule nor the July 11 draft explicitly referenced the concern.  If you have any insight on this issue, please email xenobun@aol.com.

HHS ANNOUNCES MEDICAID RULE MARCH 17

In preparation of the expansion of Medicaid to 133 percent of the Federal Poverty Line in 2014 because of the Patient Protection Affordable Care Act (PPACA), the Department of Health & Human Services announced Medicaid eligibility and signup rules.  The Rule is designed to facilitate enrollment in Medicaid and CHIP as it links up with the Health Insurance Exchanges.

Currently, the Federal Poverty Level is $14,856.00 for an individual (with the Medicaid threshold in 2014 to be $19,758.00) and for a family of four, the FPL is $30,656 now with Medicaid eligibility to be $40,772.00 in 2014.  That is based on today’s FPL.  By 2014, the FPL baseline will doubtless increase.  The Kaiser Family Foundation estimates that currently, 12 percent of Pennsylvanians are on Medicaid.

A link to the HHS fact sheet appears below.

http://www.medicaid.gov/AffordableCareAct/Provisions/Eligibility.html.

MORE HHS PPACA RULES

• Sure to evoke more controversy, HHS issued an Advance Notice for Final Rulemaking on women’s reproductive services that must be paid 100% by health insurers (first-dollar coverage).  This stemmed from an announcement last August that HHS had widened the PPACA definition of certain preventive services to include a wide range of women’s AIDS, STD, and abuse counseling, exams, treatments, sterilization, and contraceptives that are FDA approved.  This last item is what caused such a political firestone since religious groups’ employees and employees of health care facilities run by religious groups would be forced to provide this coverage.  The Obama Administration tried to dispel the furor by saying insurers could absorb the cost directly so as to allow religious entities the ability to say that they are not providing this coverage.  Some conservatives called it an attack on religious beliefs and an attack on morals to have insurers forced to pay for a lifestyle which involves contraceptives.  The Obama Administration and their advocates fired back to accuse the GOP of not allowing women to have contraceptives.

There is a ninety comment period and instructions on submitting comments are found using the link below.  Following that link, the second link gives an overview from the Obama Administration on women’s preventive services.https://www.federalregister.gov/articles/2012/03/21/2012-06689/certain-preventive-services-under-affordable-care-act.    ********
http://www.healthcare.gov/news/factsheets/2011/08/womensprevention08012011a.html

• A less controversial rule on how college health programs must be structured in order to comply with PPACA with the link appearing below.

http://www.healthcare.gov/news/factsheets/2012/03/student-health-plans03162012a.html

REGULATORY UPDATE

• The Insurance Department hearing on Highmark’s acquisition of West Penn Allegheny Health System and application of “UPE” to acquire control of Highmark and its Pennsylvania insurance subsidiaries is set for April 17 in Pittsburgh at the Westin Hotel at the Convention Center.  There will be two sessions, 9 to 5 and one starting at 7:00 p.m.  Pre-registration is not mandatory but those who do will receive an advance copy of the agenda.  Those wishing to testify are asked to submit comments in advance to Robert Brackbill 717/787-8557 rbrackbill@pa.gov.
• First Sealord Surety’s liquidation has a March update regarding the collateral of the entity and the Insurance Department is attempting to get a better sense of the cash collateral which may have been extended by Principals.  Principals should send documentation to: PA Insurance Department, Office of Liquidations, Rehabilitations & Special Funds ra-in-claims@pa.gov .  FYI, the deadline for filing claims is October 5, 2012.  Pennsylvania is NOT a state where the Guaranty Fund applies.  A link to the Department’s web page on First Sealord Surety, Inc. follows:

http://www.portal.state.pa.us/portal/server.pt/community/offices___organizational_charts/9304/first_sealord/1088423

SESSION DAYS

MARCH 14 EXCHANGE HEARING CANCELED

Friday afternoon, the planned March 14 House Insurance Committee informational meeting on the Exchanges was canceled.  The Insurance Department was supposed to have addressed implementation strategies for the $33 million Exchange implementation grant received from HHS as well as information on which legislative approach the Corbett Administration had decided to take.  The plug was pulled because the Governor’s office is still reviewing options and also because HHS’ guidance as to how the grant must be spent remains unclear.

SENATE COMMITTEE MOVES PPACA BILL

The Senate Banking & Insurance Committee met March 7 and considered an amendment to the PA Constitution that defines a person’s rights in PA not to be forced to obtain or maintain health insurance.  This rebuke to the Patient Protection Affordable Care Act (PPACA) is Senate Bill 10 sponsored by President Pro Tempore Joe Scarnati and 18 other Republicans.  The 9-5 vote was along party lines with Democrats voting in the negative.  Its’ House counterpart is House Bill 42 (Baker-R-Bradford) which had been moved by House Health and Appropriations Committees but has not yet seen a full House vote.

LIME DISEASE INSURANCE MANDATE STRICKEN

The Senate Banking & Insurance Committee also moved Senate Bill 210 (Greenleaf-R-Montgomery) establishing a tick-borne disease awareness campaign and advisory board within the PA Department of Health.  An amendment removed a provision which would have mandated health insurers cover these ailments.  The committee also approved a Risk Based Capital (RBC) solvency monitoring bill, House Bill 2134 (Micozzie-R-Delaware).  Originally, the committee was to have considered SB 1371 (D. White-R-Indiana) but the decision was made to move the House bill as it was further along in the legislative process.

CLARIFICATION: Last week’s Leg Reg Review reported that the PA Supreme Court ruled against petitioners who wanted monies to be returned to MCARE and reverse a decision made by former Governor Rendell and the General Assembly to use the money to help balance the state budget.  An attorney who is familiar with this case said that while the Supreme Court did rule, the ruling did not include whether $100 million taken from MCARE’s operating budget should be returned. That will be dealt with in a separate ruling.  Of the $701 million taken from the former Provider Retention Account, the lawsuit did not seek a return of the full amount but only for about $400 million as that was the part of the Provider Retention Account that should have gone to health care providers…i.e. to fully fund the abatement.

HOW ARE YOU OBSERVING FLOOD AWARENESS WEEK?

This coming week is Flood Awareness Week, a time set aside by the National Flood Insurance Program (NFIP) to emphasize the importance of obtaining Flood Insurance.  NOTE for your clients…Did you know that of the $500 million dollars in disaster relief received by Pennsylvanians because of Hurricane Irene and Tropical Storm Lee, $301.2 million were payments by NFIP to Flood Insurance policyholders?

In addition to media and consumer outreach, NFIP is hosting four March CE seminars in PA to better familiarize agents with the essentials of Flood Insurance. They are March 20 in Wrightsville, March 22 in New Providence, March 27 in Warrington, and March 29 in Eagleview.

Registration information: www.fema.gov/business/nfip/wshops.shtm.

MORE LEGISLATIVE ACTION

• Public Adjuster reform bill (HB 424 sponsored by Rep. Bob Godshall-R-Montgomery) was moved out of the Senate Appropriations Committee, readying it for a full Senate vote.
• A hearing took place March 7 in the Senate Communications & Technology Committee on the Administration’s desire to create eHealthCollaborative, a data base which would allow for the exchange of medical information between health care providers.  Not to introduce confusion but the concept has also been referred to as a Health Information Exchange by the Rendell Administration and by the media.  In this context, it does NOT refer to Health Insurance Exchanges mandated by the Patient Protection Affordable Care Act discussed elsewhere in this newsletter.
• On March 14, the House Aging & Older Adult Services Committee plans to hear testimony by the Legislative Budget & Finance Committee required by HR 106 on their report “Pennsylvania Lottery Funding of Programs and Services for Older Pennsylvanians”.

POLITICS

Off the ballot, on the ballot.  As mentioned in last week’s Leg Reg Review, a number of challenges were struck down by the courts and others were upheld.  Some examples:

• Rep. Jason Altmire gets to stay on the ballot
• Phila. Democratic Senator Larry Farnese fended off a challenge.  In Philadelphia, primary challenges to Reps. Evans and Donatucci were fended off as some of their potential opponents were deemed to be ballot ineligible.  Evans and Donatucci are Democrats.
• Nate Kleinman opted not to fight a challenge to his petitions in the Democratic primary against US Rep. Allyson Schwartz, preferring to run a write-in campaign.  Media have speculated that former Democratic Rep. Joe Sestak is helping him.
• Republican Frank Pinto remains on the ballot against John Maher for Auditor General.
• Challenges to Democratic House incumbents did not fare well with primary opponents withdrawing: Phyllis Mundy-Luzerne; Babette Josephs (Phila.) or with challengers being struck off the ballot: Scott Conklin –Centre; Eddie Day Pashinsky-Luzerne

There are still over twenty primary challenges still to be ruled upon.

REGULATORY UPDATES

• The Insurance Department plans a public informational hearing regarding the proposed acquisition of control of Highmark, Inc. and its PA-domiciled subsidiaries (including Gateway Health Plan, Inc., United Concordia, Keystone Plan West and others) by UPE, a newly formed nonprofit corporation.  This transactional filing is related to Highmark’s proposed affiliation with West Penn Allegheny Health System.  The hearing is set for April 17 at the Westin Convention Center in Pittsburgh.  Those seeking to testify or submit written comments need to contact Robert Brackbill rbrackbill@pa.gov .
• Notice 2012-03 was issued by the Insurance Department concerning maximum benefit adjustments for Autism spectrum disorders coverage.  www.pabulletin.com Vol. 42, No. 7
• Notice 2012004 lists the effective dates for implementation of Act 134 of 2011 (rate review authority for health insurer increases of ten percent or more).  March 21, 2012 is the date to watch.

SENATE COMMITTEE SET TO MOVE PPACA BILL

The Senate Banking & Insurance Committee has set March 7 for a meeting to consider an amendment to the PA Constitution that defines a person’s rights in PA not to be forced to obtain or maintain health insurance.  This rebuke to the Patient Protection Affordable Care Act (PPACA) is Senate Bill 10 sponsored by President Pro Tempore Joe Scarnati and 18 other Republicans.  Its’ House counterpart is House Bill 42 (Baker-R-Bradford) which had been moved by House Health and Appropriations Committees but has not yet seen a full House vote.

Text link is found below.

http://www.legis.state.pa.us/CFDOCS/Legis/PN/Public/btCheck.cfm?txtType=PDF&sessYr=2011&sessInd=0&billBody=S&billTyp=B&billNbr=0010&pn=0173

The meeting will consider two other bills:

• SB 210 (Greenleaf-R-Montgomery) to establish the Lyme and Related Tick-Borne Disease Education Prevention & Treatment Act.  Expected to be removed from the bill in committee is a provision requiring that insurance health plans include it as a mandated benefit.
• SB 1371 (D. White-R-Indiana) to amend the Risk-Based Capital statute for evaluating health insurer solvency.

HOUSE INSURANCE COMMITTEE TO REVIEW CORBETT EXCHANGE PROPOSAL

On March 14 the House Insurance Committee expects to hear Insurance Department testimony on the Corbett Administration legislation to establish Health Insurance Exchanges in PA per a PPACA requirement.  Uncertain is whether specific legislative language will be unveiled at this venue.  Exchange legislation is on a tight timeline since PA must enact legislation establishing Exchanges by 1/1/2013 or the US Department of Health and Human Services will impose its own version of an Exchange on the Commonwealth.  On March 15, the Department’s point person on Exchanges Policy Director Matthew O’Donnell will speak to the Greater Philadelphia Association of Health Underwriters. Registration information: www.gpahu.net  The Department received approval from HHS for a $33 million grant to prepare for Exchanges in PA.

NEWS TO NOTE

• At last there is some good news for the Corbett Administration on the Budget.  Collections in February exceeded expectations for the first time since last summer.  Despite the good news, the Commonwealth’s current fiscal year gap is still $481.6 million less than expected.  The other good news came with the PA Supreme Court February 29 decision overruling a lower court decision that $801 million in MCARE money had been illegally used to balance a Rendell-era budget and would have to be repaid from the General Fund.
• On March 2, the US Department of Labor extended its comment period on new MEWA regulations until March 19.  Details: http://www.dol.gov/ebsa/newsroom/2012/EBSA030112.html. DOL also scheduled a health benefits laws compliance assistance seminar in Newark, New Jersey with information and registration information at www.dol.gov/ebsa/pdf/HBECNJ041012.pdf.

POLITICS

• Primary date April 24 is also the date set for special elections filling terms of six House members who successfully gained other offices in last year’s general election.  For those six House districts, voters will need to vote twice, first to fill the unexpired term and second for the primary to see who confronts who in the fall.
• Insurance producer licensee Helen Bosley is seeking the Republican nomination in Bucks County’s 31^st district who, if nominated, will face incumbent Democrat Steven Santarsiero in the fall.  The race is not hers yet as she will need to defeat social conservative Anne Chapman for the GOP nomination.  Bosley has been endorsed by the Republican Party for this nomination.  This race is one of the best chances for a Republican pick-up since the incumbent only won by a few hundred votes in 2010.
• The PA Business Council previously released its verdict as to redistricting impact on PA’s congressional races.  They are:

-          1^st: Democrat Bob Brady’s district is still safely Democratic.  Ditto for 2^nd district incumbent Democrat Chaka Fattah.  Both are Philadelphia seats.  Incumbent Allyson Schwartz’ district is still safely Democratic despite its new Montgomery County core.

-          3^rd Incumbent Mike Kelly’s seat in northwest PA remains fiercely competitive.

-          4^th Despite the transfer of Harrisburg’s Democratic majority into this Republican district, the transfusion is not likely to prevent a Republican from retaining Todd Platts’ seat for the GOP.

-          5^th district incumbent Glenn Thompson moves from safe Republican to “comfortably” Republican.

-          6^th district incumbent Jim Gerlach has more of a Republican edge in this competitive district thanks to the inclusion of Lebanon County into this traditionally southeastern PA district.

-          7^th district incumbent Pat Meehan may have his work cut out for him despite a GOP redistricting edge because it now stretches from Montgomery and Bucks County border to Delaware, Berks, Lancaster, Chester Counties plus part of Philadelphia.

-          8^th district incumbent’s Mike Fitzpatrick now includes all of Bucks County and leans more Republican than before.

-          9^th district incumbent Bill Shuster from Blair County can rest easier despite the inclusion of some Democratic areas from Westmoreland County.  Incumbent Republican Tim Murphy (18^th district) was the beneficiary of this shift of Democrat voters into Shuster’s district.

-          In the 10^th and 11^th districts, incumbent Republicans Tom Marino and Lou Barletta gained Republican voters although Barletta’s district now extends from Hazleton in the north to much of Cumberland County, a distance of 100+ miles.

-          The 12^th district will likely be the most competitive in the state after we see who wins the Democratic nomination between incumbents mark Critz and Jason Altmire.

-          Two safe Democrat districts are the 14^th Pittsburgh district (incumbent Mike Doyle) and Tim Holden in the 17^th.  Holden lost all of his old district except for home Schuylkill County.  His district now includes everything from Wilkes-Barre and Scranton all the way over to Easton.

-          District 15 incumbent Republican Charlie Dent lost the Lehigh Valley/Easton area to pick up all of Dauphin County except Harrisburg, Berks and part of Lebanon County to make it more Republican.

-          Republican Joe Pitts’ 16^th district is contorted but still Republican. He lost eastern Lancaster County but retained Democratic Reading.

• Although the petition challenge in the primary contest between incumbent Democrats Mark Critz and Jason Altmire in western PA has attracted media attention, there are at least fifty challenges that will have to be ruled on before the primary contests are clear.  All are supposed to be resolved this week.  Embattled incumbent Rep. Bill DeWeese (D-Greene) will be permitted to be on the ballot after a challenge that he should be prevented from running because of his court conviction per the ‘Bonusgate’ scandal.  For a list of challenges and outcomes, please note the link below.

http://www.dos.state.pa.us/portal/server.pt/community/department_of_state/12405

NEWS NOTE… National Flood Safety Awareness Week is set for March 12-16, 2012.  How will you observe this occasion?

COMMISSIONER TESTIFIES ON LEAN FY 2012-13 BUDGET

Insurance Commissioner Mike Consedine testified before the Senate Appropriations Committee February 14 on the Administration’s Budget proposal for the fiscal year beginning in July. But the real focus of the hearing was on Highmark versus UPMC and on the Health Insurance Exchanges mandated by the Patient Protection Affordable Care Act (PPACA).  When Senator Robert Mensch (R-Montgomery) asked why we shouldn’t wait until after the courts have ruled on PPACA’s constitutionality, Consedine likened the situation to Hurricane Irene last year.  Even if Pennsylvania did not know the path of the storm, it still had to plan and prepare.  Likewise, (he said) Pennsylvania does not know if the January 1, 2013 mandate to the states to establish an Exchange or have it imposed by HHS will come to be but we have to prepare for it nonetheless.  Senator Larry Farnese (D-Phila.) took exception to comparing PPACA to an impending catastrophe.  The Commissioner also said that the Administration Exchange legislation would have a sunset if PPACA were invalidated and that planning is underway per the Department’s efforts to obtain a $30-plus million grant from HHS to develop the backroom systems necessary to operate Exchanges.

Another issue that received attention was a proposal (SB 1339) raised by Minority Appropriations Committee Chair Vincent Hughes (D-Phila.) to double auto limits.  Senator Hughes cited the higher cost of accidents and the human harm it causes versus the limits that were set by Act 6 in 1990.  The Commissioner said that the Department opposes changes in limits because they will ad to the cost of insurance that may be hard for some to bear in these economic times and that the result will be more uninsured motorists (and hence, more claims that have to be paid by carriers without hope of recouping their losses through premiums).

OCA HEARING

The House Insurance Committee February 15 hearing on House Bill 717 (Matzie-D-Beaver) establishing an Office of Consumer Advocate for Health Insurance (OCA) went beyond particulars of the specific legislation to center generally on how the Commonwealth can best help educate and advocate for health insurance consumers.  Most supporters and opponents agreed to the need to adequately support the Department’s efforts in Consumer Services where 15,000 complaints are dealt with yearly despite having a shrunken budget and staff.  The PA Health Law Project and others supporting OCA however felt that agency fragmentation between Insurance, DPW and Health leaves consumers confused.  OCA would give them one place to go to in order to advance their concerns, even to represent them before the Insurance Department itself.  Opponents such as the Insurance Federation of PA and Capital Blue Cross said that an OCA would hasten confusion and would run out of money quickly if assumptions of funding were based on PPACA.  The Pennsylvania Association of Health Underwriters (PAHU) stressed that the Insurance Department has been hit hard in successive Administrations and that general operating budget was cut from 23 million to 18 million in five years and that the job complement had drastically decreased with another 20 jobs lost for the new fiscal year.  In addition, there are no more regional Insurance Department offices and the Department does not even fund a switchboard or operator.  PAHU urged legislators to take money from the $43 million in fees revenue generated by the Department each year and dedicate some of it to fund the Department’s operations instead of establishing an OCA.

POLITICAL NOTES

• Rep. John Hornaman (D-Erie) has decided not to seek re-election.
• Despite reapportionment woes, the primary filings are in. If you want to see whose running, please use the link below.  Of particular interest is that licensed insurance producer and current House member Mark Mustio is seeking the southwest PA seat held by retiring John Pippy (R-Allegheny). Another item of interest is that Insurance Committee member Nick Kotik (D-Allegheny) is standing for re-election now that it appears that the 2001 district lines will be in effect this election year pending court action to the contrary.  With the new district lines, he would have been pitted against fellow Democrat Joe Preston and there was some question as to his decision. If you know of an agent running for the General Assembly, please contact xenobun@aol.com.

http://www.dos.state.pa.us/portal/server.pt/community/department_of_state/12405

INSURANCE COMMITTEE HEARS DENTAL MED MAL TESTIMONY

On February 9 the House Insurance Committee held a hearing on Senate Bill 388 (Vance-R-Cumberland) that would require dentists to carry medical malpractice insurance.  Although the PA Dental Association and others are in favor of the requirement, there was some concern raised about what levels of coverage should be mandated.

REGULATORY NOTES

• Pennsylvania updated its regulatory agenda, something that it is required to do periodically.  For the first time in years, the Insurance Department does not list any pending regulations.  Other agencies do:

-          Department of Aging is promulgating regulations by June 2012 regarding the long-Term Care Ombudsman in order to reach compliance with national standards.  (Bob McNamara 717/772-3688)

-          Labor & Industry has 14 proposed rules dealing with various labor standards issues but none with Workers’ Compensation.

• Maryland Insurance Administration (MIA) issued a caution to Maryland insurance producers to the effect that someone had a web site up that offered to help producers renew their licenses.  According to MIA, using the .exe file would cause computer damage.  The MIA web site is www.mdinsurance.state.md.us. Details: Vivian Laxton 410/468-2007
• In case you missed it, PA Bulletin Vol. 42, No. 2 ran a list of the Qualified Unlicensed Reinsurers. www.pabulletin.com .
• The Insurance Department is seeking comments from the industry as to what types of coverage should be put on the export list.  That list includes coverages where the Department has determined that a diligent search is NOT required and that the Surplus & Excess Lines market may be accessed without checking with standard carriers first.  Deadline for written comments is March 4. Details: Cressinda Bybee cbybee@pa.gov.
• The MCARE office in Rosemont is now closed.  Communications go to: MCARE Bureau of Claims Administration, 30 North Third St., 8^th floor, Harrisburg, PA 17101.  717/783-3770.
• BrickStreet Mutual Insurance Company filed an application to acquire control of PennCommonwealth Casualty Insurance Company, a stock casualty company based in PA.
• The Insurance Department’s bid to liquidate First Sealord Surety Insurance Co. was accepted by Commonwealth Court.  NOTE: Surety products are NOT covered by the PA Insurance Guaranty Association (PIGA).

FLOOD MARKET NOTE: National Flood Insurance Program (NFIP) still has two Webinars remaining for February.  They will be held Feb. 28 and 29, Basic Agent Parts I and II.

http://www.fema.gov/business/nfip/a_wshop.shtm

I- DATES:  March 22 Philly I Day; April 12 Reading I-Day; April 26 Pittsburgh I Day and May 2 Central PA I Day

PENNSYLVANIA BUDGET ISSUE

Governor Tom Corbett proposed “a budget grounded in difficult realities but framed in the optimism that we are solving our problems” on February 7.  In all, the Budget flat lines spending at $27.14 billion.  State workforce trimming continues with 647 employees lost, mostly due to attrition, compared to 1,500 last year.  Although the cuts were not as draconian as in the current fiscal year, most programs and departments were ‘trimmed’ with certain exceptions. Corrections Department for example was kept at $1.867 billion.  Education actually saw a modest $329 million increase to $9.923 billion despite some programs losing dollars (Libraries -5%; community colleges -3.8%).  Subsidies to Penn State, Pitt, and Temple took sizeable hits of 28.2%, 30% and 30% respectively.  Business received both ups and downs.  The phase-out of the Capital Stock & Franchise Tax continued but several key DCED programs lost ground as did Job Training Programs within the Department of Education.

The Rainy Day Fund is depleted with a balance of only $61,000.  The Corbett Budget does not anticipate any replenishment of the Fund for FY 2012-13.

Details on the Budget proposal may be obtained from http://www.portal.state.pa.us/portal/server.pt/community/current_and_proposed_commonwealth_budgets/4566 .  Of particular value is the Power Point on that page to walk one through the budget changes.

Following are areas of interest to the Insurance Community:

ATTORNEY GENERAL

-          Attorney General’s Office funding for General Government Operations decreased 5% to $1.865 million.  This funds the efforts of the AG to combat insurance fraud.

AGRICULTURE

-          Crop Insurance Premium Subsidy Program which had funding eliminated last year remains at zero dollars.  This also costs PA Federal matching dollars.

ENVIRONMENTAL PROTECTION

-          Mine Subsidence Insurance is funded by a special fund administered by the Department of Environmental Protection (DEP).  It receives premiums and pays claims.  Per 2002 legislation, it is marketed by insurance agents who do receive a first year commission.  For FY 2012-13, it anticipates $6.861 million in premiums and interest received and claims and administration costs at $5.622 million.

HEALTH

-          PA Health Care Cost Containment Council (PHC4) loses its independent status and is absorbed under the jurisdiction of the Department of Health

-          Patient Safety Trust Fund was established by MCARE’s Act 13 of 2002 for the purpose of independent review of medical facilities which will result in ensuring patient safety and reducing medical errors.  Administered by the Department of Health, it expects to see its balance increase in FY 2012-13 to $7.181 million, up from $5.121 million.

INSURANCE

-          Insurance Department takes a three-percent cut in General Government Operations at $17.947 million and loses 20 job slots.  This does not include MCARE which is funded by assessments from health care providers or CHIP which is a separate program administered by the Insurance Department.

-          CHIP program funding increases to $101.6 million but CHIP Administration is cut by $1.167 million.

-          The Medicare Availability & Reduction of Error (MCARE) Fund was established by Act 13 of 2002 and is administered by the Insurance Department as a middle tier of medical malpractice insurance funded by annual assessments to health care providers.  It expects to take in $205.7 million in receipts and spend $190.341 million in medical malpractice claims and administration.  NOTE: This picture may change should the state lose its appeal from a decision requiring repayment to MCARE of $801 million that was diverted to the General Fund under former Governor Rendell.

-          Underground Storage Tank Indemnification Fund (USTIF), an insurance program administered by the Insurance Department is expected to receive $63.9 million in receipts from gasoline taxes, tank capacity fees, and investments but is estimated to spend $80.5 million.

-           

LABOR & INDUSTRY/WORKERS’ COMPENSATION

-          L&I funding decreases by only 1.7% to $70.5 million but it will lose 31 positions.

-          State Workers’ Insurance Fund (SWIF) is not part of the General Fund.  As the WC insurer of last resort, it is expected to take in $ 325 million in premiums and interest but spend $ 328.3 million.

-          Workers’ Compensation Funds appear to be in decent fiscal condition. The WC Security Fund (payment of benefits to individuals who are insured by an insolvent carrier) is expected to have $625 million at the end of the 2012-13 FY, up from $614.364 million.  The WC Supersedeas Fund (reimburses insurers for payments made by them to WC claimants who are later determined to be ineligible) expects to have $1.845 million at the end of the 2012-13 FY, up from $1.090 million.  The third WC Fund, the WC Administration Fund which finances L&I’s administration of the Workers’ Compensation Act is expected to decrease slightly with $87.851 million at the end of 2012-13 versus the $90.9 million for FY 2011-12.

PUBLIC WELFARE

Medicaid spending or “the insurance entitlement program” provides benefits to 12% of PA’s population and is a major part of the Department of Public Welfare budget which in turn comprises 38.8% of the total state budget of $27.14 billion.  Long-term care is a huge part of the DPW budget.

-          DPW State-funded share of LTC under Medicaid is $741.484 million.  It compares with an additional $2.034 billion coming from the Federal Government for this purpose.

-          Tobacco Settlement supplies $161.765 million towards Medicaid LTC.

-          $88 million comes from DPW’s line item for long-term care managed care.

-          Medicaid transportation is funded at $74.8 million state and $71.926 million Federal, some of which may fund those receiving long-term care services under Medicaid.

OTHER BUDGET ITEMS TO NOTE…Insurance Liquidation Fund invests assets of insolvent carriers so as to pay claims and is expected to have a balance of $66.784 million at the end of FY 2012-13, up from $68.349 million…The independent Insurance Fraud Prevention Authority (IFPA) is funded by the insurance companies at $12 million…The Tobacco Settlement Fund (also called Master Agreement) would redirect monies spent on health research to help fund the state’s share of Medicaid spending for long-term care…Cooperative Extension and Penn State’s Agricultural Research $47 million programs would, under Corbett’s proposal, be funded by the gambling-generated Horse Race Development Fund.  For some reason, some of the equine interests are unhappy about this idea.

NON-BUDGET ITEM…Yes, there is other news.  The U.S. House voted 267-159 to repeal the CLASS Act, part of President Obama’s Patient Protection Affordable Care Act.  PA Republicans voted for repeal while Democratic Representatives voted against.  Details: www.thomas.gov  Look up HR1173.

POLITICS AND REAPPORTIONMENT

The 2012 election season is or will soon be in disarray for state legislative candidates thanks to a PA Supreme Court January 25 ruling that invalidated Reapportionment Commission-drawn boundary lines for House and Senate districts.  It is uncertain as to what district lines will be used this election cycle since nominating petitions are already circulating based on the NEW district lines.  New congressional district lines are unaffected by the ruling.  In addition, special elections for unexpired terms for open House seats are at risk since constitutionally they would have had to have been in the new district boundaries, not the old.  Side note: in one of those districts former Rep. Chelsea Wagner (D-Allegheny) decided to resign her post in the General Assembly after all despite early indications to the contrary because the new district would have been a Lehigh Valley vote, not a Pittsburgh vote where her district had been before reapportionment.

Other state political news:

-          House Majority Leader Mike Turzai (R-Allegheny) will not run for Congress.  In that district, there is a hot contest between two Democratic incumbents, Mark Critz and Jason Altmire.

-          Senator John Pippy (R-Allegheny) has decided not to stand for re-election.

HEARING UPDATES

• The House Insurance Committee hearing on SB 338 (Vance-R-Cumberland) that was originally scheduled for January 26 was cancelled and is rescheduled for February 9.
• February 16 remains the date for a House Insurance Committee hearing on HB 717 (Matzie-D-Allegheny) that would establish a Consumer Advocate for Health Insurance based in the Department of Community & Economic Development.

NAHU CAPITOL CONFERENCE REPORT

The National Association of Health Underwriters (NAHU)’s annual Washington, DC Capitol Conference ended with major developments on insurance agents’ quest to have agent compensation removed from calculations of the Patient Protection Affordable Care Act (PPACA) Medical Loss Ratio (MLR).  First, congressional visits landed 11 more sponsors to HR 1206 as of 1/27/12 including two more from Pennsylvania, Republicans Glenn Thompson and Patrick Meehan.  This brings the PA sponsorship up to 12, a majority of the 19-person House delegation.  HR 1206 has 160 House sponsors.  Another development is the promise to introduce a similar bill in the Senate by Democratic Senator Mary Landrieu (LA).

HHS Director of the Center for Consumer Information and Insurance Oversight Steve Larsen stated that HHS would not consider exempting agent compensation from MLR.

Another presenter of note was Speaker of the House John Boehner (R-OH).  Coming the morning after the President’s State of the Union speech, Boehner said that President Obama had changed into the “Great Divider” which as a campaign theme does not help the country.  He also pointed to Senate inaction as an obstacle to constructive legislation since the House had passed 30 economic development bills, only three of which had been taken up by the Democratic-controlled U.S. Senate.

HOUSE COMMITTEE MOVES RBC BILL

On January 24, the House Insurance Committee moved House Bill 2134 (Micozzie-R-Delaware) to strengthen the Insurance Department’s tools in analyzing insurance company solvency.  It  provides a “trend test” to better gauge insurer solvency in the life and health market.  This legislation gives the Insurance Department an additional monitoring tool and helps the state maintain its NAIC accreditation as being equipped to evaluate company solvency.

REGULATORY UPDATE

• On January 28, the PA Bulletin published a list of eligible Surplus Lines Insurers.  This replaces in its entirety the list published on January 4, 2011.  Details: www.pabulletn.com
• Philadelphia-United Fire Insurance Company, a domestic stock property insurance company, has submitted an application for approval to surrender its Insurance Department Certificate of Authority.
• Per PA Compensation Rating Bureau Circular 1594 issued January 10, the U.S Department of Labor wants to transit away from hard copy submissions of form LS 570 from insurers reporting coverage under the Longshoreman and Harbor Workers Compensation Act.  This is not finalized.  Details: www.pcrb.com

INSURANCE DEPARTMENT TO HOLD BRIEFINGS ON EXCHANGE IN PA

Next week the PA Insurance Department is holding briefings on the Corbett Administration’s approach to establishing Health Insurance Exchanges in Pennsylvania.  Briefings will be held separately for legislative staffs and stakeholder groups such as PAHU and the PA Chamber.  Expected in the presentations will be an overview and background as well as discussing enabling legislation that might be proposed by the Administration.  This announcement comes on the heels of the Insurance Department’s seeking of $33 million implementation money from HHS, a move that evoked some controversy from conservatives who regarded it as a de facto endorsement of the Patient Protection Affordable Care Act (PPACA).  The counter to this was the argument that PA has until 1/1/13 to pass Exchange legislation or HHS will impose its version on the Commonwealth.

2011 ENFORCEMENT ACTIONS LISTED

On January 25, the PA Insurance Department reported that in 2011, it closed 334 enforcement actions and market conduct exams, issued 141 orders and adjudications, collected $900,000-plus in fines and recovered more than $3.2 million in restitution for consumers.  Some specific outcomes:

-          37 individual producer licenses were revoked or surrendered

-          57 licensees were placed on probation

-          16 waivers were granted from section 1033 of the Federal Violent Crimes Act which prohibits anyone with a criminal past from working in the insurance industry

Examples of what caused the department to take action were using unapproved insurance contracts, misappropriating insurance premium dollars, forging or altering signatures on applications, failing to disclose prior felony and misdemeanor convictions, selling unlicensed health plans, and lying on license applications or renewal forms.  Details: www.insurance.pa.gov .

ITEMS TO WATCH IN HARRISBURG…On January 20, Rep. Marguerite Quinn (R-Bucks) introduced House Bill 2135 which would permit electronics vendors to have a limited lines license to sell, solicit or negotiate coverage for portable electronic devices.  It follows House Bill 20 sponsored by Rep. Katherine Watson (R-Bucks) which would allow staff at self service storage units to sell, solicit and negotiate property policies for the storage unit contents.  Both representatives are members of the House insurance Committee.

SPARKS NOTE: The SPARKS Club is holding two seminars on disaster March 27 in Monroeville and March 28 in Grantville.  The class is pending Insurance Department approval for six credits and will focus on disaster strategies undertaken by agencies and their clients.  It will also examine endorsement language issues (E&O?) for earthquake, storms, flood, hail, etc.  Details: www.sparksclub.com