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Apr 2012
13
April 13, 2012

From The Capitol - April 2012


As the Legislature is winding up its spring break, House and Senate members are well on their way to passing a state budget for the 2012-2013 fiscal year.  Nearly all the budgets have been reported from their subcommittees to either the full House or Senate Appropriations Committee.  The goal here is to have the budget completed by June 1. Much of what the final product will look like will be based on the spring Revenue Estimating Conference scheduled in May. Meantime, many line item appropriations, especially in the Department of Community Health (DCH) and Department of Human Services (DHS) budgets, have only a $100 “placeholder” figure until legislative and administration leaders figure out what they can expect in the way of revenue.

This being an election year with all nonterm limited members up for reelection, look for the Legislature to recess for the summer by mid-June so lawmakers can hit the campaign trail.

While not as active as last year’s record-setting pace, the Legislature has been busy on a number of key initiatives.
 
HEALTH CARE

Autism

After coming up short for the past two legislative sessions, backers of mandatory insurance coverage for autism finally got lawmakers to agree to require such coverage. SB 414, 415 and 981 are on their way to the Governor after an attempt by the Republican Majority to ease the pain of the mandate’s implementation through amendments and the creation of a special fund to reimburse (at least initially) insurers for the coverage. The Governor’s office has arranged for a bill-signing ceremony for April 18.

Health Care Exchange

After Senate passage of SB 693, the bill creating a health care exchange in Michigan, the House Health Policy Committee held a number of hearings even though it was understood no action would be taken on the matter until the U.S. Supreme Court renders a decision on the constitutionality of the Affordable Care Act (ACA).  It is the ACA which mandates the creation of a health care exchange and most House Republicans don’t want to even entertain the thought of implementing the ACA until the expected June decision by the Supreme Court. Besides, by June the filing deadline for candidates for the House (including Tea Party primary candidates) will have passed.

Curbing Fraud and Abuse

House Bill 4369 was recently signed into law (now Public Act 44 of 2011).  It allows health plans with permission from the DCH Director to access the Michigan Automated Pharmacy Service (MAPS) for certain dispensed controlled substances.

Pharmaceuticals

Two bills that may yet receive attention are HBs 4733 and 4757. These bills revise and standardize prior authorization forms and procedure.  Nearly a year ago these bills were substituted to create a procedure and bureaucracy for prior authorization requirements for drugs not on the Medicaid preferred drug list. The bills lost momentum when even DCH opposed them as written.

Once again, Democrats have introduced bills repealing the so-called “FDA Defense” pharmaceutical companies currently enjoy.  Michigan is the only state that provides a complete defense to a product liability action if it can be shown that FDA approval of the drug in question was properly obtained and without fraud.

Senate Bills 429 (S-1) and 430, which just passed the Senate, amend the Insurance Code to require the Commissioner of the Office of Financial and Insurance Regulation (OFIR) to develop a standard prior authorization methodology.  The bill also requires the appointment of a workgroup to assist in the development of the methodology to:
  • require an insurer to use the standard methodology by July 1, 2014; and,
  • provide that an expedited request would be considered granted if the insurer failed to grant or deny it within 72 hours.
The bill is now with the House Committee on Insurance.
 
Senate Bill 479 prohibits the interchanging of an anticonvulsant drug without notification and consent from the patient and doctor, remains in the Senate Health Policy Committee.  There is considerable pressure to give this bill a hearing even though the bill sponsor is a member of the Minority (Democratic) Party.

Senate Bills 540 and 541 would require equal reimbursement for oral chemotherapy with that of intravenous medicines.  This legislation has really been pushed hard by patient groups and pharmaceutical companies that manufacture oral medications.  The bills sailed through the Senate, but are now getting considerable push back from health insurers and self insurers to the point where passage in the House is now in doubt.

Legislation calling for the proper disposal of unused pharmaceuticals has not made it past its first House Committee.

House Bill 5131 now has traction.  The bill allows a prescription contained in a person’s medical chart in a health facility to be transmitted to a pharmacy.  The bill has passed the House, been reported from the Senate Health Policy Committee and is now on the Senate floor.

Occupations
 
Senate Bill 481 and House Bill 4774 would expand the scope of practice for specialty nurses known as “advanced practice nurses.”  Physicians are willing to work with the nurses on this legislation but, as written, physicians believe the scope is overbroad.  The bills remain in their first House Committee.

Legislation which licenses “pharmacy technicians” may soon be seeing the light of day.  Senate Bill 591 was introduced in September 2011 and has stayed in the Senate Regulatory Reform Committee ever since.  There is talk of trying to move the bill to the full Senate this spring.

Late last year, Senate Bill 804 was introduced and referred to the Senate Committee on Health Policy.  It requires licensure and regulation for clinical psychotherapists. There is still no talk of advancing this bill.

It’s been over 9 months since the introduction of legislation mandating the licensure of genetic counselorsHouse Bill 4756 was referred to the House Health Policy Committee where it has stayed.
 

Both House and Senate Subcommittees for the Department of Community Health (DCH) have reported budgets to their full Appropriations Committee.  Several line items were stripped from current funding levels and were given a $100 placeholder until the May Revenue Conference gives a better picture of state income for this coming fiscal year. Senate leadership anticipates budgets to be completed by Memorial Day.

Back in November 2010 in the waning days of the Granholm Administration, DCH was awarded a grant to submit a proposal to the Center for Medicare and Medicaid Services (CMS) on the integration of those eligible for Medicare and Medicaid services into managed care.  Those who are eligible for Medicare and Medicaid are often referred to as “dual eligibles.”  They number approximately 220,000 in Michigan.  However, this population consists of the elderly with chronic and serious conditions along with the developmentally and behaviorally disabled.  It is a very expensive population costing approximately $8 billion.  Health Plans have long advocated integrating this group into managed care as a way to provide quality care while still saving the state money.  Last year, DCH held a series of workshops attended by providers, health plans and the dually eligible population.  Last month, DCH made its proposal public.  The proposal is a bifurcated plan with a behavioral and physical component.  Critics of the proposal say it is not true integration and runs contrary to the CMS grant criteria.  DCH will submit the proposal to CMS late this month.  If approved, the plan is expected to be implemented by July 1.
 
TAXATION AND BUSINESS
Senate Bill 930 requires digital stamping of packs of cigarettes and appropriates $6 million for tobacco enforcement measures.  What it also does is classify those people who roll their own cigarettes for their own use with the help of cigarette rolling machines as manufacturers.  The same classification of “manufacturer” would be placed on retailers who own a cigarette making machine and allow others to use it.  This “unique” interpretation of what constitutes a manufacturer will, if enacted, close several businesses around the state and cost the jobs of over 200 people. One of the reasons enactment of the bill will put these retailers out of business is, it is currently impossible to obtain a manufacturer’s permit due to a federal court injunction prohibiting the federal government from doing so.  In 2011, the Michigan Department of Treasury attempted to treat people who own a roll your own cigarette machine as manufacturers, even though it is the customer who rolls his/her own cigarette.  Warner attorneys successfully obtained an injunction against the Department of Treasury from enforcing its “manufacturer edict.”  A trial is set for July.  Stymied in court, those who oppose the Roll Your Own folks are seeking to classify them as manufacturers through legislation.  Senate Bill 930 was introduced on February 7, given a hearing on February 8 and was jammed out of the Senate on February 22.  Even though being somewhat more deliberate, the House has reported it from Committee to the Floor.  Negotiations continue with House leadership in an effort to reach some sort of compromise which will allow retailers to stay in business.

Personal Property Tax


As soon as lawmakers return, the Senate plans on considering legislation which will phase out the tax on industrial property.  The plan is to introduce the 8-bill package on April 17 and begin hearings before the Senate Finance Committee the very next day.  Talk of repealing the “PPT” has been going on for years and has intensified this legislative session due to the large GOP majorities in both Houses.  On the other hand, local governments have become dependent upon the tax to the tune of hundreds of millions of dollars annually.  The “locals” don’t care where the money comes from, whether it be from the tax or some other source, but they do want it and want it guaranteed.  In fact, local governments are insisting that any replacement revenue be etched into the state constitution.  Legislators oppose this demand because the PPT is not guaranteed to the locals in the constitution now.  Instead, state savings from last year’s elimination of numerous tax credits can be used to offset any loss in local revenue.  Look for a series of hearings through the spring with the package passing the Senate and sent to the House by summer recess.

UCC Upgrades Are Now Law

Governor Rick Snyder has signed into law revisions to Michigan’s Uniform Commercial Code (UCC) which revise definitions, recognize electronic documents of title and revise financing statements.  Public Acts 86, 87 and 88 of 2012 should help Michigan’s budding logistics industry.  Warner attorney/lobbyists were actively involved in passage of the legislation.
 

Public Act 4 of 2011 gives the Governor and State Treasurer more authority to appoint an emergency manager who in turn would have extensive authority to see a municipality or school district through a financial crisis.  In fact, Public Act 4 grants an emergency manager the ability to virtually run the entity and to alter collective bargaining agreements.  As might be imagined, public employee unions do not like the measure and commenced a petition drive calling for a referendum on the law pursuant to the Michigan Constitution.

Meantime, the City of Detroit was, by May of this year, looking at running out of money, causing payless paydays for its employees and creditors left “holding the bag” on accounts due.  As called for by Public Act 4, the Governor appointed a Review Team late last year.  It is the Review Team’s statutory obligation to look at the City’s finances and determine one of the following:
  • The City’s financial situation is not in crisis;
  • The City’s financial situation is in crisis and a Consent Agreement has be entered into; or,
  • The City’s financial situation is in crisis and an emergency manager should be appointed by the Governor.
In late March, the City and the Review Team agreed to enter into a Consent Agreement.  Some of the highlights include:
  • Discussion of transfer of ownership of the State Fairgrounds to the State Land Bank in the hope of spurring development.
  • The state maintaining Belle Isle Park while still in City control.
  • Additional state troopers to patrol the City streets.
  • Creation of a new authority to pay for and maintain public lighting, now so woefully lacking in the City.
  • Creation by the Legislature of a regional bus service.
  • Renovation of the Eastern Market.
  • Moving ahead with the New International Trade Crossing project.
In return for the state’s commitment, the Agreement, while allowing City officials to remain in authority, places budgeting in the control of a 9-member financial advisory board.  It also releases the City’s ability to bargain with public employee unions.  Moreover, the City must meet monthly budget requirements.

Simultaneously with the Review Team negotiating the Consent Agreement, public employee unions were gathering signatures for a referendum on Public Act 4.  They were so effective that they gathered more than 60,000 over the threshold amount to call for a referendum on the law.  The Board of Canvassers must meet later this month to certify the petitions so the issue can go to the ballot.

So what?  So what if the question is certified for the ballot?  Well, the Michigan Constitution says PA 4 will be suspended and cannot be enforced until the people decide.  Thus, some would argue, the Consent Agreement entered into by the City of Detroit and the Review Team would also be subject to question because it was negotiated pursuant to a law that would be suspended.  However, others argue the Consent Agreement can stand on its own as a legally enforceable document and executed pursuant to other statutes. Nevertheless, if PA 4 is "suspended," there are those who will argue the fate of the Consent Agreement may be in doubt.

Just prior to certification, a newly created group challenged the petition itself, saying it was not of the proper font type for circulation.  A technical legal question to be sure, but one that has to be addressed.  This is yet another legal roadblock that will have to be hurdled by proponents of the referendum.  Stay tuned.

The Michigan Constitution requires a two-thirds majority of both Houses in order for any enactment to have immediate effect.  Otherwise, the law does not become effective until 90 days after sine die adjournment.

For years, the majority party in the Legislature has threatened to use this tactic in order to thwart the majority’s will.  What has occurred in the House of Representatives is the “quick gavel,” whereby immediate effect is granted at the call of the chair and members of the minority party who seek to be recognized to move for a record roll call vote on the question are simply ignored by the Chair.  It has been a gripe of both Republicans and Democrats when they have been in the minority.

Recently, House Democrats put their motion for a record roll call vote for immediate effect in writing and submitted it to the Clerk of the House.  The House Democrats’ aim was to delay the effective date of a bill that would prevent University of Michigan graduate assistants from forming or joining a union.  Predictably, the majority Republicans ignored the written motion, granted immediate effect to the bill and sent it to the Senate.  The House Democratic Caucus then voted to commence a legal action in circuit court to negate the immediate effect status for the bill and to enjoin the Republicans from ignoring Democrats’ written motion for a record roll call vote on the issue.  The court agreed with the Democrats’ position that not granting a written request for a record roll call vote violated the constitution and the immediate effect given by the House to the graduate assistant bill was not effective.

This week, the Michigan Court of Appeals, while retaining jurisdiction, lifted the injunction gained by the Democrats in the lower court and reinstated the immediate effect given to the bill by the House.  By bringing the matter to the court, the Democrats have hurt any chances they may previously have had of getting legislation even considered by the majority Republicans.  Moreover, courts are very reluctant to delve into the internal workings of a separate branch of government.  At least for now, if the Democrats want more influence on policy it would behoove them to win a few more seats in the House this fall.

ON THE HORIZON
  • Legislation requiring protocols for pharmacy benefit managers when auditing pharmacies will soon be introduced.
  • Look for the House Democrats to eventually lose their legal fight over immediate effect.
  • Repeal of the Personal Property Tax (PPT) will be a sticky issue for House Republicans to handle before the election.  Repeal could wait until lame duck.
  • The budget will be completed by June 1 with some funding for graduate medical education and disproportionate share hospital payments.
  • Many of the state’s obligations under the recently signed Consent Agreement with the City of Detroit will be difficult to get enacted through the House prior to Election Day.
  • A close race is shaping up between incumbent Republican Congressman Dan Benishek and Democratic challenger and former state representative Gary McDowell for Michigan’s 1st District congressional seat.  Some polls show McDowell with a slight lead.  You can expect both political parties and Super PACs like Club For Growth to spend an enormous amount in this race.

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