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Jan 2016
14
January 14, 2016

From the Capitol - January 2016

 
 
The Michigan Legislature is about to commence the 2016 session year. Before leaving 2015, the Legislature enacted many laws, some of which were very controversial, but left other issues such as consideration of a new energy policy and a mechanism for funding Medicaid until next year.
 
2016 is also an election year with the voters in Michigan not only faced with a choice for a new President, but all 14 members of Congress and 110 state representatives.
 
 
WAIVER FROM FEDS APPEARS TO SAVE THE HEALTHY MICHIGAN PLAN
 
In 2013 the Legislature passed its form of Medicaid expansion pursuant to the Affordable Care Act (ACA). The ACA states could decide to offer Medicaid health care to people with incomes of 100 percent to 133 percent of the federal poverty level. Enough Conservatives in the Legislature were willing to vote for the measure if the legislation required an investment by recipients. Included among those items were contributions by recipients toward premiums and copays, engaging with their primary care physician toward a plan to achieve better health and offering a series of wellness incentives which could ultimately reduce the cost of copays and premiums for the recipient. The statute required two waivers from the Centers for Medicare and Medicaid Services (CMS). The first waiver involved approval of a requirement for recipients to pay up to three percent of their income toward copays and premiums. This waiver was promptly granted by CMS shortly after the enactment of the state enabling legislation. 
 
It was the second waiver that caused the most angst for policy makers and many of the nearly 600,000 people who are now enrolled. The second wavier that needed to be granted by CMS was based on the statute’s requirement that recipients who had been with the program for 48 months or longer would have a choice of: (1) leaving the program and obtaining insurance through the federal health insurance exchange; or (2) remaining with the program but paying up to seven percent of their modified adjusted income toward premiums and/or copays. CMS had never granted a waiver involving recipient contribution of more than five percent of income. 
 
The statute gave the Department of Health and Human Services (DHHS) until September 1, 2015, to make the waiver request and for CMS to grant the request no later than the end of this year. Otherwise, the statute dictated that the program would come to a halt on April 1, 2016.  DHHS submitted the waiver application to CMS in the last week of August and on December 17, 2015, CMS informed DHHS that its application for a waiver had been granted subject to the “terms and conditions” of the wavier itself. DHHS officials said part of the deal was the mandatory requirement for recipients to participate in wellness programs which, at least in theory, will keep their costs below five percent of their adjusted income. DHHS officials and legislators are combing over the details of the terms and conditions, but for now at least, it looks as if the Healthy Michigan Plan will survive.
 
HEALTH INSURANCE CLAIMS ASSESSMENT (HICA) ON HOLD FOR NOW
 
How to fund the State’s Medicaid obligation has been a problem for this and previous Governors. The price tag is in the $400 million range with the federal government sending Michigan slightly more than twice that amount to fund the Program. Raising the money has always been a challenge and with more and more demands on the General Fund, it has now become a necessity. In order to find a sustaining revenue source, the Health Insurance Claims Assessment (HICA) legislation was enacted in 2011. HICA at that time was a one percent tax on most paid health care claims. The levy was anticipated to raise approximately $400 million, the amount of Michigan’s Medicaid match obligation. However, since its enactment, HICA revenue has chronically fallen short of what it was supposed to raise (anywhere from $120 to $150 million). In addition, in an effort to curb business opposition to the tax, a sunset date of December 31, 2017, was placed on the legislation. To compound matters, CMS has informed Michigan and other states that a major source of revenue for the Medicaid program can no longer be used. Michigan imposed a six percent use tax on certain Medicaid providers and CMS has ruled that this only amounts to the use of mostly federal dollars to draw down more federal dollars. In essence, CMS views it as a tax on a tax. 
 
Then there was the Legislature, dedicating what would eventually be $600 million for years beginning in 2021 toward road and infrastructure improvement. Something had to give, and that something was a bill to extend HICA until the end of 2025 and go back to the one percent assessment instead of the current 0.75 percent, which it has been for two years. HB 5105 sponsored by Appropriations Committee Chair Al Pscholka (R-Stevensville) was seen as a necessary alternative to the General Fund for Medicaid funding. The bill sailed through the House in a week’s time and it seemed destined to land on the Governor’s desk by Christmas, however, a funny thing happened to the bill on the way to the Governor. The Michigan Chamber and other business interests became much more vocal in their opposition. Republican Senators became sensitive to the business community’s opposition, but also didn’t like that they were being asked to take a difficult vote twice, with the first vote occurring nearly five years ago. The only reason they had to take a second vote is that revenue estimates were greatly exaggerated. When the Legislature broke for the year, the bill was on the Senate Floor awaiting action. Look for the Senate to consider the bill, most likely in February.
 
FLINT WATER CRISIS LEADS TO RESIGNATIONS
 
While the City of Flint was under emergency management in 2014, the city switched its water supply from the Detroit water system to the Flint River. This switch in water supply and the decision not to require corrosion control treatment for aging pipes led to the contamination of Flint water. So says the Flint River Advisory Task Force. The Task Force, which had been appointed by Governor Snyder in October to investigate the matter, specifically blamed the Michigan Department of Environmental Quality (DEQ) for insufficient regulation which led to increased lead levels in the water supply. Another study has also found increased lead levels in children’s blood since the switch. This finding by the Task Force was immediately followed by the resignation of the DEQ Director and the DEQ Communications Director and an apology from the Governor to the people of Flint. The Governor has declared a state of emergency which could lead to federal financial assistance for a problem that may cost as much as $1.5 billion to rectify.
 
EFFORTS TO REVAMP SCOPE OF PRACTICE MEET WITH LITTLE SUCCESS – SO FAR
 
Numerous bills were introduced last year affecting the scope of practice of health care professionals. Perhaps none drew more attention than SB 68. As introduced, SB 68 allowed Advanced Practice Registered Nurses (APRNs) to practice independent of a physician’s supervision. Moreover, APRNs (nurse practitioners, nurse midwives and clinical nurses) could engage in several aspects of the practice of medicine, including issuing prescriptions, conducting and interpreting diagnostic tests such as all forms of imaging and reaching a diagnosis. APRNs and their allies argue that granting them independence from physician supervision would address the critical need for primary care in the state. Physicians argued that the bill compromised the quality of care by requiring a medical degree for nurses. In the end, the bill was altered to the extent that even the APRNs opposed it. The bill remains in the Senate where no further action is expected.
 
Another effort at scope expansion, or scope creep, can be found in SB 320. The bill allows certified nurse anesthetists (CRNAs) to engage in specific anesthesia and analgesia services including the development and implementation of a plan of care and the prescription of drugs and chronic pain management services. Due to significant opposition from the physician community, the bill remains in its first House committee, the Senate Health Policy Committee.  Yet another scope of practice bill involves nurse midwives. HB 4598 would establish licensing criteria for nurse midwives and also a scope of practice which would include providing maternity care that is consistent with a midwife’s training, education and experience to women and neonates during the antepartum, intrapartum and postpartum periods. Unlike the other practice bills, HB 4598 has already moved through the House and is now with the Senate Health Policy Committee.
 
TELEMEDICINE AND MULTISTATE LICENSURE
 
Two bills introduced this past fall create the “Interstate Medical Licensure Compact” whose member states would allow a streamlined process for physicians to be licensed in multiple states. The Compact, it is argued, will allow physicians to still work within their scope of practice, but in jurisdictions adopting the Compact. It is also argued by advocates for the Compact, that telemedicine technologies such as store-and-forward imaging, video conferencing and phone and wireless communications make it easier for physicians to practice medicine without boundaries.1 HB 4582 and 4583 are now on the House floor and should get action from the full House early in 2016.
 
BIOSIMILAR DRUG SUBSTITUTION
 
Two competing bills that allow for interchangeable biosimilar substitution were considered by the Legislature. HBs 4437 and 4812 are very similar. However, HB 4812 requires a pharmacist to notify the prescribing physician of the substitution within five days of its occurrence. Opponents of the provision argue it is totally unnecessary, act to chill substitution, and is only inserted to place a roadblock in front of biosimilar substitution, thus helping drug companies with existing, more expensive drugs. Proponents of the notification argue a prescribing physician needs to know what is going on with his/her patient. Ultimately, the House approved the notification provision (HB 4812) and sent it on to the Senate where it is now with that Chamber’s Health Policy Committee. Action is expected early in the year on this legislation.
 
AN ATTEMPT AT REGULATING MARIJUANA
 
This fall, the House of Representatives passed and sent to the Senate legislation providing comprehensive regulation of marijuana use.  HB 4209 creates the Medical Marihuana Facilities Licensing Act which establishes a licensing and regulatory system for medical marijuana growers, processors, transporters and compliance centers. The regulatory aspect of the bill is patterned after those which are in place for alcohol and gaming.2 HB 4827 creates the Marihuana Tracking Act. The bill requires the establishment of a tracking system for marijuana growth, processing, transferring, storage and disposal.
 
Significant portions of the legislation include:
  • A requirement for an annual state operating license for growers, processors, transporters and compliance facilities.
  • Allowing local governments to enact ordinances to limit the number of facilities within a community.
  • Creating a Medical Marihuana Licensing Board within the Department of Licensing and Regulatory Affairs to implement the legislation.
  • Imposing a tax rate of eight percent of the purchase price on the gross receipts of the provisioning center.
  • Requiring the tracking of lot and batch information throughout the chain of custody.3
Backers of the legislation believe it is important to regulate marijuana use rather than try to ban it, especially since the voters approved of its use for medical purposes in 2008. Many law enforcement officials believe this regulatory legislation merely leads to the further use of marijuana. There is also an effort to bypass the Legislature and have voters enact a law. The language for “no fewer than three separate ballot questions” has already been approved by the State Board of Canvassers. 
 
One proposal is an initiated law to create the Michigan Cannabis Control and Revenue Act which would allow for the lawful possession of marijuana by anyone 21 years or older, to permit its taxation and to permit the legislature to require licensing of commercial marijuana facilities by establishing a Cannabis Control Board.4 Another proposed initiated law would create the Michigan Marihuana Legalization, Regulation and Economic Stimulus Act to allow the regulation of cultivation, production, testing and sale and to authorize an excise tax on transfers and to authorize local government limited regulatory powers.5 A third proposal would amend the state constitution to make the use of the cannabis plant lawful and allow for agricultural, personal, recreational, medicinal, industrial and commercial use. Moreover, it would prohibit the taxation or regulation of cannabis.6 The two initiative proposals will require far fewer petition signatures than the proposal to amend the Constitution because an initiative proposal only requires the valid signatures of eight percent or more electors who voted for the Governor in the election7 while a Constitutional Amendment requires 10 percent or more.8
 
MEDICAID CONTRACTS AWARDED
 
While not a legislative issue, one of the biggest matters in Lansing this year is the timing of the Request for Proposals and the award decision on the Medicaid health plan contracts with the State. The contract, otherwise known as the Medicaid rebid, involves over $4 billion annually for those awarded contracts to serve 10 different regions in the State. The duration of the contracts will be at least four years and as many as seven years, depending upon the number of extensions exercised by the State. Bids were submitted at the beginning of September and the decision was made in November. The effective date was scheduled for January 1. 
 
As part of the new contract, the Department of Health and Human Services required health plans to institute a consensus drug formulary. Health plan formularies can be less restrictive, but not more restrictive than the developed “common formulary.” 
 
DRUGS APPROVED FOR MEDICAID DRUG FORMULARY
 
A growing concern for the State, health plans, pharmacists and consumers is the high cost of “specialty drugs.” Specialty drugs are disease or condition specific and require a certain amount of special care and handling. As a general rule, they are extremely expensive and have a short shelf life.
 
Two of those drugs, Sovaldi and Harvoni, used for the care of hepatitis C, are no exception, costing in the neighborhood of $100,000 for a three month regimen.9 The cost places an extreme strain on the budgets of the Department of Health and Human Services and the Department of Corrections. Nevertheless, the State must place these and others on its formulary if they are proven to be effective. In December the Pharmacy and Therapeutics Committee within the Department of Health and Human Services recommended these two drugs be added to the Medicaid drug formulary and thus eligible for reimbursement. The committee can only recommend coverage, but while the Department decides, all indications are it will follow its Committee’s recommendation.
 
 
A NEW ENERGY POLICY?
 
Last summer the Environmental Protection Agency (EPA) promulgated new rules aimed at reducing carbon (mostly coal) emissions from power plants. The fact that the rules were coming did not take industry or governments by surprise as they had been in the making for some time. The new standards, known as the Clean Power Plan, were developed under the Clean Air Act. The Clean Power Plan establishes state-by-state goals for carbon emission reduction. The goal as set by the EPA is to reduce national electricity sector emissions by over 30 percent   from 2005 levels by 2030.10 The federal plan gives states a number of options to cut carbon emissions, including use of natural gas and renewable energy, energy efficiency policies and nuclear power.11 The goals for each state depend on the extent to which a state can use the options. States must submit a final plan or an initial plan with a request for an extension by September 6, 2016.12 The EPA may grant extensions of up to two years. Twenty Four states are challenging this rule, including Michigan, alleging the EPA went far beyond the authority Congress gave it by requiring states to transform the way they generate electricity.13
 
Meantime, in response to the need to develop and submit a state plan by September, the Chairs of both the House and Senate Energy Policy Committees introduced legislation to address the federal mandate. Representative Aric Nesbitt (R-Lawton) introduced HB 4297, 4298 and 4299. HB 4297 amends the Clean, Renewable and Efficient Energy Act. This bill went through many changes before it was reported from the Committee to the House Floor. The full House now must decide on a bill which, among other things:
  • Repeals references and provisions pertaining to energy optimization as of January 1, 2019, or January 1, 2020.
  • Allows fuel manufactured from municipal solid waste to be a “renewable energy source” and revises the definition of that term.
  • Creates Part 7 to allow electric and natural gas providers to establish programs by which their customers may obtain loans for energy projects.
  • Allows for the use of pyrolysis in the generation of new energy. Pyrolysis is a high temperature, oxygen free process to make biofuels from a wide range of industrial and municipal solid waste.14
HB 4298 amends the Act regulating utilities and would, among other things:
  • Keep the current level of customer choice but require those who once reject an alternative energy supplier to be placed on a waiting list for 20 years.
  • Add a new section requiring development of statewide assumptions for integrated resources plans (IRP).
  • Require the Michigan Public Service Commission (PSC) to approve the best IRP with a stated goal of not less than 30 percent of electric energy needs to be met through a combination of energy waste reduction and renewable energy by 2025.
  • Require five year resource adequacy assessments by electricity providers regarding expected peak demand, reserves and capacity.
  • Allow a three year contract for meeting capacity needs.
  • Reduce the time from 12 months to 10 months in which the PSC can reach a decision on a rate change request.
  • Lower the threshold from $500 million to $100 million for electric utility projects in order to trigger the necessity of a certificate of necessity application.
  • Require that all customers of an electric utility have access to utility service from an alternative energy source before the electric utility discontinues service to its members.
  • Allow energy optimization programs for K-12 schools, community colleges and universities to achieve cost savings.15
Like HB 4297, HB 4298 is now on the House Floor awaiting action by the full Chamber.
 
The Senate’s alternative to the House version is sponsored by Senator Mike Nofs (R-Battle Creek) and is SB 437. The bill amends the PSC law and does the following, among other things:
  • Requires the PSC to decide on a utility’s rate application within 10 months of the date the application is filed, or it will be considered approved.
  • Requires an electric utility’s five year forecast to include a power supply cost recovery clause to show that the utility had adequate resources to meet a required reserve margin.
  • Mandate that each utility regulated by the PSC file an IRP within two years after the bill takes effect.
  • Requires the PSC to establish statewide parameters for IRPs every four years.
  • Requires AES customers to notify the electric utility that provides the customer’s distribution services whether the customer intends to remain with the AES or return to the utility.
  • Requires the PSC to revoke the license of an AES that was unable to make the required demonstration of sufficient generating capacity and bar the AES from providing capacity for three years.
  • Requires the PSC to establish a planning reserve margin for all customer electric loads served by an AES.16
SB 437 has remained in its first Committee, but Senate leadership has made it clear that the enactment of an energy policy is one of its highest priorities. It looks as though the final product will be a combination of both the House and Senate plans.
 
 
NO MORE STRAIGHT-TICKET VOTING
 
Early last year, SB 13 was introduced. The bill amends the election laws and eliminates a voter’s ability to cast a straight ticket or a split ticket in the partisan section of the general election ballot. General election ballots in Michigan have three sections: a partisan section, where candidates are affiliated with a political party; the nonpartisan section, which includes candidates for judgeships, school boards and certain local elections; and a state and local ballot section. Straight-ticket voting allows voters to cast their votes for candidates of one political party by making a single selection for the partisan ballot. Split ticket voting allows voters to vote a straight ticket as well as select individual candidates from a different political party for particular offices.
 
According to the bill, the ballot instructions for the partisan section only allow voters to vote a “mixed-ticket,” voting for each and every candidate of their choice for each office.  Finally, the bill has a $5 million appropriation tied to its implementation.
 
Supporters of the bill argue that voters who only vote straight ticket often neglect the nonpartisan and ballot question portions. Removing the straight-party voting option, it is argued, will help voters complete their ballots. Opponents argue that eliminating straight-ticket voting will cause confusion and longer lines at polling places. Waiting in long lines will decrease the voter’s attention at the end of the ticket rather than enhance it. Opponents also point out that on two previous occasions voters have rejected by way of referendum, attempts by the legislature to eliminate straight-party voting. Only this bill contains an appropriation, which would prevent the people of exercising the right of referendum. In the end, the Republican Majorities in both Houses prevailed. The bill was enacted and signed by the Governor on January 5.
 
CAMPAIGN FINANCE: FUNNY THING HAPPENED ON THE WAY TO ENACTMENT
 
Just prior to leaving for the year, the Legislature considered SB 571. The bill made amendments to Michigan’s Campaign Finance Act, allowing a “connected organization” to collect funds intended for its separate segregated fund (SSF) and then subsequently transmits the money to its SSF. Existing law allows an organization, such as a corporation, to form an SSF solely for political purposes. Under the bill, a “connected organization,” one that forms an SSF, can collect funds on behalf of the SSF as long as it fulfills recording and reporting requirements, specifically: 
  • The individual making the contribution must either specifically indicate which portion of the contribution is intended for the SSF, or remit a written instrument specifying what part of the contribution is intended for the SSF.
  • The connected organization must transmit the entire amount of the contribution, individually or aggregated with other contributions to the SSF.
  • The transmission must be accompanied by or associated with a record or electronic recording disclosing all the information required by the Campaign Finance Act.
  • The connected organization must internally account for a contribution that distinguishes it from general treasury funds and disclose other information about the individual contributor.
However, the bill changed significantly as it wended its way through the process. All of the substance regarding SSFs and controlling entities was retained, but a third House Substitute changed a 12-page bill into a 53-page bill adding a single paragraph that bans local governments from spending public funds on TV ads, mailers or phone messages about local ballot proposals 60 days before an election. This new Substitute narrowly passed in the House (58-38) and was approved in the Senate (25-12-1) after not receiving one negative vote in that Chamber for the original bill.
 
Local officials almost immediately urged the Governor to veto the bill, saying the 60 day ban was overbroad and would prevent them from even discussing critical ballot questions affecting their cities, counties and school districts. The enrolled bill was officially presented to the Governor for his signature on December 28. As local government officials complained more and urged the Governor to veto the bill, several legislators, specifically House members who voted for the bill as substituted, said they were not aware of the new language gaging local governments. Consequently, some at year’s end were suggesting a new law should be enacted to soften and clarify the gag language if the Governor signs the bill into law. Nevertheless, on January 6, the Governor signed the bill and opponents immediately vowed to seek its repeal yet this session.
 
 
GOVERNOR SEEKING RESTRUCTURING OF DETROIT PUBLIC SCHOOLS
 
The Detroit Public School system now faces a debt of approximately $700 million. The reasons include a declining student population (less state aid), aging and crumbling infrastructure, a citywide declining tax base and mismanagement. A collapse of the Detroit system would greatly affect all school districts in Michigan, as the State is constitutionally responsible to cover many debts of localities. Earlier this year, Governor Snyder put forth a plan to restructure the school system. He received input from community leaders, educators and Mayor Mike Duggan. The proposal includes:
  • Creation of a new public school district known as the “Detroit Community School System” with the current Detroit Public School District existing only to address debt. All assets would move to the new district which would be governed by a seven person board appointed by the Governor and Mayor.
  • Creation of a Detroit Education Commission which would hire a chief education officer.
  • Allowing the Chief Education Officer to hold low performing schools accountable and reward high performing schools.
  • Enabling the Chief Education Officer and the commission to partner with Detroit’s Financial Review Condition to oversee finances until the debt is paid in full.17
Even this proposal will require State assistance so that existing debt can be addressed while keeping the school doors open. This is one of the major issues facing the Legislature in 2016, but where will the money come from to stave off the debt? That’s the question lawmakers will ponder.
 
  • When all is said and done, the Legislature will, in some way, shape, form or extend the HICA.
  • Look for a legislative push to remedy a provision regarding the recently promulgated Residential Building Code which excludes arc fault circuit interrupters (AFCIs) in new home construction. If the rules remain, Michigan would become only the second state in the country not to require AFCIs for new residential construction in at least one circuit of the residence.
  • Look for one more push for some form of auto no-fault insurance revision.  However, this probably won’t occur until after the November general election.
  • Like auto no-fault, if there is any attempt to repeal Michigan’s prevailing wage statute, it will not, in all likelihood, occur until after the November election.
  • Look for an effort of repeal or partial repeal of the certificate of need statute that dictates nearly all the state’s major health care spending.
 

1 Legislative Analysis, House Bill 4582, House Bill 4583 (reported from committee as H-2), December 4, 2015 House Fiscal Agency, http://www.legisalture.mi.gov
2 Legislative Analysis, House bill 4209 (passed by the House as H-5, January 4, 2016, House Fiscal Agency, http://www.legislature.mi.gov
3 Ibid
4 State of Michigan Statewide Ballot Proposals, Status and Full Text, November 8, 2016, Michigan Secretary of State, www.mi.gov.documents/sos/petition_-_MI_Cannibus_Coalition_5491724_7pdf
5 Ibid.  Petition_-_MI_Comprehensive_Cannibus_Law_Reform_Cmte_Verdana_491725_7.pdf        
6 Ibid.  Petition_-_Abrogate_Prohibition_MI_509578_7.pdf
7 Const. 1963, art II, sec 9
8 Ibid.  art XII, sec 2
9 “Sovaldi, Harvoni, And Why Its Different This Time” Health Affairs Blog, Laura Fegraus and Murray Ross November 21, 2014; http://healthaffairs.org/blog/2014/11/21/sovaldi_harvoni_and_why_its_different_this _time/
10 “The Clean Power Plan: A Climate Game Changer” Union of Concerned Scientists; http://www.ucusa.org/our_work/global_warning/reduce-emissions/what_is_the_clean_power_plan#.VpUhmKE66UK
11 Ibid
12 Ibid
13 “Two dozen states sue Obama over coal plant emissions rule”; The Hill, Timothy Cama, October 23, 2015; http://thehill.com/policy/energy-environment/257856-24-states_coal_company_sue_obama_over_climate_rule
14 Legislative Analysis, House Bill 4297 (reported from committee as H-3) December 10, 2015, House fiscal Agency;http://www.legislature.mi.gov/documents/2015-2016/billanalysis/house/pdf/2015-HLA-4297-D6568120.pdf
15 Legislative Analysis, House bill 4298 (reported from committee as H-9), December 8, 2015, House Fiscal Agency;http://www.legislature.mi.gov/documents/2015-2016/billanalysis/house/pdf/2015-HLA-4298-E46ADFCC.pdf
16 Legislative Analysis, Senate Bill 437 (Substitute S-1), September 30, 2105, Senate Fiscal Agency; http://billanalysis/senate/pdf/2015-SFA-0437-S.pdf
17 “The Plan For Detroit Schools” Governor Rick Snyder, October 19,2 015; http://www.michigan.gov/snyder/0.4668.7-277-57577_60279_353475--.00.htm

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