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Jul 2013
15
July 15, 2013

From the Capitol - July 2013


After passing a budget for fiscal year 2013-2014 and before recessing for the summer, state legislators made an effort to pass legislation calling for Medicaid reform/expansion and worked to revise taxes and fees for road funding and infrastructure improvements. Here's a recap of the Legislature's activity so far this year and a peek at what might come next.
 
HEALTH CARE

Senate deliberations continue on whether or not to allow those with incomes up to 133% of the federal poverty level (FPL) to qualify for Medicaid. Under the Affordable Care Act (ACA) states are required to expand their Medicaid programs to include this population. However, in upholding the constitutionality of the ACA last year, the U.S. Supreme Court ruled that the federal government could not force states to expand their Medicaid programs.

In February, Governor Snyder urged the Legislature to adopt Medicaid expansion because he was convinced it would lead to a healthier Michigan and save hundreds of millions of dollars in uncompensated care. House and Senate Republicans were initially cool to the idea, but House Bill 4714 eventually was introduced. It said expansion would occur only if:
 
  • Able-bodied adults were allowed to stay on the program no longer than 48 months
  • The federal government paid the entire amount of the cost
  • Recipients be given a choice of Medicaid coverage or coverage from a private insurer
  • Recipients be allowed to establish health savings accounts to pay for coverage
  • Incentives for the personal responsibility for one’s own health and wellness were built into the program
The bill was amended to remove the 48-month limitation and soften the requirement that the program end when federal money could no longer fully fund it. After a number of hearings, the House’s Michigan Competitiveness Committee voted to send it to the full House where it passed on a bipartisan vote of 76-31.

The Senate received the bill with just days left before the scheduled summer recess. Like the House GOP, Senate Republicans have a policy that no bill will receive a vote unless a majority of the Caucus will vote “yes.” Despite intense lobbying from the Snyder Administration, business groups and health care providers on one side and members of the Tea Party on the other, no one really changed their minds. The Republican head count stayed at 8, possibly 9, well short of the 13 or 14 GOP senators needed in order to advance the bill. Seeing that there were not enough Republican votes (even though the bill would have passed because 12 Democrats would have voted for it), the Senate “virtually adjourned” for the summer. Governor Snyder called for the Senate to come back into session and take a vote on the legislation rather than go on vacation.

In a recent development, Senate Majority Leader Randy Richardville (R-Monroe) has appointed 6 GOP senators to a Senate task force to find the winning combination that will secure the votes of at least 13 Republican senators. Two Democratic senators also were appointed to the task force, but the GOP still controls this show. The Senate is scheduled to meet a few times in July and August, but don’t expect an immediate response.

DCH Budget

Since the jury is still out on Medicaid expansion, that anticipated federal revenue was not included in the Department of Community Health (DCH) budget. However, Medicaid health plans received a 2.5% provider rate increase in order to meet the actuarial soundness requirement. In addition, appropriations for graduate medical education were kept at current levels, even though the Governor recommended eliminating this funding.

Assessing Health Insurance Claims

Two years ago the federal government informed Michigan’s DCH officials that its method of funding the state’s share for the Medicaid program would no longer be acceptable. That method was a 6% use tax levied on Medicaid health plans and certain other Medicaid providers. The federal Government determined this “assessment” did not provide a broad enough base and would therefore be unacceptable. As a consequence, the Legislature enacted a Health Insurance Claims Assessment (HICA) in 2011, which imposed a 1% tax on most paid medical claims. It had a two-year sunset date in order to get business interest groups to back off in their opposition.

The HICA was expected to generate the $400 million necessary to meet the Michigan funding match for the Medicaid program. But it fell about $140 million short. Nevertheless,  the Legislature enacted SB 335, which reauthorizes HICA until December 31, 2017. In this fiscal year, the state’s general fund could cover the short fall. In the longer term, legislation that revises Michigan’s no-fault auto insurance law (see below) calls for earmarking part of each auto insured’s premium to cover the match.
 
SCOPE OF PRACTICE AND LICENSURE ISSUES

Advanced Practice Nurses

To address what will soon become a shortage of primary care physicians in this state, the Legislature has attempted to grant an increased scope of practice to advanced practice registered nurses (APRNs).  Senate Bill 2, introduced early this year would grant APRNs, which include  nurse midwives, nurse practitioners and clinical nurses, the authority to conduct diagnostic tests, such as imaging, independent of a physician’s supervision. Despite strong objections from the physician community, the legislation went to the Senate floor, where it has remained for the past two months. Meanwhile, an alternative proposal calls for  physicians and nurses to practice under a collaborative agreement, with the physician leading the team. Expect introduction of this alternative to SB 2 in the near future.  However, the sponsor of SB 2 has indicated its passage is his No. 1 priority.

Medical Malpractice Liability Reform


House Bill 4354, sponsored by Rep. John Walsh (R-Livonia), would change the medical malpractice liability standard from negligence to that of gross negligence in those situations where no prior doctor-patient relationship existed, such as in emergency room situations. As written, this change in the liability standard would also apply to any specialist on call who had not established a prior relationship with the patient. The bill is with the House Judiciary Committee and is expected to receive a hearing in the fall.

TRANSPORTATION

Road Funding

As far back as 2011, the Governor asked the Legislature to tackle the road and infrastructure crisis, which will require about $1.2 billion in additional revenue. That means at least raising fees, if not taxes, on Michigan motorists. The Legislature balked at the notion in 2011, but the condition of Michigan’s road and bridges continues to get worse.

Early this year, the Republicans began working on a plan that a majority of their Caucus might  accept. This is no small order, considering the fact that most members of the GOP Caucus have taken a no-new-tax pledge that is birddogged by Americans for Prosperity and other groups. What appears to be emerging from the House is a package of bills aimed at raising at least some of the $1.2 billion. The lawmakers’ registration fee reform package would  consolidate 20 different registration categories into three, removing preferences for certain types of vehicles such as farm vehicles. This reform could raise about $200 million.

The other piece to the puzzle is changing the state's fixed tax on fuel to a tax that can fluctuate when tied to the wholesale price. The House Fiscal Agency estimates this tax shift would raise $485 million to $829 million, depending on the price of fuel and the rate of consumption.

The registration bills (HBs 46304633) and the tax shift bills (HBs 4358 and 4359) are still a work in progress. House Transportation Committee Chair, Wayne Schmidt (R-Traverse City) is taking the summer to devise a plan he hopes will be acceptable to his Caucus.

INSURANCE

Limiting The Clawback

Two bills that would prohibit an insurer from rejecting a provider claim more than a year after it was paid may receive a vote this fall by the House Health Policy Committee. For years, health care providers have complained when insurance companies and pharmacy benefit managers disqualify claims that were previously paid. In fact, providers say that these “clawbacks” can go back for years. House Bills 4192 and 4193 would prohibit this practice beyond a 12-month period. Exceptions would include cases involving fraud and where federal law supersedes state law, such as with the Medicaid program.

Physicians, pharmacists and other health-care providers have been lobbying to get a hearing on the bill. Opposition is coming principally from Blue Cross Blue Shield of Michigan. Legislative horse trading is underway so certain health-care providers will back down in their opposition to revisions in the no-fault insurance law in exchange for advancing some bills near and dear to the providers, such as the anti-clawback legislation.

Auto No-Fault Hits Another Snag

With strong Republican majorities in both Houses of the Legislature, auto insurance companies in Michigan are hoping for some relief from Michigan’s 40-year-old no-fault auto insurance law.  Part of the law requires insurers to pay unlimited medical benefits, otherwise known as Personal Injury Protection (PIP) benefits. Michigan is the only state that mandates unlimited PIP benefits.  Providers like PIP because there is no fee schedule, as is the case with Medicare, Medicaid and even workers’ compensation.

Last year, the House Insurance Committee passed a bill that  limited PIP benefits, although it did not receive approval in the full House. This session’s version, which places a $1 million cap on PIP, may meet the same fate. The bill, reported from committee nearly three months ago, has lingered on the House Floor due to a lack of support. Oakland County lawmakers oppose the $1 million cap. So do rural Republican legislators because districts hospitals are a primary employer in some rural areas and hospitals are adamantly opposed to a PIP cap.

Believing the legislators can be swayed, auto insurers have been furiously negotiating with them. The insurers are willing to raise the $1 million cap but aren’t sure how much will it take to get the requisite number of votes for passage and whether  the plan for a providers’ fee schedule can be scuttled. The bill also dedicates $25 of every paid premium toward addressing the shortfall in the state’s share of Medicaid funding. It was a shrewd political move to address a funding shortfall, while at the same time possibly dividing opposition to the bill among Medicaid health-care providers.
 
EDUCATION

EAA Stalled In The Senate

After passing through the House in March, HB 4369, which would codify the Education Assessment Authority (EAA) as a statewide school district, remains in the Senate Education Committee. EAA currently is part of an inter-local agreement between Eastern Michigan University and the Detroit Board of Education to operate the lowest achieving schools in Detroit.

The latest problems with EAA pertain to Freedom of Information Act (FOIA) requests by Rep. Ellen Cogen-Lipton (D-Huntington Woods) and Wayne State University professor Thomas Pedroni, which revealed possibly flawed student achievement scores. Another FOIA request by Sen. Hoon-Yung Hopgood (D-Taylor) concerning student attendance, discipline, treatment of special education students and testing, received a tardy and incomplete response from the EAA. Sen. Hopgood has made it clear that he is waiting for a complete response.

Proponents of the EAA contend that several schools are showing progress in test scores and are helping students who have struggled for years. House and Senate members will continue negotiations in order to reach some sort of compromise, but the next wave of responses to FOIA requests could be telling.
 
LOCAL GOVERNMENT

Detroit Institute of Arts

With bankruptcy a real possibility for the City of Detroit, Emergency Manager Kevyn Orr has been evaluating the city’s assets, including valuable works of art at the Detroit Institute of Arts (DIA). In an effort to protect what some claim is a public trust, even though it is owned by the city, Senate Majority Leader Randy Richardville introduced SB 401. The bill prohibits the sale of an art institute’s collection unless in accordance with the Code of Ethics for Museums of the American Alliance of Museums.

The bill quickly passed the Senate. However, when it arrived in the House, Speaker Jase Bolger made it clear that it was not a priority and any House action would have to wait until after the summer recess. Also, Attorney General Bill Schuette issued a 22-page legal opinion saying the art collection at the DIA is held by the city in charitable trust for the people of Michigan and no piece of the collection can be sold or transferred to satisfy city debts.

However, art law experts view the DIA collection as a city asset that  can be sold pursuant to a bankruptcy proceeding. One thing is for certain – if the emergency manager pursues the DIA collection, the matter will wind up in court.

Dissolving School Districts

Both Buena Vista (near Saginaw) and Inkster School Districts do not have enough money to pay their operating bills. Just prior to the summer recess the Legislature approved two bills that allow for the expedited dissolution of a school district and provide for additional funding to the districts that absorb students from the dissolved districts.
 
House Bill 4813 amends the Revised School Code to establish criteria for the dissolution of a school district and the attachment of the dissolved district’s territory to one or more nearby school districts. Specifically, the state school superintendent and the state treasurer could jointly dissolve a school district. House Bill 4815 amends the School Aid Act to provide $4.9 million in additional funds related to the dissolution of the school district and transfer of students to other districts.

The bills passed both the House and Senate on a partisan basis. Democrats wanted displaced teachers and staff to be given first preference with the school districts where children are transferred. That amendment was defeated by the Republicans. The Governor recently signed the bills (now Public Acts 96 and 97 of 2013) so the mechanism is now in place to dissolve these districts before the start of the next school year.
 
POLITICS

With the Michigan Primary election slightly over a year away, some races seem to be set while others are waiting for potential candidates to make up their minds. The nominees for Governor, state senator and state representative will be decided in August of next year. The nominees for statewide offices of Justice of the Supreme Court, Secretary of State, Attorney General, Lt. Governor, and members of the three largest university governing boards will be decided at each party’s convention, which will be held after the August, 2014 Primary.

Governor

All expectations are Incumbent Republican Governor Rick Snyder will seek reelection. Even though he signed the right-to-work bill, which has been tops on the wish list of conservatives, he has also succeeded in drawing their ire by vehemently supporting Medicaid expansion. In fact, the Tea Party element of the Republican Party will not endorse the Governor for reelection and will likely offer a candidate of their own.

On the Democratic side, the decks have been cleared for former Congressman, state senator and state representative Mark Schauer of Battle Creek. Earlier this year, Schauer’s entry into the race seemed to be by default, as opposed to a true desire to run. Other potential candidates saw a race against Snyder as a losing proposition. So, Schauer was the only one left standing. But recent polls have Schauer running neck-and-neck with Snyder and, in some areas, actually beating the incumbent. However, a year is an eternity in politics and things can change quickly. (Remember the DeVos-Granholm race of 2006?)

Secretary Of State

Incumbent Republican Secretary of State Ruth Johnson should win easy renomination at the party convention. She has been a staunch advocate of voter identification policies and legislation, much to the approval of most Republicans. Johnson’s Democratic opponent in the 2010 general election was Wayne State Law School Dean Jocelyn Benson. Benson’s campaign against Johnson in a tidal wave Republican year was impressive and many Democrats want her to take another shot. If Benson decides not to pursue the nomination, there are a number of county clerks that could be chosen.

Attorney General

Incumbent Bill Schuette rolled to a win in 2010 over his opponent, Democratic Genesee County Prosecutor David Leyton. Schuette should be easily renominated and will be the favorite to win. His name is well known and he has worked hard to foster an aggressive law-enforcement posture. On those legal questions that have had political overtones ((medical marijuana, same sex marriage and benefits, etc.), he has taken a consistent position that is pleasing to the right of the Party. Possible Democratic contenders for the post are current Senate Democratic Leader Gretchen Whitmer, Michigan State University Law School Professor Mark Totten and possibly Jocelyn Benson. Only Totten has declared and, at this point, Schuette is the heavy favorite.

Supreme Court

Republicans now hold a 5-2 lead on the State Supreme Court. However, that lead could climb to 6-1. Justice Michael Cavanagh cannot seek reelection because he is now older than 70, thus leaving an open seat the Republicans could gain. Unlike other elected offices, justices or judges seeking reelection have the benefit of having the incumbency designation on the ballot. Without Justice Cavanagh running on the Democratic ticket and having the incumbency designation, it certainly levels the playing field. Moreover, Republicans usually enjoy an edge in funds raised for an election.

There are two other seats up in 2014 and both are held by Republicans. Justice Brian Zahra and newly appointed Justice David Viviano. Justice Viviano was appointed by Governor Snyder to fill the vacancy created by the resignation of Justice Diane Hathaway. The GOP should keep its strong majority on Michigan’s highest court.

State Senate


Republicans currently have a 26-12 supermajority in the state senate. Seven of the 38 members are term limited and three of those seats  -- one held by a Democrat and two held by Republicans -- are in very competitive districts. In addition, the Republicans reapportioned districts to favor incumbent Republican senators. However, drawing a district that leans more to the right politically  could leave them vulnerable to a challenge from the right in a Republican primary. This legislative session has included a number of controversial issues, including Medicaid expansion and the creation of a health care exchange. Senators who voted for either measure may face a challenge from the right. Many believe the GOP has hit the high-water mark, and even with districts drawn more favorably for them, a few divisive primaries could lead to some wins for Democrats.

House Of Representatives

The current composition of the Michigan House of Representatives is 59 Republicans, 49 Democrats, 1 Independent and 1 vacancy. As with the Senate, Republicans gained the majority in 2010 and redrew legislative district lines to give their party an advantage. In 2012, the Democrats made some gains, but were generally disappointed they did not gain the majority, given the size of President Obama’s victory in the state and that of Democratic U.S. Senator Debbie Stabenow.

There are 29 term-limited state representatives:  16 Republicans and 13 Democrats.  While Republicans have their “marginal” seats, so do Democrats, including seats in traditionally rural Republican areas. At least at this stage, there is no indication the current composition of the House will be dramatically different after the 2014 election.

ON THE HORIZON
 
  • Unlike Arizona Governor Jan Brewer, Michigan Governor Rick Snyder will not use his veto power to get GOP Senators to vote for Medicaid Reform/Expansion. But don’t look for Senate action on HB 4714, the Medicaid Reform/Expansion bill, prior to August.  First, the Senate is only meeting for 2 more days in July.  Perhaps more important, however, is the fact that on July 20, Tea Party groups will be holding a forum on alternatives to government-run health care.  In fact, Tea Party groups will help front the registration fees for any Senator who wants to attend.
  • With the recent U.S. Supreme Court rulings on the Defense of Marriage Act and California’s Proposition 8, look for gay rights advocates to bring an effort to repeal or strike down Michigan’s constitutional ban on same-sex marriage.  That amendment to the Michigan Constitution came by way of Proposal 2 of 2004.  In addition, a U.S. District Judge deferred his ruling on Michigan’s ban until the U.S. Supreme Court ruled.  Now that the decision has been made, any ruling by the District Court will certainly be appealed.
  • Look for the Coalition for Auto Insurance Reform to step up its public relations campaign to revise no-fault insurance in the wake of the Michigan Catastrophic Claims Association’s $11 increase in its assessment, which covers catastrophic injury.
  • Even though Governor Snyder signed legislation that would allow a purchaser to inspect a property at any time during the home foreclosure period and possibly evict the resident if damage is found, look for follow-up legislation that would place parameters on what constitutes a reasonable inspection and what notice should be given.

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