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PIAA Legislative Alert

Dateline: February 25, 08

New Medicare Proposal Includes MPLR

On February 15, President Bush submitted a legislative proposal to Congress that is aimed at addressing the unprecedented shortfall in Medicare funding. The proposal consists of three major recommendations, one of which (Title II) focuses on medical liability reform. The language of Title II is similar to California’s MICRA law, and is akin to previous medical liability reform proposals (The HEALTH Act) that were passed numerous times by the Republican-controlled House. Congress is required to take action on the Medicare funding issue by June 30th, but is not required to use the President’s plan. 
President’s Proposal - Background
The Administration’s proposal is aimed at avoiding the pending Medicare insolvency crisis. By law, the President is required to submit a Medicare cost reduction plan when the Medicare trustees estimate that 45% or more of the program’s expenditures will come from general revenues (i.e. income taxes), rather than the payroll tax that is dedicated for this purpose.

Under Title I and III of the President’s plan, health care providers are required to implement electronic health records and prescription drug benefit premiums for higher-income beneficiaries would be increased. Much attention, however, will be focused on Title II, which implements medical liability reform. Key elements of this title include: a $250,000 cap on noneconomic damages (but no cap on economic damages); a sliding scale cap on attorney fees; collateral source rule reform (evidentiary) with a ban on subrogation; periodic payment of future damages for large awards; a 3-year from incident/1-year from time of discovery statute of limitations; and, limitations on punitive damages.

Unlike the reforms generally supported by the PIAA, however, the President’s proposal applies to health insurers and medical device/prescription drug manufacturers, as well as health care providers. The plan also allows self-funding health plans to subrogate medical liability awards and fails to require use of the Uniform Payment of Periodic Judgment Act (UPPJA) when periodic payments are made.

Although Congress must consider the Bush proposal, likely through a hearing, they are not required to vote on it directly. Instead, Congressional leaders could introduce their own plan for controlling Medicare costs that would be debated in lieu of the Administration’s plan. Whatever plan proceeds through the legislative process, Congress must vote on it by June 30.

PIAA Analysis

It is highly unlikely that Congressional leaders will allow debate and a vote on any substantive medical professional liability reform proposal. Instead, we will likely see a plan that attacks funding for Medicare’s private health plans or otherwise more directly addresses Medicare funding. The fact Congress is required to take some action on Medicare during the first half of the year, however, does mean that reform supporters will have at least one opportunity, via procedural motions, to force a vote on the issue of medical professional liability reform in general.

PIAA Position

The PIAA is pleased that President Bush continues to push for medical liability reform. We also applaud Congressional supporters for seizing this opportunity to highlight the issue and potentially force all Members of Congress to take a very public stand on tort reform. While questions remain about some elements of the President’s plan, the possible vote on a medical liability reform plan, regardless of the outcome, may be the best that could be achieved in the current political environment.

For more information, please feel free to contact Mike Stinson, Director of Government Relations, at mstinson@piaa.us or Mike Kalutkiewicz, Government Relations Representative, at michaelk@piaa.us.