LEG REG REVIEW 2014, 5th Issue February 24, 2014

LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol.  It contains news on the legislative and regulatory scene in Pennsylvania that may be of interest to the Insurance and Business Communities.  It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU).  Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/232-7005 or e-mail to xenobun@aol.com.  Please email jtrout2792@aol.com supplying both your name and e-mail address if you wish to be removed from or added to this list.


Governor Corbett has submitted the state’s request to the Centers for Medicare Medicaid Services (CMS) for approval of an alternative to the Patient Protection Affordable Care Act (PPACA) provision to expand Medicaid eligibility to 133% of the Federal Poverty Level (FPL).  The Corbett plan would:

  • Allow those under  the PPACA threshold to enroll in the federally-facilitated exchange instead of Medicaid
  • Consolidate numerous Medicaid plans into fewer standardized PPACA-compliant options
  • Require a work search for non-disabled Medicaid recipients

Details: https://listserv.dpw.state.pa.us/scripts/wa.exe?A2=ind14&L=NEWS-RELEASES&P=16627 (press release);

https://www.portal.state.pa.us/portal/server.pt?open=514&objID=1598151&parentname=ObjMgr&parentid=2&mode=2  (Healthy PA specifics)


Art McNulty is assuming the Deputy Commissioner position made vacant by Ron Gallagher’s move to become President of the PA Association of Mutual Insurance Companies (PAMIC).  McNulty serves now as General Counsel at the PA Department of Labor & Industry which oversees Workers’ Compensation but is no stranger to the Insurance Department, having served there as counsel previously (2006-2009) and as Chief Counsel to the former PA Professional Liability Catastrophic Loss Fund (medical malpractice state-run insurance tier now known as MCARE) 1993-1999.  Other public service includes Executive Director of the House Insurance Committee for Rep. Tony DeLuca (D-Allegheny).


On February 18, Highmark filed papers with the PA Insurance Department to seek approval for it to merge with Blue Cross of Northeastern PA (BCNEPA).  If approved, it would underscore Highmark’s competitive reach in most of the state.  The Insurance Department commented, saying “The highest priority in our review of this application is to see that consumers will be protected and the impacted health insurers remain financially strong and the market competitive.”  In addition, the Department plans a public hearing in northeast PA.  For access to the filing and related information, go to www.insurance.pa.gov and click on the Blue Cross/Blue Shield Plans icon.  According to a joint release issued by Highmark and BCNEPA, Blue Cross of Northeastern PA insures more than 540,000 individuals in thirteen counties in northeast and north central Pennsylvania.


  • Conservative York business owner Scott Wagner is back in the picture in the special election as a write-in candidate to fill out the rest of Michael Waugh’s Senate term.  Waugh left the Senate earlier this year to head the Farm Show Complex in Harrisburg.  .
  • Former Auditor General Jack Wagner apparently has decided to run for the Democratic nomination for Governor as has Jay Paterno for Lt. Governor into what is already a crowded primary contest for both offices.


The maximum benefit for treatment for autism spectrum disorders is increased to $38,276.00 for policies issued or renewed for calendar year 2014 per Notice 2012-02 issued February 22, 2014.  This is an annual increase based on the Consumer Price Index for Urban Consumers which was 1.5% in 2013.  It stems from Pennsylvania legislation, not PPACA.


  • DSN Holdings, Inc. has filed an application for approval to acquire control of Professional Casualty Association, a domestic reciprocal exchange insurance company.
  • The Insurance Department has determined that no contributions from WC carriers will be necessary for the Workers’ Compensation Security Fund.  The fund’s balance as of December 31, 2013, exceeded $500,000,000, the statutory threshold for insurer contributions to be made.


Agency                                   Senate                                     House

DEP                                        completed                                completed
DCNR                                     completed                               2/25
Health                                     completed                                2/24
DPW                                       2/24                                         2/26
L&I                                          2/25                                         completed
Agriculture                              2/25                                         2/24
Banking & Securities               2/26                                         completed
Education                                2/26                                         2/18
Aging                                       2/27                                         completed
PennDOT                                2/27                                         2/26
Insurance                                completed                                2/27


  • PA Association of Health Underwriter members will convene in Washington this week for the NAHU Capitol Conference in Washington.  Among issues discussed with PA members of Congress will be PPACA medical loss ratio which has hurt agent compensation; re-defining PPACA 30-hour full-time determination to the traditional 40; Navigators and criminal background checks; having a long-term care premium deduction appear as a line item on the 1040 tax form (responding to less attractiveness of tax-qualified LTC insurance because of PPACA’s increase in the medical deduction threshold from 7.5% to 10% of adjusted gross income on Schedule A).
  • On February 21, CMS proposed 2015 payment and policy rules for Medicare Advantage plans with a comment period closing March 7, 2014.  CMS credited PPACA as being responsible for an increase in the numbers of Medicare Advantage enrollees to almost 30% (or 15 million beneficiaries) of those on Medicare.  Additionally, the government credits PPACA with reducing Medicare Advantage premiums by ten percent.  A bipartisan group of Senators (19 Democrats and 21 Republicans) wrote to CMS to raise “serious concerns” with the proposed payment and policy changes.  PA Senator Bob Casey Jr. (D-PA) was one of the signers.  Some elements of this plan:
  • Aligning Medicare Advantage with the traditional fee for service Medicare
  • Reducing insurer discretion regarding costs or cuts in services with a cap on increases limited to $32 per person/month and continuing the present level of pot-of-pocket spending
  • Lower Donut Hole (Part D) costs by increasing discounts to 55% on brand name drugs and 35% on covered generic drugs
  • The Advance Notice and draft Call Letter may be viewed through https://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/  and selecting “Announcements and Documents.”

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