Below is a brief summary of the major policy issues enacted by the 2004 session of the Maryland General Assembly.

FY 2005 Operating Budget
Higher Education
Cigarette Restitution Fund
Medicaid and CHIP
FY 2005 Capital Budget
Mental Health
Maryland Trauma Physician Services Fund
Flush Tax
Medical Malpractice
Dually Eligible Managed Care Pilot Program Task Force to Study Physician Reimbursement at Maryland Hospitals
Patient Safety Expanding Access to Care

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FY 2005 Operating Budget
The General Assembly adopted a $23.8 billion budget, a 3.8% increase over fiscal 2004. The general fund portion of the budget totals $11.2 billion. The budget was balanced with a total of $255.7 million in budget transfers to the general fund portion of the budget.

New Revenue Sources
To balance the budget, and begin to address the projected fiscal 2006 deficit, the General Assembly added $203.2 million in new revenues. The new revenues passed include: Developmentally Disabilities Facilities Provider Fees - $5.7 million, Corporate Income Tax – Delaware Holding Companies - $91.5 million, Decoupling from Federal Accelerated Depreciation - $21.3 million, Decoupling from Special Federal Depreciation for Large SUV’s - $13.5 million, minimum local Income tax on nonresidents - $38.6 million, Reduced Vendor Discount – Sales Tax - $15.4 million, Decoupling from Estate Tax Unified Credit Exemption Increases - $9.1 million, DHMH Fees - $1.1 million, Fee for filing of Appeal with Office of Administrative Hearings - $3.2 million, Filing and Processing Fees – Assessments and Taxation - $.5 million, Security Exemption Filing Fee – Office of Attorney General - $.5 million, Abandoned Property – Acceleration of Payment - $2.8 million.

Higher Education

Sellinger Aid: The budget includes $35.6 million for the Sellinger Aid program. This amount reflects a $4.1 million or 13% increase from the Governor’s allowance and last year’s fiscal 2004 appropriation. For The Johns Hopkins University, this represents a $1.9 million increase over last year’s fiscal 2004 appropriation for a total appropriation of $14.5 million. Last years fiscal 2004 appropriation was $12.6 million. The General Assembly agreed with the Governor’s allowance for the public higher education (University System of Maryland, Morgan State University, and St. Mary’s College) and funded them at the same levels as fiscal 2004.

Financial Aid: The Governor’s budget increased the state’s financial aid program 17.5% over the fiscal 2004 working appropriations. The largest increase was in the Educational Excellence Award program-the state’s need based aid program, which saw a $12.2 million increase over last years working appropriation. The Loan Assistance Repayment program and the part-time grant program, both offer need-based aid increase 189% and 54%, respectively. The HOPE Scholarship programs received a 26% decrease. Last year, Johns Hopkins students were able to use $1.9 million in state scholarships to attend the University. All other state scholarship programs other than those mentioned above were funded at the same level as the fiscal 2004 appropriations.

-Educational Excellence Awards - $12.2 million increase
-Delegate Scholarships - $1.1 million increase
-HOPE Scholarships - $4.1 million decrease
-Part-Time Grant Program - $.73 million increase
-Conroy Memorial Scholarship - $.14 million increase
-Loan Assistance Repayment - $.32 million increase

Higher Education Policy House Bill 1188, Higher Education Accessibility and Affordability Act passed the General Assembly. House Bill 1188 creates a funding formula for the public higher education institutions by providing a 5% increase in funding over the previous year. The bill also caps tuition increases for the public institutions at 5% over the preceding year. House Bill 1188 increases the corporate income tax from 7% to 7.7%. The increased revenue generated by the corporate income tax will be placed in a special fund for the increases in higher education. We were successful in amending to bill to allow Sellinger Aid to benefit as well. Therefore, the bill as passed by the legislature would increase the State appropriation under the Sellinger Aid program in future fiscal years at the same 5% level as the public institutions.

House Bill 1188 also creates a Commission to Study Maryland's Commitment to and Funding of Higher Education. The commission will consider methods to provide a combined level of State support for Maryland’s public, private and local institutions of higher education. The President of Johns Hopkins University and a representative of the Maryland Independent College and University Association shall serve as members on the Commission.

Cigarette Restitution Fund
The Cigarette Restitution Fund Program has remained in the State budget, but funding has been reduced again this year. Johns Hopkins’ appropriations include $2.4 for the Cancer Research grant, and $1.2 for the Public Health Grant to provide prostate cancer screening, prevention, education and treatment in Baltimore City.

Medicaid and CHIP
The Medicaid and CHIP budget continues to be one of the fastest growing sections of the budget, now consuming almost $4 billion for FY 2005. While the total appropriation for Medicaid only reflects a 3.8% increase from FY 2004, due to one-time funds from the federal government for a temporary enhanced federal match, the General Fund allocation for Medicaid increased 15.1% from FY 2004 to FY 2005. Even with this increase in funding, the Department of Legislative Services projects the Medicaid budget is under funded by more than $70 million in total funds.

Even though the Department of Legislative Services projects the Medicaid budget is under funded, the budget committees adopted several Total Fund reductions to include:

• $7.3 million reduction through the implementation of budget bill language requiring the Department to sanction MCOs that fail to met the 84% medical loss ratio and achieve below average health outcomes, this reduction primarily affects Americaid
• $5.2 million by increasing hospital day limits for adult Medicaid participants
• $4.6 million by reducing pharmacy dispensing fees from $4.69 for a generic and $3.69 for non-preferred drugs by $1.00
• $1.0 million reduction recognized by charging providers for the cost of recovering inappropriate payments
• $1.0 million reduction by requiring a $10 co-payment for non-emergency use of the emergency room

FY 2005 Capital Budget
The capital budget includes $2 million for Off-Site Shelving Facility for Johns Hopkins University. The $2 million was part of an $8.5 million grant for the MICUA Capital Projects Grant Program. The General Assembly agreed to provide an extra $500 thousand, ($250 thousand for Columbia Union College, and $250 thousand for Villa Julie College). The extra $500 thousand will help to better position MICUA and Johns Hopkins for our fiscal 2006 capital requests.

Mental Health
In the past four years, the mental health program has required more than $140 million in supplemental appropriations to cover program deficits. As a result, there has been extensive discussion concerning mental health services being carved into the HealthChoice program as a means of controlling costs. Instead, the General Assembly adopted legislation that will require the Department to seek legislative approval before carving these services into the HealthChoice program. In addition, the budget committees requested a report by December 1, 2004 on how the program will maintain access to care while remaining within its budgetary allotments.

Maryland Trauma Physician Services Fund
This Administration introduced HB 1467, a bill that increases the State motor vehicle registration fee and alters the requirements for the level of miscellaneous fees charged by the Motor Vehicle Administration (MVA). It also authorizes a fee for a missed driver's test appointment and increases the debt limit on consolidated transportation bonds. The purpose of the bill is to help to repay the Transportation Trust Fund, which was heavily utilized by Governor Ehrlich last summer to balance the budget. The bill was of particular interest to Johns Hopkins because it permanently extends the Maryland Trauma Physician Services Fund by repealing the sunset that would have occurred at the end of June 30, 2005.

Flush Tax
The General Assembly passed SB 320 - Water Pollution - State Waters - The Restoration Fund, otherwise known as the “Flush Tax.” An amendment to the bill was adopted that provided for the definition of a “single site" to mean a discrete grouping of buildings or structures that are located on contiguous or adjacent property and owned by the same user. This amendment will enable Johns Hopkins to count the East Baltimore and Homewood campuses as a single entity and save the Institution approximately $250,000. However, the formula for calculating the fee for businesses was altered as well. As the bill was adopted, Johns Hopkins will pay roughly $325, 000 into the fund.

Medical Malpractice
The only piece of medical malpractice tort reform legislation - HB 1299 - that was moving through the legislature was voted unfavorable by the Senate Judicial Proceedings Committee. The bill had been amended down to mandatory arbitration and a taskforce composed of six senators and six delegates. There have been some rumorings that the Governor, through an Executive Order, will appoint a commission to study the issue over the interim.

Dually Eligible Managed Care Pilot Program
Early in the session, Secretary Sabatini announced his intention to reduce Medicaid’s budget by targeting the spiraling costs associated with the dually eligible population (Medicaid and Medicare eligible), particularly those in nursing homes. A major component of his plan included seeking a waiver from CMS to require the dually eligible population to enroll in Medicare and Medicaid managed care. Sabatini stated his intention to proceed with the application process without the benefit of input from a task force or advisory council, but he did agree to meet with advocates regarding their concerns and issues. Particularly concerning to the hospitals and other advocates, was the speed with which Sabatini’s plan was proceeding. Caution, and a deliberate process was encouraged and lobbied for to assure that the best interests of the frail elderly were served, and to lessen the possibility of unintended consequences that a hastily developed program may bring.

Although legislation is not necessary for the waiver application, members of the General Assembly made it very clear that they expect to have a significant role in the waiver application process, as well as the implementation of any resulting program. Consequently, Senator Hollinger sponsored a bill that specifies the process for and components of the waiver, as well as consumer protections, and legislative oversight. Current nursing home residents and those participating in Bayview’s PACE program will be exempt from the program. Hospice and specialty mental health have been carved out. The bill also specified reimbursement rates that must be paid to nursing homes, adult day care facilities, hospitals, and hospital emergency facilities.

The waiver will request permission to implement a pilot program of managed care for the dually eligible population in two regions of the State. Although an amendment was introduced that designated Baltimore City and the Western Maryland counties, the final legislation does not specify the regions; instead, DHMH will determine the locations of the pilot. The program will be patterned after the HealthChoice program to the extent that it will require a choice of at least two Community Care Organizations (CCO) for participants. DHMH must make capitation payments to each CCO consistent with actuarially adjusted benefits for providers, and DHMH must certify the CCOs for participation in the program. In addition, DHMH is required to study ways to provide incentives for CCOs that a locally owned, controlled and operated. The waiver application will be submitted to CMS by September 1, 2004, and DHMH will be required to solicit input from interested and affected parties.

Task Force to Study Physician Reimbursement at Maryland Hospitals
A bill originally introduced to aid Prince Georges County Hospital was completely amended, resulting in the establishment of a Task Force to Study Physician Reimbursement at Maryland Hospitals. Members of the task force include legislators and representatives from the Maryland Hospital Association and MedChi. The study will include:

• problems associated with physician reimbursement at Maryland hospitals, including differences in the level of Medicaid reimbursement for physician services provided at academic health centers versus community hospitals
• inadequacy of Medicaid payments to cover non-physician and physician expenses
• trends in declining volume of uncompensated care provided by physicians and subsequent financial impact on health care institutions

A report will be due in January 2005 with recommendations on options for addressing the findings of the study and sources of funds for each option recommended.

Patient Safety
Responding to the recent significant attention given to patient safety, several pieces of legislation were introduced this session.

One bill addressed prescription drug legibility. Although its intent was laudable, it was onerous in its original form, specifying how prescriptions are to be written, prohibiting the use of Latin or apothecary abbreviations, and requiring that the reason for the prescription be included. As amended, the bill calls for a workgroup to study the issue and report its recommendations to the General Assembly by November 2004.

The chair of the House Health and Government Operations Committee introduced a bill on patient safety that duplicated efforts already underway regarding the reporting of adverse events and the establishment of the Maryland Patient Safety Center. The bill was withdrawn by the sponsor.

A bill addressing resident work hours would have added a layer of State requirements to the ACGME regulations. After hearing from those affected by this legislation, including hospitals and residents, the sponsor withdrew the bill.

Expanding Access to Care
After considering several bills to expand access to healthcare, in the final hours of the 2004 session HB 1271 – Community Health Care Access and Safety Net Act of 2004 was defeated. The bill attempted to expand access to health care services by providing operating and capital grants to community health resources that include FQHCs, community health centers, teaching clinics, and school based clinics. In addition, the bill would have phased in expanded Medicaid eligibility and transferred $20 million in FY 2005 to the Medicaid program to increase select Medicaid specialty reimbursement rates to 80% of Medicare.

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STAFF CONTACT INFORMATION
Please contact Government Relations if you have concerns or would like additional information. Your input assists us greatly in evaluating and formulating the position of Johns Hopkins on all legislation.

Legislative Session Office
47 State Circle, Suite 203
Annapolis, MD 21401
410-269-0057
fax 410-269-1574

Sheila Higdon	shigdon@jhmi.edu
Jim Kaufman	jkaufma@jhmi.edu
Bret Schreiber	bschreiber@jhu.edu
Heather Woods Barthel	hbarthe1@jhmi.edu
Suchita Lorick	slorick@jhsph.edu
Mickey Giesler	mgeisler@jhu.edu