Legislative Session Kicks-Off Next Week- SBT Replacement and Budget Woes Highlight Immediate Agenda

Lansing welcomed 32 new faces to the legislature at the official swearing in ceremonies on January 10. The full legislature will convene for the first time on January 23rd. There is still conjecture in the Michigan House as we await the announcement of committee composition. The Senate announced its committees several weeks ago. Two issues are certain to dominate the discussions for the immediately foreseeable months. Among the first tasks will be to develop and pass a replacement revenue stream for the soon to be obsolete Single Business Tax. There are multiple options circulating in Lansing including a new business tax, income tax hikes and a tax on services. MOA will be closely monitoring all the options and will pass information to its membership. Complicating matters is that the state budget is projected to be anywhere from $500 million - $1 billion below needed revenue, so a discussions are underway about where "fat" can be cut in state expenses. The Medicaid program is a perennial favorite for cutting, so we are on alert for that threat again.

Do You Know These People??? Tell us.

Clarke, Hansen - Wayne
Scott, Martha - Wayne
Clark-Coleman, Irma - Wayne
Thomas, Buzz - Wayne
Hunter, Tupac - Wayne
Anderson, Glenn - Wayne
Patterson, Bruce - Wayne
Basham, Raymond - Wayne
Olshove, Dennis - Macomb
Switalski, Michael - Macomb
Sanborn, Alan - Macomb
Bishop, Michael - Oakland
Pappageorge, John - Oakland
Jacobs, Gilda - Oakland
Cassis, Nancy - Oakland
Brown, Cameron - Branch, Hillsdale, Lenawee, St Joseph
Richardville, Randy - Jackson, Monroe, Washtenaw
Brater, Liz - Washtenaw
Schauer, Mark - Calhoun, Jackson
George, Tom - Kalamazoo, Van Buren
Jelinek, Ron - Berrien, Cass, Van Buren
Garcia, Valde - Ingham, Livingston, Shiawassee
Whitmer, Gretchen - Ingham
Birkholz, Patricia - Allegan, Barry, Eaton
Gilbert, Jud - Lapeer, St Clair
Cherry, Deborah - Genesee, Oakland
Gleason, John - Genesee
Jansen, Mark - Kent
Hardiman, Bill - Kent
Kuipers, Wayne - Kent, Ottawa
Barcia, Jim - Arenac, Bay, Huron, Sanilac, Tuscola
Kahn, Roger - Gratiot, Saginaw
Cropsey, Alan - Clinton, Ionia, Isabella, Montcalm
Van Woerkom, Gerald - Mason, Muskegon, Newaygo, Oceana
McManus, Michelle - Benzie, Clare, Kalkaska, Lake, Leelanau, Manistee, Mecosta, Missaukee, Osceola, Roscommon, Wexford
Stamas, Tony - Alcona, Alpena, Crawford, Gladwin, Iosco, Midland, Montmorency, Ogemaw, Oscoda, Otsego
Allen, Jason - Antrim, Charlevoix, Cheboygan, Chippewa, Emmet, Grand Traverse, Mackinac, Presque Isle,
Prusi, Michael - Alger, Baraga, Delta, Dickinson, Gogebic, Houghton, Iron, Keweenaw, Luce, Marquette, Menominee, Ontonagon, Schoolcraft

If you know any of these State Senators, the MOA wants to know. If you don't, you should, and MOA wants to introduce you. These are the members of the 2007-2010 Michigan Senate. For the next four years, these 38 men and women will impact how you live your personal and professional lives. You need to know them, and need to speak to them regularly. If you have a personal or professional relationship with any of these Senators, please let us know by notifying Doug Borruso, MOA Manager of Government Affairs at dborruso@mi-osteopathic.org or call him at (800)-657-1556.

Governor Signs Medical Records Law, Impacts Doctors

On December 19, Governor Jennifer Granholm signed into law a bill to regulate the retention and destruction of medical records. The law is effective immediately. Public Act 481 of 2006 mandates a minimum record retention period of seven years, unless a longer period is required by other state or federal law or standard of practice. The retention period can be shortened through written authorization by the patient. The law also provides that the destruction must ensure confidentiality. The law requires physicians to have arrangements for record retention in the event of closure, sale or retirement of the practice, and the physician must notify the Michigan Department of Community Health (MDCH) and the patient in such circumstance. Initial applicants for licensure and renewal applicants will have to submit to MDCH an affidavit that the physician has a relevant records policy in place. Fines for non-compliance are up to $10,000. Even with a patient's authorization, the MOA advises against the early destruction of records due to statute of limitations concerns with medical liability and fraud. Physicians should consider independent legal review based upon their practice profiles. MOA will provide complete information about this law in a resource document to be published in the near future.

10th Annual Capitol House Call nearing - Tuesday, March 20
Registration now open-

Join your colleagues in Lansing for a day of discussion with lawmakers. Grab a friend and give legislators face-to-face education on the challenges facing health care today. Tell them, in your own words, how they can help you through policymaking. If they don't hear from you, you have no right to complain about it later. One day in Lansing can have a tremendous effect on the future of your practice and the profession. Last year, nearly 125 D.O.s and students proudly wore their white coats as a symbol of unity. The challenges continue again this year, but there are more opportunities than at any time in recent history. You can be a part of the solution. MOA does all of the preparation. You show up and speak from the heart. Join us on March 20.

Register now for the Capitol House Call.

If you have any questions regarding the information contained in this newsletter, or other Government Relations questions, please contact Doug Borruso, Manager of Government Affairs at the MOA, 800-657-1556, or by email at dborruso@mi-osteopathic.org.

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Governor Outlines Plan for the Future in State of the State Address

Governor Granholm delivered her 5th State of the State address on Tuesday. MOA President-elect, Susan Sevensma, D.O. was on the House floor for the speech as the special invited guest of Sen. Roger Kahn, MD (R-Saginaw), one of only two physicians in the legislature. In her speech, the Governor characterized Michigan's economy as in crisis and acknowledged that the auto industry was no longer the anchor capable of supporting the state. She spoke broadly about her intention to lead the state down a path of economic diversification, governmental cost cutting, strengthening education, workforce retraining, expanded access to healthcare and urban revitalization.

Specific to health care, the Governor announced the creation of the Michigan Nursing Corps., to prepare nursing educators to generate thousands of nurses over the next several years. The Governor announced that she is expecting federal approval, sometime this spring, of the Michigan First Health Plan, her proposal to cover Michigan's uninsured population. The Governor also called for a ban on smoking in the workplace, development of the Michigan Health Information Network for new medical technology and a physical fitness and exercise initiative. MOA will keep you informed of any developments in these areas.

Follow this link to see the full text of the State of the State Address.

Two Proposals for SBT Replacement Tax Unveiled

Two of the anticipated recommendations for a replacement to the soon defunct Single Business Tax (SBT) were unveiled this week.

The Senate Republicans introduced their Business and Economic Stimulus (BEST) plan, which would replace $1.56 billion of the $1.9 billion lost through elimination of the SBT. Senate majority leadership states that the package will stimulate growth by bringing new business and jobs to the state in numbers enough to make up for the $300-400 million differential. The BEST plan would apply to business with more than $350,000 in gross receipts, but is different from the SBT in that it would allow businesses to select the method of calculating their liability, ensuring that all pay a tax but at a minimal level based on business structure. Business would be able to select between paying an income tax, a gross receipts tax or a franchise tax. The income tax rate of 1.97 percent is the only rate to be determined, leaving opponents wondering how much revenue the proposal can actually generate based on unknown quantities.

The Governor released her tax plan and quickly called on the legislature to pass it in order to prevent further cuts to the current year budget. The Governor's "Two-Penny Plan" is claimed as a full replacement model that relies on a combination of $400 million in spending cuts, $1 billion in new business tax revenue and $1.5 billion from a 2-percent sales tax on services. The services tax would be paid by consumers but has several exceptions including health care services. The overall business tax is actually a net reduction in taxes on business of $450 million, accomplishing this through a decreased burden on in-state companies and an increased burden on foreign state business.

MOA will continue to update its membership as the tax proposals make their way through the legislature.

Governor Releases FY 2008 Budget Proposal

The budget recommendation for FY 2008 calls for a 2-percent increase in general fund money for the Department of Community Health. The total DCH budget would be $11.53 billion. The budget reflects the proposal for covering the uninsured through the Michigan First Healthcare Plan, which relies on $100 million of new federal money that is not contingent on using state general fund money. The budget calls for a 50-percent reduction in appropriations for the Healthy Michigan Fund, a program that supports numerous public health education programs including the Michigan Cancer Consortium. Also included in the recommendation is an increase to HMOs. The MOA will be closely monitoring that recommendation to determine any opportunities for pass-through increases to physicians. Approximately $450 million of the overall DCH budget will be designated for health and disease prevention programs.

The downside is that the DCH will experience cuts in the current fiscal year through Executive Order reductions also released on Thursday. Her cuts include $2.18 million from hospitals, $12.5 million from health plans.

For more complete information about the FY 2007-2008 budget, follow the link.

House Announces Committee Assignments

After a surprisingly lengthy delay, the House of Representatives finally released its committee assignments. Below is a listing of the three committees that the Michigan Osteopathic Association is most actively involved. If you have a personal or professional relationship with any of these legislators, please contact Doug Borruso at the MOA at (800) 657-1556 or by email at dborruso@mi-osteopathic.org.

DCH Appropriations Subcommittee: C Gary McDowell (D-Rudyard); VC Pam Byrnes (D-Chelsea); MVC Bruce Caswell (R-Hillsdale); Richard Hammel (D-Flushing); Morris Hood (D-Detroit); Alma Smith (D-Ypsilanti); Mike Nofs (R-Battle Creek).

Health Policy Committee: C Kathy Angerer (D-Dundee); VC Mike Simpson (D-Liberty Twp.); MVC Ed Gaffney (R-Grosse Pointe Farms); Barb Byrum (D-Onondaga); Brenda Clack (D-Flint); Marc Corriveau (D-Northville); Andy Coularis (D-Saginaw); Marie Donigan (D-Royal Oak); Ted Hammon (D-Burton); Robert Jones (D-Kalamazoo); Mary Valentine (D-Norton Shores); Lisa Wojno (D-Warren); Richard Ball (R-Owosso); Brian Calley (R-Portland); Kevin Green (R-Wyoming); Joe Hune (R- Hamburg Twp.); Jim Marleau (R-Lake Orion); and Chris Ward (R-Brighton).

Insurance Committee: C Virgil Smith (D-Detroit); VC Barbara Farrah (D-Southgate); MVC Joe Hune (R-Hamburg Twp.); Paul Condino (D-Southfield); Bob Constan (D-Dearborn Heights); Bert Johnson (D-Highland Park); LaMar Lemmons, Jr. (D-Detroit); Gino Polidori (D-Dearborn); Bettie Cook Scott (D-Detroit); Mike Simpson (D-Liberty Twp.); Lisa Wojno (D-Warren); Judy Emmons (R-Sheridan); Dave Hildenbrand (R-Lowell); David Law (R-West Bloomfield); Tim Moore (R-Farwell); Dave Robertson (R-Grand Blanc); and Tory Rocca (R-Sterling Heights).

Judiciary Committee: C Paul Condino (D-Southfield); VC Andy Coulouris (D-Saginaw); MVC Tonya Schuitmaker (R-Lawton); Steve Bieda (D-Warren); Marc Corriveau (D-Northville); Mark Meadows (D-East Lansing); Andy Meisner (D-Ferndale); Bettie Cook Scott (D-Detroit); Virgil Smith (D-Detroit); Rebekah Warren (D-Ann Arbor); Kevin Elsenheimer (R-Bellaire); Rick Jones (R-Grand Ledge); David Law (R-West Bloomfield); Tory Rocca (R-Sterling Heights); and John Stakoe (R-Highland).

New Laws Limit the use of Mercury Devices

Three new laws, PA 492, PA 493 and PA 494 of 2006 will phase out the use and sale of blood pressure devices, thermostats, esophageal dilators, bougie tubes and gastrointestinal tubes containing mercury. The blood pressure device ban is effective January 1, 2008, and the ban on the other devices is effective January 1, 2009. Violators are subject to misdemeanor convictions and civil fines.

Legislation Introduced to Make Michigan a Smoke Free State

Both the House and Senate may begin discussion to make it illegal to smoke in certain public places in Michigan. Under the provisions of SB 109, SB 110 and HB 4163, it will be illegal to smoke in restaurants, bars and workplaces. Governor Granholm also encouraged the passage of this legislation in her State of the State Address. The MOA supports these bills, which reflect resolutions passed by the House of Delegates. MOA is an active participant in the Campaign for Smokefree Air coalition. We anticipate a significant grassroots campaign in the near future, so be watching your email for a Call to Action.

Capitol House Call Registration open

Only six weeks to go until the 10th annual Capitol House Call, Tuesday March 20, in Lansing. Join your colleagues and talk to legislators about the importance of medicine in Michigan and the compelling need to protect funding for critical programs and support the future of the profession despite the budgetary constraints. Register Now.

MOA Posts Memoranda Regarding New Medical Records law

The MOA has posted a summary of Public Act 481 of 2006 on its website. PA 481 provides rules for the retention and destruction of personal medical information. For a more complete description, you may access the summary through this link, or go to the MOA website.

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Governor Issues Executive Order for FY 2007, Senate Drops Hammer on DCH Budget

On Thursday afternoon the Governor issued a long-awaited Executive Order to address the projected shortfall of nearly $900 million from the current year's budget. The Senate blocked the Governor's first Executive Order back in February because it included a two-percent excise tax on services as part of the solution. This second effort at balancing the state's fiscal crisis for the current year, which runs through September 30, includes significant cuts to most areas of state government, but still only addresses about $350 million of the shortfall. The largest cuts come in the area of higher education ($74 million) and corrections ($68 million). There were cuts within the Department of Community Health budget, which includes the Medicaid program, but the cuts were not directed at the physician reimbursement lines. The Governor did recommend total departmental cuts of nearly $25 million, including roughly $2.2 million to hospital services and $12.5 million to health plan services. Read Executive Order 2007-3.

The Senate immediately voted to support the Executive Order and followed up with the passage of Senate Bill 220, which would cut another $65 million from the DCH budget for the current fiscal year, an additional $255 million overall. The Senate recommendations target physicians, call for the elimination of some fee-screen increases made since October 2004, and call for a further one-percent cut in the reimbursement rates to all Medicaid physicians paid by fee-for-service or health plans effective May 1, 2007. The estimated savings from these cuts is approximately $11 million. MOA is advocating against the recommended cuts to the Medicaid program as they are considered by the House of Representatives.

Capitol House Call Success

The 10th Annual Capitol House Call was a resounding success. This year's event brought a record turnout with 130 attendees wearing white coats and 66 different legislators participating in meetings. Due to the delayed release of Fiscal Year 2006-7 Executive Order budget cuts and Fiscal Year 2007-8 budget and tax restructuring plans, the profession was able to advocate for long term health policy issues rather than defensive posturing on reimbursement cuts. Without the overwhelming state fiscal issues to contend with, attendees were free to communicate a message of protecting and encouraging physician presence in Michigan. The legislature appeared receptive to issues related to retention of young physicians and medical students through creative tax incentives and loan subsidy or repayment programs, and attendees witnessed a groundswell of encouragement for legislative initiatives that would hold Blue Cross Blue Shield of Michigan accountable for its contracting practices with physicians. During the next weeks and months, the MOA will be following up with specific legislators on the issues raised during these meetings. MOA extends its gratitude to all those who attended the event and looks forward to seeing you again next year.

Osteopathic Discrimination, Liability Insurance Premiums targeted by MOA bills

At the request of MOA, legislators have introduced an important piece of the MOA's legislative agenda. In the area of osteopathic discrimination, Senate Bills 304 and 305 introduced by Roger Kahn, MD (R-Saginaw) and House Bills 4449 and 4450 introduced by Ed Gaffney (R-Grosse Pointe Woods). These bills, if passed, will make it a violation of Michigan law for a hospital or facility to discriminate against a physician on the basis of their osteopathic education, training or certification and would provide a judicial remedy for alleged violations.

Another of the MOA legislative issues has been introduced by Rep. Paul Condino (D-Southfield). House Bill 4302 was introduced in response to unexplained increases in medical liability premiums during the past several years. Under the provisions of the bill, insurers that sell medical liability insurance policies will have to file their rates and forms with the State of Michigan. Since March of 2003, rate filing has been optional, meaning that insurers have been able to charge what they want without oversight or opportunity to review the actuarial assumptions for premium increases.

Lieutenant Governor comes to MOA on auto-no fault issues

The MOA hosted a meeting of the Coalition Protecting Auto No-Fault (CPAN), of which the MOA is an Executive Committee member. Lieutenant Governor John Cherry addressed the meeting in early March to reaffirm his support and the support of the Governor's office for coalition legislative efforts to protect Michigan's no-fault automobile insurance system. MOA testified in support of House Bill 4301, the so-called "Kreiner Fix", which passed the House of Representatives in mid-March. HB 4301 reaffirms the right of injured victims to be compensated for significant injuries that altered a patient's ability to lead a normal life. MOA will be continuing its participation in the discussions in the Senate to secure passage of the bill.

Only Six Weeks Left to make Pre-Convention MOPAC Contribution

Convention is fast approaching. Don't miss out on the chance to be recognized as a donor to the Michigan Osteopathic Political Action Committee (MOPAC). Have your name memorialized on the donor plaque for Governors Club and Still Club membership, or have your name listed on any of the other prominent signage and convention materials. Proudly wear you ribbons and MOPAC lapel pins to demonstrate your commitment to the profession. Political Action Committees are more important than ever in gaining access to lawmakers. MOPAC accepts personal contributions of any amount (corporate or PC funds are not accepted), and has special recognition at Representatives Club ($100-249), Senator's Club ($250-499), Governor's Club ($500+) and Still Club (5 years consecutive contribution). You can make your contribution by Visa, MasterCard or Discover using our secure online donation page, or you can call the MOA at (800) 657-1556 and ask for Doug Borruso or Jen Miller.

If you have any questions about these, or any other legislative issues, please contact Doug Borruso, MOA Deputy Director, at 800-657-1556, or dborruso@mi-osteopathic.org.

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Legislature, Executive Agree on budget fix for 2007

After months of posturing, the legislature and the Governor have agreed on a fix for the $800 million deficit in the current year's state budget. The deal was passed by both the House and Senate on Friday, but still requires some legislation to authorize the gap filling provisions. Action on those technical bills will occur next week, when the legislature returns from the annual Detroit Chamber of Commerce Conference on Mackinac Island.

The good news from this budget deal is that Medicaid providers have been spared any further cuts to reimbursement. Cuts ranging from 2-6 percent had been threatened in previous budget proposals. Nearly 200 MOA members sent emails urging lawmakers to fix the budget without cutting reimbursement to physicians, and the MOA lobbyists passed that same message to lawmakers on a daily basis in Lansing. The message was heard for the immediate future.

The bad news is that this deal does nothing to address the structural deficit that is at the core of Michigan's budget problems. As has become part of a lengthy pattern, this deal relies on a series of cuts and one-time fixes and conversions. This year's solutions include delayed payments to higher education (essentially transferring a debt to a period 5 months in the future) and a conversion of the restricted tobacco settlement revenue to the general fund. Cuts have also been made to the Healthy Michigan Fund, which supports many critical health care initiatives including the cancer consortium.

What does this mean for physicians? Your Medicaid reimbursement level is safe until September 30. It is a very real possibility that the budget for next year will include cuts to the Medicaid program, including payment levels. Physicians should be prepared to stand up and fight against these cuts again as the legislature begins almost immediately to work on the projected $1.8 billion deficit for next year.

HPV vaccine bill moving through legislature

The legislature has started to act on bills related to the Human Papillomavirus vaccine (HPV). The Senate passed SB 415 and SB 416 that require the Department of Community Health to develop educational materials regarding the HPV vaccine and require the public schools to provide the educational materials to students and parents. The MOA supported passage of these bills because they were premised on consumer education. MOA had opposed previous versions of the legislation because they had moved into the area of mandatory immunization and legislative intervention in the practice of medicine. The bills have been referred to the House Health Policy Committee for further action. Click on the links to be directed to the complete text of the bills.

MOA has expert testimony legislation introduced in the House of Representatives

The MOA has successfully introduced two of its limited initiatives regarding medical liability for this session. With the introduction of HB 4723, sponsored by Rep. Kevin Green (R-Wyoming) and HB 4724, sponsored by Rep. Rick Jones (R-Grand Ledge), the MOA is attempting to make some important improvements in the area of expert testimony in medical liability cases. Identifying a need to have greater ability to review the integrity of testimony by physicians, the MOA's proposed legislation would expand the scope of practice for osteopathic physicians to include the provision of testimony as an expert in a liability case. In essence, the bill would make expert testimony subject to peer review. The legislation would also require physicians coming to Michigan to provide testimony for the sole purpose of offering testimony to possess a limited Michigan license for that purpose. The holding of a license would subject their actions to the authority of the Board of Osteopathic Medicine and Surgery. The MOA's objective is ensure that only the most reliable testimony is offered in Michigan cases and that those physicians that are offering less credible information are subject to scrutiny by their own peers. The bills will not have any impact on ability for injured persons to bring cases. Follow the links to read the complete text of the legislation.

If you have any questions about the subjects discussed in this edition contact Doug Borruso, MOA's Deputy Director by phone at (800) 657-1556, or by e-mail at dborruso@mi-osteopathic.org.

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Agreement Reached for Business Tax Replacement

After nearly 100 hours of closed door negotiations between Governor Granholm, Senate Majority Leader Mike Bishop and Speaker of the House Andy Dillon, Michigan appears to have a replacement for the soon-to-be-defunct Single Business Tax. The new tax structure, being called the Michigan Business Tax (MBT) is being described as broad based and purports to generate the complete $1.9 billion that was being lost through elimination of its predecessor.

The tax shifts more burden to out-of-state companies and provides significant credits for investment, compensation and research and development. The tax shifts burden from the manufacturing industry to the industries that don't have tangible assets like banks and insurance companies. The administration claims that 72 percent of businesses will be winners under this structure, and that small business will see an overall tax cut of about $300 million and will have the option of paying liability under the MBT or paying a flat 1.8-percent income tax.

All necessary legislation is expected to be drafted this week, and voted on during the next few weeks, so the SBT replacement should be completed by July 1.

Legislature prepares for a vote on tax hike

The House of Representatives was preparing to take a vote on a number of tax increases as early as this week in order to begin addressing the 2008 budget deficit. The legislature has made this sort of promise numerous times already this year but has failed to follow through. Why is that?

No one wants to pass a tax, but all realize that it has to happen in order to have a budget capable of meeting the states obligations. There is no party unity in this debate, particularly in the Senate, where it is rumored that the Democratic caucus is at least three votes short of complete, and the Republican caucus contains at least 6 Senators that have indicated a willingness to support some form of tax hike.

What lies ahead is debate on what is to be taxed and how much the increases will be.

Smoke Free Legislation gets moving, MOA there in support

Last week the House Commerce Committee heard extensive testimony in support of House Bill 4163, which would ban smoking in all Michigan workplaces, including restaurants and bars. The Michigan Osteopathic Association was at the hearing to go on record in support of the legislation, which is consistent with both MOA and AOA resolutions. The Commerce Committee is expected to take additional testimony on Tuesday, June 26, and may vote the bill at the same time.

On a related note, the MOA testified in support of another smoking related bill on Tuesday, May 19. House Bill 4087, sponsored by Ted Hammon (D-Burton) would ban smoking in all college dormitories. The legislation is a small step in the right direction, and will have the effect of giving legal effect to what have, up to now, been voluntary initiatives by colleges and universities. MOA was represented at the hearing by MSUCOM student, Carrie Janiski, who had been asked to testify following her meeting with Rep. Hammon at Capitol House Call in March, and MOA Deputy Director Doug Borruso.

If you have any questions about these or any other developments in Lansing, please contact MOA Deputy Director Doug Borruso at (800) 657-1556, or by email at dborruso@mi-osteopathic.org.

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Governor Signs Michigan Business Tax

Last week, Governor Granholm signed into law the replacement for the single business tax. Known as the Michigan Business Tax (MBT), this new structure claims to be revenue neutral with a broad taxpayer base, while being conducive to jobs creation. The MBT also retains some of the characteristics of the old Single Business Tax, including the filing threshold and credits for small business. Below are some of the highlights:

Business Income Tax: Every taxpayer with business activity in Michigan will be taxed at the rate of 4.95%. Business income will generally be calculated on the Federal taxable income, subject to adjustments.

Modified Gross Receipts Tax: Taxpayers will pay 0.8% of gross receipts less purchases from other firms, including inventory, depreciable assets and capital expenditures. This portion of the tax contains special provisions applicable to self-employed persons, members of partnerships and limited liability companies (LLC).

Filing Threshold: The MBT retains the $350,000 threshold for tax liability that existed under the SBT. In addition, the MBT includes a phase-in provision provides a tax credit to those businesses with gross receipts between $350,000 and $700,000. The phase-in is designed to minimize the tax cliff, and create some equity between those at either end of that range.

Small Business Credit: The MBT will make it possible for more businesses to qualify for the credit by increasing the qualifying criteria. The gross receipts ceiling has been increased to $20 million (up from $10 million), the business income ceiling has been increased to $1.3 million (up from $475k), and officer compensation range has been increased to $165-180K (from $95-115K). The tax rate has been reduced to 1.8%, down from the current 2%.

Revenue Limits: The MBT contains a provision that limits the amount of revenue that may be generated by the tax. In years when the total revenue generated exceeds that legislated threshold, ½ of the surplus is deposited in the Budget Stabilization fund and the remaining half is returned to the taxpayers.

The above information was provided for basic understanding and is not meant to replace advice from subject matter experts. The MOA suggests that you discuss the implications of the Michigan Business Tax with your tax advisor.

If you have any questions about these or any other developments in Lansing, please contact MOA Deputy Director Doug Borruso at (800) 657-1556, or by email at dborruso@mi-osteopathic.org.

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Smoke-Free Michigan One Step Closer to a Reality

The Michigan legislature took a significant step forward in the effort to make workplaces, including bars and restaurants, smoke free. The House Commerce Committee passed House Bill 4163 in overwhelming fashion, by a vote of 12 to 4, with one pass. The bill passed would make all worksites smoke free, except for existing cigar bars and specialty tobacco retailers. Representative Rick Jones (R-Grand Ledge) offered an amendment that would exempt any place where liquor was sold, private clubs and casinos. The amendment was soundly defeated, garnering only three votes of support. This is an indication that even those representatives that oppose smoke-free worksites are determined to make certain that any bill does not favor one business over another. The Michigan Osteopathic Association provided testimony in support of the bill passage, and immediately prior to the vote was contacting committee members to ensure that it was not weakened through amendments. The next step for the bill is a full vote on the house floor. MOA members are encouraged to tell their state representative to support HB 4163. Contact your State Representative now through MOA IMPACT.

MOA, CPAN Protect Physician Payments through delayed Vote on Auto Fee Schedules

Physicians that treat victims of automobile accidents were spared a significant cut to reimbursement for those services. During the past days and weeks, the MOA and other members of the Coalition to Protect Auto No-Fault have been lobbying members of the House Insurance Committee to prevent passage of House Bill 4792. The automobile insurance industry is the major proponent of HB 4792, which would mandate the use of the Workers Compensation fee schedule for all services provided to drivers injured in automobile accidents. The current system of reimbursement allows for physicians and other health care providers to charge the same fees they would charge to private pay patients. The no-fault system is the last true fee-for-service model of reimbursement. The chairman of the House Insurance Committee has been unable to secure enough votes from his own caucus to pass this bill and has been forced to delay a vote on it for the past two weeks. There is significant opposition within the Democratic membership on this issue, primarily because there is no guarantee of any premium reductions resulting from the bill's passage. MOA has opposed the bill in committee and has created a link through its IMPACT program for those members wishing to contact their Representative. Follow the link to see if your State Representative needs to hear from you.

Only a Few Days left to act on Medicare Payment and Sustainable Growth Rate reform

In the next few days, the House of Representatives in Washington D.C. is expected to vote on issues that are critical to your practice and your patients. The Children's Health Insurance and Medicare Protection "CHAMP" Act reauthorizes the State Children's Health Insurance Program (SCHIP) to protect access and coverage for children. The Act eliminates the proposed 15% Medicare physician payment cuts and replaces them with two years of nominal positive updates and a consideration of discontinuing the flawed sustainable growth rate (SGR) formula. The Act encourages wellness and prevention by adding new wellness benefits and eliminating co-payments and deductibles on current and future preventive services. The CHAMP Act will also increase taxes on tobacco and tobacco products, which has been shown to reduce smoking, and will reduce subsidies to Medicare Advantage private insurance companies that disadvantage the traditional Medicare program. Follow this link to the AOA's Advocacy Center to be heard in Washington.

If you have any questions about these or any other developments in Lansing, please contact MOA Deputy Director Doug Borruso at (800) 657-1556, or by email at dborruso@mi-osteopathic.org.

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After a lengthy summer recess the legislature has returned to Lansing and so too has the Capitol News.

Budget Showdown enters Fourth Day, Government Shutdowns/Continuation Budget Possible as Legislature Fails to Produce a Budget

The Michigan legislature returned to work after the Labor Day weekend, leaving less than three weeks to pass revenue and spending plans before being forced into government shutdowns. The latest revenue projections leave the state with a deficit of approximately $1.7 billion. In an attempt to reach a budget solution before the October 1 deadline, the House engaged in rare Friday night and Saturday sessions. Despite the weekend work, Michigan is no closer to a budget and the threat of partial government shutdowns are closer to reality.

Senate Majority Leader Michael Bishop (R-Rochester) recently proposed a compromise-budget solution that calls on each chamber to take responsibility for a portion of the deficit. Bishop's plan from the Republican-controlled Senate calls for government reforms and spending reductions of slightly more than $1 billion and calls on the Democratic-controlled House to resolve the remaining $662 million shortfall. This proposal leaves the House with the obligation to either find further cuts in an already under funded system or identify revenue increases to fill the gap.

Speaker Andy Dillon (D-Redford Twp) is pushing for a bi-partisan solution with enough Republican crossovers to offer a realistic chance of passing the Republican Senate. A bi-partisan agreement would also provide some cover for Democrats in vulnerable seats that are threatened by recall efforts. (See related story) As of September 17, the bi-partisan approach has shown no progress.

The late date for agreement on the budget makes a continuation budget a distinct possibility. Lieutenant Governor John Cherry commented that a continuation budget is the proper procedural way to continue government operations after October 1, but cautioned that the Governor would not authorize a continued deficit budget, meaning that the legislature must solve the revenue situation before presenting her with a continuation budget.

Partisan rhetoric has become the focus in Lansing with Democrats called Republicans obstructionist intent on running government into the ground, and Republicans responding that Democrats were determined to raise taxes without any state reforms.

Speaker Andy Dillon (D-Redford Twp) is pushing for a bi-partisan solution with enough Republican crossovers to offer a realistic chance of passing the Republican Senate. A bi-partisan agreement would also provide some cover for Democrats in vulnerable seats that are threatened by recall efforts. (See related story) The bi-partisan result appears doomed because Republican leadership will not budge without trade-offs including reforms in school employee health care and other anti-union reforms.

Proposals for Sales and Income Tax Increases Not Making the Cut in House

On September 12, efforts at a sales-tax increase from six cents to seven cents failed in the House of Representatives. Needing 74 votes to put the issue on the January 15 presidential primary ballot, the measure to raise the sales tax one cent to seven percent garnered only 50 votes from Democrats. All 45 voting Republicans opposed the initiative. Five Republicans did not vote, nor did seven of the Democrats being challenged by recall petitions. Three members were absent.

House Minority Leader Craig DeRoche (R-Novi) said that his caucus did not support the measure because it called for taxation that was contingent on the vote of the people, and therefore not guaranteed. He also commented that even if the popular vote supported the tax increase it would not be effective until halfway into the fiscal year, leaving the first six months of the fiscal year without any firm revenue guarantees on which to base a budget.

Early Saturday morning, lawmakers began arriving for the Saturday session greeted by a voting board still showing the failure to get enough votes the night before to raise the income tax seven-tenths of a percent to 4.6 percent. With the House in deadlock, Democratic leadership began negotiating with moderate Republicans, offering "equity" school funding to benefit rural school districts in exchange for their votes on an income tax increase. The Senate indicated that the school equity issue would not be enough to guarantee support in the upper chamber, so House Republicans backed off the issue. After nearly three days on the clock, as of Monday morning the bill still remains deadlocked, only 48 of the 56 votes needed for passage have been secured. The bill was not supported by ten Democrats and all of the Republicans. The Governor has reportedly been contacting leaders of big business including the Big Three automakers to get their backing for the tax, under the threat of repeal of tax credits provided under the new Michigan Business Tax

The House Democrats then offered up a substitute for the Senate plan, calling for $1.75 billion in cuts with no revenue. That plan expectedly failed by a vote of 0-105, with five members not voting. The structure of the substitute made it impossible for either party to because it contained excessive cuts with no revenue increase.

The MOA will issue special alerts and will call on its members to contact their legislators as necessary.

Threats of Recall Have Marked Influence on Tax Vote

The Michigan Taxpayers Alliance under the leadership of former State Representative Leon Drolet from Macomb County has orchestrated recall efforts against House members in competitive districts who vote in support of tax increases. The threat of recall has clearly influenced the decision making process in Lansing where lawmakers are receiving countless telephone calls and emails. In the last week of August, recall paperwork was filed against ten lawmakers, with as many as 2 dozen possible.

The targeted Republicans are: Sens. Gerald Van Woerkem (R-Muskegon) and Valde Garcia (R-Howell) and Representatives Dick Ball (R-Laingsburg) and Ed Gaffney (R-Grosse Point Farms).

Targeted Democrats include: Speaker Andy Dillon (D-Redford Twp), Reps. Mary Valentine (D-Muskegon), Gino Polidori (D-Dearborn), Marc Corriveau(D-Northville) and Sens. Glenn Anderson (D-Westland) and Dennis Olshove (D-Warren).

Despite the fact that some tax increase will be required to resolve the budget crisis, these individuals will likely not vote in order to avoid a recall, thereby making the passage of a tax increase more difficult.

If you have any questions about these or any other developments in Lansing, please contact MOA Deputy Director Doug Borruso at (800) 657-1556, or by email at dborruso@mi-osteopathic.org.

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Governor, Legislature Make FY 2008 Budget Deal
At roughly 4:00 this morning, the first day of Fiscal Year 2008, Michigan Gov. Jennifer Granholm and the Legislature finally agreed on a bi-partisan deal to avoid the shutdown of state government. Details of the budget deal include:

• Income Tax Increase: The income tax rate is increased to 4.35 percent until October 1, 2011, when it will decrease to 3.95 percent. It will decrease again in 2015 to its current level of 3.9 percent.
• Expansion of Sales Tax: In order to generate about $750 million in revenue, the sales tax will expand to many services that were previously excluded including consulting services, armored car services, landscaping and office administration. A sales tax on medical services was not included in the measure.
• Public Employee Health Reform: This bill requires health insurance administrators to release health claims data for pools of 100 or more employees to allow for competitive rating by the school district, reportedly saving 12 percent from the current MESSA administered system.
• Other Reforms: Several other smaller cost items include higher employee contribution to retirement benefits by teachers, wellness incentives for Medicaid beneficiaries, a series of government efficiency studies, common calendar school districts, privatizing mental health services in the Department of Corrections, and stopping state retirees from collecting benefits while employed or under contract with the state.

Details on the budget deal and how it affects health care are available on the MOA website at www.mi-osteopathic.org. You can also contact MOA Deputy Director Doug Borruso with questions at dborruso@mi-osteopathic.org or (800) 657-1556.

TAMPER RESISTANT PRESCRIPTION REQUIREMENT DELAYED UNTIL 2008.
Due to intense pressure from the medical community, Congress and President Bush passed legislation on Saturday, September 29 that delays implementation of the tamper-resistant prescription requirement for Medicaid beneficiaries for a six-month period. The Michigan Osteopathic Association was a signatory on a letter to Congress, urging a delay in implementation, informing lawmakers that compliance by October 1 was unreasonable in light of the short time between passage and effective date. Countless providers and numerous state Medicaid directors were reporting an inability to get adequate supplies of prescription pads containing the requisite security features. The MOA will continue to apprise you of further developments in this area prior to the new compliance date of April 1, 2008.

If you have any questions about these or any other developments in Lansing, please contact MOA Deputy Director Doug Borruso at (800) 657-1556, or by email at dborruso@mi-osteopathic.org.

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First Wave of Post-Tax Recall Efforts Announced

In a move that was widely expected following the passage of an income tax increase and an expansion of the sales tax the Michigan Taxpayers Alliance (MTA) under the leadership of former Macomb county representative Leon Drolet, announced that it had initiated recall efforts against lawmakers who voted for tax increases. The list of targeted legislators includes five Republicans and five Democrats, including some big name lawmakers like Speaker of the House Andy Dillon (D-Redford Township) and Senate Education Committee Chair Wayne Kuipers (R-Holland). In addition to Dillon and Kuipers, initial recall efforts have been launched against Reps. Steve Bieda (D-Warren), Marc Corriveau (D-Northville), Robert Dean (D-Grand Rapids), Mary Valentine (D-Muskegon), Ed Gaffney (R-Grosse Pointe Farms), Chris Ward (R-Brighton) and Sens. Valde Garcia (R-Howell) and Gerald Van Woerkom (R-Muskegon).

Organizers within the targeted districts must collect signatures from registered voters in numbers that exceed 25% of the number of voters that participated in the last gubernatorial election within a 90-day window. The county board of elections must first approve the recall language before the collection of signatures may commence.

This effort marks the first time there has been a significant recall effort since 1983, where 17 recalls were initiated following the income tax hike passed under then-Governor James Blanchard's administration. Although only two of those efforts were successful, those recalls caused the Republicans to gain control of the Senate, which they have retained for more than two decades.

SENATE PASSES MI-HEART PROGRAM TO ADDRESS STATE'S UNINSURED

The state Senate unanimously approved legislation that would help residents get access to health insurance through a state-created exchange. The three bill package, SB 278, SB 280 and SB 283, would create the Michigan Helping Ensure Affordable and Reliable Treatment (MI-HEART) exchange. The exchange would facilitate the availability, choice and adoption of private insurance and would also allow individuals to buy insurance through the exchange. Subsidies for low income individuals would also be available through the exchange's MI-HEART Program.

The exchange would be able to work collaboratively with the proposed Michigan First health plan to provide insurance for as many as 1 million residents. Michigan First is currently awaiting waiver approval by the U.S. Department of Health and Human Services.

Under the MI-HEART legislation, an exchange board would be established within the Department of Community Health and would be required to secure private carrier coverage for insurance plans. The exchange would have to offer multiple plans, including one that offers catastrophic coverage only with a high deductible. Subsidies would be available on a sliding scale based on income. Administration costs of the exchange require a federal match of state funds. Once those federal funds are received individual policies would have to be available within six months and small employer policies within eight months. Read a summary of the bill.

HOUSE ADVANCES MOTORCYCLE HELMET REPEAL, AGAIN

Last week the state House of Representatives passed the proposed repeal of Michigan's mandatory motorcycle helmet law by a vote of 69-39. House Bill 4749, sponsored by Rep. Barb Farrah (D-Southgate) would allow motorcycle drivers and passengers over age 21 to operate without a helmet. The motorcyclist would by required to have a permit and carry a minimum of $20,000 in first party medical insurance. Opponents of the repeal include most automobile insurers and health care providers , who argue that the use of crash helmets reduce severity of injury, likelihood of death and overall cost of medical care for injuries sustained in motorcycle accidents. The bill now moves to the Senate which is expected to also pass the legislation. The Governor vetoed a similar bill in the last session and is expected to do the same this time around when the bill gets to her desk for signature. The Michigan Osteopathic Association is part of the Heads First Coalition and has repeatedly opposed the passage of the bill.

MICHIGAN BECOMES LAST TO ADOPT MEDICAID ESTATE RECOVERY PROGRAM, EXEMPTIONS REDUCE PUNITIVE EFFECT

After 14 years of delay, Michigan became the final state in the country to adopt an estate recovery law. PA 74 of 2007 was passed ultimately by the state legislature following contentious votes of 57-52 (40 Democrats and 17 Republicans) in the House and 25-13 (14 Republicans and 11 Democrats) in the Senate during the extended session days needed to pass a budget. The law comes with an estimated cost savings of $10 million. Michigan has been balking at the passage of the program since it was mandated by the federal government in 1993, but finally was forced to move on the issue when faced with the loss of federal Medicaid funding for failure to act. The law gives the state the right to try to collect bills for Medicaid long-term care services by recovering the money from an individuals estate. Michigan laws provides for a variety of safeguards so that heirs don't have to liquidate the assets of their parents to pay the bills. The law applies only to assets that are included in an estate that passes through probate and exempts significant amounts of assets including those homes where a family member lived with the deceased for at least two years prior to entering long-term care. You can view the complete text of the law or you may read the summary drafted by the Senate Fiscal Agency.

BCBSM PROPOSES ITS REFORMS TO INDIVIDUAL INSURANCE MARKET

The House Insurance Committee is poised to hear testimony on a four-bill package that will reform the Michigan market for individual health insurance. House Bills 5282-5285 have been cosponsored by a large bipartisan contingent of state representatives. The bills would open PA 350 of 1956, which is the statute that governs Blue Cross Blue Shield, and would allow them to participate in the individual or non-group market for health insurance in the same manner as any other carrier. The bills would preserve BCBSM status as the "carrier of last resort" but would allow them to use health status as an underwriting factor. BCBSM would still have to fund and administer a state high risk pool for those individuals that do not qualify for coverage under traditional underwriting rules. The bills would also allow BCBSM to use its Accident Fund subsidiary to conduct property and casualty business. Despite the proposed legislation making BCBSM more similar to other carriers in Michigan, it still preserves the not-for-profit, tax exempt status that BCBSM has enjoyed by virtue of its statutory benevolent mission.

BCBSM has been engaging in comprehensive meetings with stakeholders and legislators, communicating their justification for this major overhaul of the insurance system. BCBSM has asserted that individual market reform, as they propose it, will eliminate cherry picking and increase overall competition in the marketplace by allowing all carriers to compete based on the uniform coverage criteria and premium rating factors. BCBSM paints a picture of the individual market without reform that is characterized by older, unhealthy people being the only ones insured by BCBSM. They also claim that the reforms will support Michigan's economy by allowing subsidiaries to conduct business in other lines of insurance, keeping the economic growth in Michigan.

The bills are significant in length and effect, and the Michigan Osteopathic Association is thoroughly reviewing the content. The MOA will be asking the legislature to delay any decision making on the legislation until there is discussion in a public forum, and until all stakeholders have had adequate opportunity to review the legislation for impact. While the MOA Board has not had an opportunity to take a position on the legislation, we believe a cautious approach is necessary, particularly because of the dominant market position that BCBSM currently enjoys and because there is some debate whether this expansion would be consistent with BCBSM's benevolent mission statement. MOA will keep its members apprised of any developments.

If you have any questions about these or any other developments in Lansing, please contact MOA Deputy Director Doug Borruso at (800) 657-1556, or by email at dborruso@mi-osteopathic.org.

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BCBSM Reform Package Flies through House, Leaves Many Question and Concerns

Earlier this week, the Michigan House of Representatives overwhelmingly passed a four bill package that will significantly enhance Blue Cross Blue Shield of Michigan's (BCBSM) participation in the market for individual health insurance. The legislation, House Bills 5282 - 5285, makes major changes to the state's insurance law. While there has been a little of discussion of the merits or detriments of the proposal, the far greater emphasis has been placed on the manner of the passage. These changes to Michigan law represent a completely different way of conducting business in the individual market, and offer BCBSM major competitive opportunities while still affording the non-profit, tax-exempt status that is provided under law. Despite the magnitude of the changes and its obvious effect on a large portion of the Michigan citizens, this package was introduced on a Thursday afternoon, given a specially scheduled Committee hearing with limited opposition testimony 5 days later, and was passed by the full House 5 days after that. There were some certain stakeholders that provided formal opposition to the bills, but the majority of interests that were testifying at the House Insurance Committee, including the Michigan Osteopathic Association, were requesting an extension so that they could adequately review the implications.

Some of the highlights of the bills include:

• Authorization for BCBSM to use regional variations and tiered premium levels in the individual insurance market, including the ability to use age and health status as an underwriting factor. MOA is trying to identify the implications that this may have on the senior populations and those with pre-existing medical conditions.
• Creates a high risk pool that would be solely administered by BCBSM to cover those citizens that could not get coverage under any of the other categories. This high risk pool presumably would satisfy BCBSM obligations as the "carrier of last resort" allowing them to maintain their tax-exempt, non-profit status. The high risk pool, while administered by BCBSM, would have any losses subsidized by all carriers in the individual market.
• Allowing BCBSM to sell any line of insurance product in the state through its Accident Fund subsidiary.

The package of bills has been referred to the Senate Health Policy Committee under the Chairmanship of Sen. Tom George, MD, (R-Portage). The MOA had been in contact with Senate Majority Leader Mike Bishop (R-Rochester) to urge this referral. It is anticipated that Sen. George, will encourage due diligence and thorough consideration of all the implications before putting it to a vote.

A summary of the bill contents provided by the House Fiscal agency may be found here: HBs 5282-5283, HBs 5284-5285.

Budget Deals Coming Together

With only 4 days left in the continuation budget, lawmakers are reportedly cutting deals and getting close to finalizing the 2008 budget. The majority of the budget had been solved in September with the passage of the income tax hike and the service tax expansion. The continuation budget had been approved to allow the Governor and the legislature to identify and pass approximately $ 450 million in budget cuts. Included within those cuts was $ 50 million in the Department of Community Health budget that includes Medicaid. Throughout the past month the MOA has been actively lobbying the legislature to prevent cuts to physician reimbursement while still preserving benefits and eligibility for Medicaid programs. In a Friday afternoon call, the Governor's office described a budget agreement that accomplished both of those objectives and preserved funding for the Healthy Michigan Fund. MOA will keep its members updated as the budget deadline approaches.

If you have any questions about these or any other developments in Lansing, please contact MOA Deputy Director Doug Borruso at (800) 657-1556, or by email at dborruso@mi-osteopathic.org.

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Blue Cross Market Reform Target of Fierce Opposition

As reported in earlier editions, Blue Cross Blue Shield of Michigan is promoting a series of legislative proposals that it claims will provide it with equity in the market for individual insurance products. The 4-bill package will essentially rewrite the way that Blue Cross does business in its health care operations by eliminating adjusted community rating, authorizing underwriting adjustments based on age, geography and health status, and eliminating the oversight of state regulatory agencies. Other parts of the bill would expressly authorize Blue Cross to own subsidiary corporations to sell any type of insurance allowable in the state.

The Michigan Attorney General's office has come out fiercely against the proposal, conducting press conferences across the state yesterday, and claiming that the reform is aimed at increasing profits for a benevolent charity that already makes record profits at the expense of the old, sick or vulnerable, who will pay more or lose insurance coverage.

The Attorney General is just one of many opponents, a list which includes the Consumers Union, AARP and nearly every insurer in the state. The MOA has reviewed the legislation thoroughly and has adopted a position of opposition to the legislation as it is written. MOA does not believe that the stated purposes of the reform: making individual insurance more affordable and accessible to the public, are met with the legislation as drafted. The MOA is actively advocating with Senate leadership for significant modifications to the bills that will make them consistent with the charitable and benevolent mission of Blue Cross to provide quality, accessible and affordable health care. The MOA agrees that legislative changes are necessary to allow BCBSM to compete in the individual market for insurance, but this series of legislation is not the appropriate vehicle for that objective. The MOA has drafted a policy paper on the legislation which we are using as the basis for discussion with the Senate.

Read the MOA policy paper.

Read the Attorney General position with supporting documents.

Read House Bill 5282

Read House Bill 5283

Read House Bill 5284

Read House Bill 5285

Service Tax Repealed, Full Replacement Found

Earlier this year the legislature passed an expanded service tax of six-percent on dozens of services as part of the plan to replace the eliminated Single Business Tax. Faced with fierce opposition from the business community claiming that the tax was a significant burden on business because it applied to business to business transactions, the tax was in effect for only 19 hours before the legislature finally agreed to repeal it. Senate and House leadership had been working well into the night to reach a compromise that would provide full replacement revenue for the $600 million hole that would be created. The tax will be replaced by a 21.99 percent surcharge on the new Michigan Business Tax. Under the enacted replacement, all businesses that pay under the MBT will have to add an additional 21.99 percent to their liability. An additional feature of the replacement is an increased cap on tax liability of $6 million for the largest businesses.

Physician offices may be impacted by the Michigan Business Tax. MOA recommends that you consult a qualified tax expert for advice.

If you have any questions about these or any other developments in Lansing, please contact MOA Deputy Director Doug Borruso at (800) 657-1556, or by email at dborruso@mi-osteopathic.org.

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