Pennsylvania Legislation

These days, more often than not, physicians and up on the short end of the stick when it comes to new health care legislation. However, last month a bill was introduced by Senator David Argall which, if passed, would give physicians and other healthcare providers important protection against retroactive insurance denials. Specifically, Senate Bill No. 554 would limit the period during which insurance companies could retroactively deny payment to 12 months after the date of the original payment. This would mean that if a payor makes payment on a claim, it would have only 12 months to later seek to recoup that payment if coverage is retroactively denied. The only time this rule would not apply as if the claim is fraudulent or improperly coded. The bill, which has been referred to the Banking and Insurance Committee can be viewed on the Pennsylvania Senate website.

Physicians in Pennsylvania who have been dispensing and billing for prescription drugs under the Pennsylvania Workers’ Compensation program will be disappointed to learn that House Bill 1846 (which already passed the House) was approved by the Pennsylvania Senate yesterday, essentially clearing the way for the bill to be signed into law.  HB 1846, among other things, limits the amount a physician may charge for drugs under the Workers’ Compensation program to 110% of the Average Wholesale Price of the drugs.  The Bill also limits the amount of drugs a physician can dispense to a Workers’ Compensation patient to a 7-day supply for Schedule II and III drugs and to an initial 30-day supply for any other drug.  The final bill can be viewed here:  Pennsylvania House Bill 1846

The Centers for Medicare and Medicaid Services (CMS) has agreed to permit Pennsylvania to expand its Medicaid program under the federal Affordable Care Act to cover low income adults whose incomes exceed the federal poverty level.  Pennsylvania will join 26 other states in expanding its Medicaid program under the statute.  With the expansion, the Pennsylvania Medical Assistance Program benefits will cover an additional 500,000 people starting in 2015.  Beginning in 2016, individuals whose incomes exceed the federal poverty level may be required to pay a modest premium for the coverage.  More information on the program, which is call the Health PA Plan, can be found on the plan website at

On December 18, 2013, Pennsylvania Act 122 amended the Pennsylvania Clinical Laboratory Act to, among other things, impose licensure requirements on out of state clinical laboratories and to place certain prohibitions on physician financial arrangements with labs.  Among other things, Act 122 prohibits the payment or receipt of commissions, bonuses, kickbacks or fee-splitting arrangements and prohibits laboratories from leasing office space, shelves or equipment within a physician’s office.  The Department of Health has now issued two rounds of “Frequently Asked Questions” regarding clinical laboratories and Act 122.  These FAQs can be found on the Department’s website here.  Physicians in Pennsylvania who have financial/contractual arrangements with clinical laboratories, whether those labs are located in Pennsylvania or in another state, should carefully review Act 122 and the FAQs to ensure that their arrangements are in compliance with these new requirements.

Creative clinical laboratory arrangements seem to be proliferating of late in Pennsylvania. Laboratories, like many providers, are eager to find ways to more closely align with referring physicians. Such arrangements can take a variety of forms such as shared space and personnel arrangements as well as various kinds of marketing arrangements.

Providers considering such arrangements should be aware of recent amendments to the Pennsylvania Clinical Laboratory Act which may effectively prohibit many such arrangements. The amendments, which were signed in to law just this month, prohibit, among other things, the following:

1. Paying or receiving commissions, bonuses, kickbacks, rebates or entering into fee-splitting arrangements for patients or clinical laboratory specimens;

2. Clinical labs from leasing or renting space, shelves, equipment or services within a health care provider’s offices;

3. Clinical labs from leasing personnel to perform any services in a health care provider’s office; or

4. Clinical labs from placing paid or unpaid personnel in a health care provider’s office to perform any service, including specimen collection.


The Pennsylvania Insurance Department has announced that the Medical Care Availability and Reduction of Error (MCARE) Act annual assessment for calendar year 2013 will be 25% applied to the prevailing primary premium for each participating health care provider.  The announcement is in  the Pennsylvania Bulletin.  This represents an increase of two percentage points from the 2012 assessment.

On October 9, the Pennsylvania Department of Health (PA DOH) announced that it has changed the Pennsylvania rules regarding the J-1 Physician Waiver Program. DOH has established three filing periods, which could result in the Conrad 30 numbers being assigned earlier in the fiscal year. Read the entire text:


 I mentioned recently to one of my physician practice clients that all indications suggest to me that in-office dispensing of drugs by physicians is likely to become a target for increased regulation and enforcement.  It seems like at least once a week we hear in the news about another tragedy involving prescription drug addiction.  In fact, only this week I saw a documentary spotlighting the newest illegal drug epidemic sweeping the northeast: prescription pain pills purchased from doctors in Florida and trafficked up the route 95 corridor for sale on the street.  With a street value of up to $80 per pill, prescription meds may be more profitable and easier to obtain than cocaine.

As an indication that a regulatory correction is just around the corner, a recent New York Times article casts a spotlight on the huge mark-up on prescription drugs that physicians are able get under state workers compensation programs and efforts by state legislators to control the associated costs. (See Insurers Pay Big Markups at


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Last week, the Pennsylvania Board of Medicine published proposed regulations amending the physician controlled substances prescribing regulations to, among other things, expand the regs to include butalbital, carisoprodol and tramadol hydrochloride

Under the proposed regulations, these drugs would now be subject to the same requirements applicable in Pennsylvania to physician office prescribing of controlled substances, including that an initial medical history and physical exam be performed before a drug may be prescribed unless emergency circumstances justify otherwise, and that patients receive appropriate counseling regarding the patient’s condition and the drug dispensed.

In addition, among other things, each time a drug is prescribed, administered or dispensed, the medical record must be updated to include the name of the drug, its strength, the quantity and the date it was prescribed, administered or dispensed. For the initial visit when the drug is prescribed, administered or dispensed, the medical record documentation must also include the patient’s symptoms, the diagnosis and the instructions given to the patient for the use of the drug. If the same drug is repeatedly prescribed, administered or dispensed, the medical record must also reflect changes in the symptoms, diagnosis and instructions given.

The proposed regulations have been published for public comment. If you’re interested in submitting written comments on the regulations you can submit your comments, suggestions or objections to Teresa Lazo, Assistant Counsel, Department of State, P. O. Box 2649, Harrisburg, PA 17105-2649, within 30 days of March 3, 2012. Commenters should reference No. 16A-4933 (Prescribing) when submitting comments.

Most medical practices in Pennsylvania are aware that Pennsylvania imposes a sales and use tax on various items and services purchased by medical practices.  However, physicians are not always clear on exactly the items and services to which the tax applies.  For example, the tax applies to secretarial/administrative services purchased from a third party vendor.  This includes transcription services.  If your vendor is not charging a sales tax or you are not reporting a use tax in connection with your outside transcription services, you may have an issue.  The Pennsylvania Medical Society has published a helpful guide entitled How to Comply with State Sales and Use Taxes.  If you’re not sure whether or how Pennsylvania’s sales and use tax applies, I recommend that you give your accountant or attorney a call since the Pennsylvania Department of Treasury is currently conducting sales and use tax audits of physician practices.