August 13‚ 2013 - Mintz Levin
Health Care Reform by Petition
By Elissa Flynn-Poppey and Gregory Sandomirsky
A series of alternative proposed Initiative
Petitions were filed Thursday, August 7, with the Office of
the Attorney General of Massachusetts (the gAGOh) seeking
primarily to establish specified limits on operating margins
achieved by many Massachusetts hospitals and on the
compensation of the CEOs of such hospitals. The proposed cap
on operating margins is 5% in some versions and 8% in others.
The term goperating marginh is not defined. The proposed cap
on CEO compensation is 100 times the amount of the
compensation of the lowest-paid full time employee of the
hospital. In addition, two versions of the proposed
Initiatives would require certain disclosure of all financial
assets held by such hospitals, including assets held outside
the US.
These proposed Initiative Petitions were filed
by representatives of the Massachusetts Nurses Association
under the Massachusetts law which allows groups of citizens to
place new statutes on the ballot at general elections to be
voted on by the public. If approved, the petitions become law
as voted unless repealed by the Legislature. Prior to being
placed on the ballot, the petitions must be certified by the
AGO. The recently filed petitions are open to comment from the
general public prior to action by the AGO until August 16. If
one or more is certified, the petitioners will need to solicit
two rounds of certified signatures (68,911 and then an
additional 11,485) from the voting public to get their
preferred, certified version on the ballot in November,
2014.
As drafted, the new restrictions would apply
to certain health care facilities which accept funds from the
Commonwealth and are licensed hospitals under the primary
licensing statute in Massachusetts as well as to any state
general acute care hospital, acute care psychiatric and
specialty hospitals and certain units within state facilities,
but not to rehabilitation or long-term care facilities. Some
versions of the petitions would only apply to such hospitals
if their patient mix is less than 60% government payer.
The sanctions for violations would be civil
penalties equal to the amounts by which operating margins or
CEO compensation exceed permitted levels in any year, which
penalties are to be paid into a new Commonwealth Medicaid
Reimbursement Enhancement Fund established to gimproveh
Medicaid reimbursement. The petitions provide the legislation
is to go into effect July 1, 2015, and expressly state it is
gnot to be construed to impair any contract or agreement in
effect as of July 1, 2015.h The petitions contemplate that the
Commonwealthfs Health Policy Commission will promulgate
governing rules and regulations.
The petitions raise interesting legal and
policy issues at various levels. An immediate question will
arise with respect to impact, if any, on financial standing
and credit of hospitals in the Commonwealth. Future Client
Alerts and Advisories will provide additional information as
it emerges. This Alert has been prepared by Greg Sandomirsky
and Elissa Flynn-Poppey, but feel free to contact any of our
Public Finance or Health Law attorneys for more
information.
Copyright © 2013 Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.