Chairman Eachus and members of the House Majority Policy Committee. I’m Bruce MacLeod, MD, chairman of the board of trustees at the Pennsylvania Medical Society and a practicing emergency medicine specialist here in Pittsburgh.

Thank you for giving the Pennsylvania Medical Society an opportunity to testify.

Today, I’d like to touch on a number of areas in health care that need to be fixed. In no particular order, those areas are fair treatment from payers, smoke-free environments, Medicaid, Mcare Fund, the uninsured, medical errors , hospital acquired infections, and access to care in rural areas.

In Pennsylvania, there are roughly 12 million residents, 29,000 physicians, 182 acute care hospitals, and four dominant Blue Cross plans as well as some minor insurance players along with Medicare and Medicaid. In a nutshell, every geographic area in Pennsylvania has at least one dominant Blue plan, a few minor health insurers, and, of course government-funded programs.

Eighty-seven to 92 percent of individuals have insurance, which is generally obtained through one of the insurer types just mentioned. These insurers are required to have a network of providers as a condition of their certificate of authority to operate.

The reality of our health care systems at the front end is a high demand from millions of patients for coverage and care. Patient expectations for pharmaceuticals, treatment, and procedures as well as the adverse medical liability climate have pressured utilization to increase. On the back end is a handful of insurers controlling price and payment. In the middle are doctors and hospitals, working to be paid from a limited amount of money. Since there are fewer hospitals than physicians, hospitals, and especially large health systems who are large employers, tend to have greater market control and thus have the ability to negotiate better financial contracts with insurers.

This inevitably results in a one-sided contracting process for physicians. Contracts are increasingly onerous and presented to physicians on a take-it-or-leave-it basis. Please understand that not taking their contract is a very difficult business decision when the insurer has enrolled 40 percent of your practice. The power lies totally with insurers.

In a state like Pennsylvania, where one or two insurers dominate each of the four health care delivery markets, the situation is further exacerbated. If a physician says no to the contractual provisions presented to them, they lose much of their patient base leaving them with few options.

That is why work is needed to correct this unfair balance of power. Both parties should be treated as equals in the contractual relationship. We should not create the opposite of what we have now. That is, we shouldn’t slant the contracting process in favor of the physician. Instead, the playing field needs to be leveled.

And the answer is House Bill 503 from the last legislative session. Currently, the Medical Society is working with Chairman DeLuca of the House Insurance Committee to have this bill reintroduced for this legislative session.

Two recent polls clearly indicate that the public is looking to avoid tobacco smoke when out in the public.

The most recent poll, issued by Quinnipiac University on February 7, says that 60 percent of Pennsylvanians support a smoking ban in public places.

A January Patient Poll conducted by the Institute for Good Medicine at the Pennsylvania Medical Society indicated that 70 percent of Pennsylvanians prefer either a smoke-free restaurant or a non-smoking restaurant when they dine out.

Both polls validate one another, and clearly show the public desires smoke-free public environments.

Based upon public opinion, Pennsylvania should look to ban smoking in public locations.

Consider these facts …

Imagine the benefits related to quality of life and health care expenditures if Pennsylvania would ban smoking in public locations. We certainly applaud Governor Rendell for including this in his Rx for Pennsylvania proposal.

According to a 2005 survey published in Health Affairs, Pennsylvania was ranked 47^th in the country for physician Medicaid payment. To make matters worse, Pennsylvania Medicaid payment levels were 52 percent of equivalent Medicare payment amounts.

This is having and will continue to have an adverse affect on access to care because Pennsylvania competes with other states for physicians and we are losing. We know from CMS statistics that the number of Pennsylvania physicians accepting Medicare patients has dropped in recent years. Compared to ALL other states, only Pennsylvania and California have seen a decrease in the percentage of Medicare physicians. The lack of physicians is beginning to manifest itself primarily in the rural areas rather than in the cities.

While there is no information specific to Medicaid providing physicians, if Medicare is experiencing a loss, it’s likely that Medicaid is too, particularly considering Medicaid fee schedules have not been adjusted since the late 1980s.

Pennsylvania should review its Medicaid program to encourage physician participation and increase fees that have not been raised for about two decades. The Governor’s budget proposal includes some money for a fee increases and incentives for participation which is a good start on this issue.

As we meet today the medical liability insurance environment for Pennsylvania physicians can best be described as "stable." Primary liability insurance premiums, though at historic highs, have leveled off.

Mcare Fund payouts are down, likely as a result of the Fund’s gradually reduced exposure pursuant to Act 135 of 1996, and there is cautious optimism that further benefits will soon be realized from the reforms contained in Act 13 of 2002 and from the subsequent procedural rules changes decreed by the Supreme Court as long as they are sustained and NOT overturned.

And yet, serious problems lurk just below the surface. Act 13 has set in motion the ultimate demise of the Mcare Fund. If the fund is not carefully phased out, estimates of the resultant increase in primary premiums for physicians who we are competing with other states for, range as high as 40 percent for physicians who must purchase $1 million of coverage in the private market. No one believes that funding for the Mcare abatement program will last forever, and its abrupt end will cause a sudden and massive increase in physician liability costs, especially for the high-risk physicians like OB-GYNs, orthopedists, and neurosurgeons who are so vital to the stability of our health care system.

The phase out of the Mcare Fund, coupled with the end of the abatement program, will signal the onset of a multi-year period when physicians will purchase $1 million of liability insurance in the private market and pay a surcharge for Mcare coverage they no longer receive. This heavy burden will continue to be borne by the state’s physicians and hospitals until the Mcare Fund’s $2.3 billion unfunded liability is retired.

It takes little imagination to foresee the result. The recruitment of young physicians, always difficult, will become nearly impossible. Asking a young physician to pay Mcare surcharges for coverage he never received is akin to asking someone to assume a mortgage on a house he doesn’t own. This can only hurt a patient’s access to care in Pennsylvania.

The Pennsylvania Medical Society, in conjunction with the Hospital and Healthsystem Association of Pennsylvania (HAP) and several physician specialty societies, has offered a proposal for accomplishing both a smooth transition to the purchase of $1 million of liability insurance in the private market and the retirement of the Mcare Fund’s unfunded liability.

The recommendations of the Mcare Commission that you created were reported publicly in November and we are now working with Representative Shapiro to have legislation introduced.

Medical care has become so expensive that, absent some form of subsidy, it is unavailable to persons who do not have health insurance. It is critical that a sound system for health care insurance be built.

Last year, the Pennsylvania Medical Society issued its first ever State of Medicine Report. Within the report a comparison was made between Pennsylvania and the nation for private commercial health insurance enrollment. The national comparison indicates that while there has been a drop in Pennsylvania, large drops in private commercial health insurance have not been a national phenomenon. Pennsylvania’s declining private commercial health insurance coverage may well be attributable to health insurance premium increases that are greater than the national increases or something unique to Pennsylvania, such as a poor economy.

Our state is blessed to have in place the Pennsylvania Patient Safety Authority and the Pennsylvania Health Care Cost Control Council (PHC4). These organizations are unique to Pennsylvania, and through them we have the opportunity to study medical errors and hospital-acquired infections. Most importantly, we have the opportunity to learn from this research and make the appropriate changes to avoid or minimize future problems.

Act 13 of 2002 has done wonders to move Pennsylvania to the front of the class in addressing medical errors. The Pennsylvania Medical Society supported Act 13, and we’ll continue to support the Patient Safety Authority that was formed as a result of Act 13.

The Pennsylvania Medical Society also supports PHC4. And, we believe that its research on hospital-acquired infections is a wake-up call for our state that an all-out effort must be made to address this issue.

We realize that there will be debates on statistics. But regardless of the numbers, the issue of hospital-acquired infections should be a priority, just like the issue of medical errors was as part of Act 13 of 2002 and continues to be today through the Patient Safety Authority.

Reducing medical errors and hospital-acquired infections are laudable goals to which all parts of the health care system should strive. With the appropriate research, we should be able to pinpoint problems, and make the appropriate investments to fix broken parts of the system.

According to Thomas Jefferson University’s Physician Shortage Area Program, the shortage of physicians, especially primary care physicians, in rural areas of the US is one of the most intractable health policy problems of the past century. Nationally, 20 percent of the population lives in rural areas but only 9 percent of physicians practice there. Such shortages have serious implications for access to care, the quality of care, and the health of those individuals living in rural areas.

This is a particularly serious problem in the state of Pennsylvania, where more than 30 percent of Pennsylvanians (3.7 million people) live in rural areas. In addition, Pennsylvania has a severe maldistribution of physicians, with almost one-half of the doctors in the state practicing in only 3 counties (Philadelphia County, its suburban Montgomery County, and Pittsburgh's Allegheny County), even though the remaining 64 counties have almost three-quarters of the population. Overall, 55 of the 67 Pennsylvania counties contain federally designated Health Profession Shortage Areas (HPSAs) or Medically Underserved Areas (MUAs).

Based upon this information from the Thomas Jefferson University Physician Shortage Area Program, Pennsylvania should work towards addressing issues related to HPSAs and MUAs.

Also, I should point out that according to the Pennsylvania Medical Society’s State of Medicine Report published last year, our state could face problems that go beyond rural communities. We question if physician supply can keep up with demand for services. According to our research, trend data suggest Pennsylvania could face an overall shortage of about 10,000 physicians based upon supply and demand.

This is a logical conclusion when you consider Pennsylvania has a large number of older adults compared to other states, and that older adults tend to have greater health care needs. Demand for certain specialties such as general surgeons and orthopedic surgeons could be the tip of the iceberg in this supply and demand issue. We should also question if we have enough gerontologists, oncologists, and neurosurgeons. And, while we’re talking about it, will we have enough nurses and other health care professionals?

I also want to briefly mention two other areas of concern that may be misunderstood.

Much has been said about nurse practitioners.

For the record, in Pennsylvania, Act 206 of 2002 details the collaborative relationship between physicians and nurse practitioners. "Collaboration" is defined within Act 206 as "a process in which a certified registered nurse practitioner works with one or more physicians to deliver health care services within the scope of the certified registered nurse practitioner’s expertise. The process includes all of the following: 1) immediate availability of a licensed physician to a certified registered nurse practitioner through direct communications or by radio, telephone or telecommunications; 2) a predetermined plan for emergency care; and 3) a physician available to a certified registered nurse practitioner on a regularly scheduled bases for referrals, review of standards of medical practice incorporating consultation and chart review, drug and other medical protocols within the practice setting, periodic updating in medical diagnosis and therapeutics and cosigning records when necessary to document accountability by both parties."

Most states either require collaborative agreements or have scope of practice standards, requirements for consultation, or requirements for physician involvement and/or supervision. Even states claiming "independent" practice for nurse practitioners have some of these exceptions related to overall nurse practitioner practice or at a minimum for prescriptive authority.

The Pennsylvania Medical Society believes overall patient care quality and safety is best served when physicians and nurse practitioners work together in collaboration. And, this applies to nurse midwives and some other practitioners as well. But please be cautious because one size doesn’t fit all. For example, we’ve opposed legislation and continue to evaluate proposed language that would allow nurse anesthetists to "cooperate" with physicians without restrictions.

In a nutshell, Pennsylvania law and regulation currently provide sufficient latitude to work with the existing collaborative arrangements to permit nurse practitioners to work to the extent of their scope of practice.  Most of the problems with the nurse practitioners’ ability to practice relate to practice settings, conditions of participation and third party requirements, and other statutes and regulations rather than scope of practice.

These are the areas that should be investigated and rectified.

The Pennsylvania Medical Society supports efforts to allow nurse practitioners to practice to the fullest of their scope provided they work in collaboration with a physician.

The other area that I want to mention is certificate of need (CON).

At one point in time, Pennsylvania did have a CON. And, before it was dropped in the 1990s, everyone complained that it wasn’t working correctly. Essentially, it was rationing care or decreasing access.

Today, we have the opposite situation. People are again complaining, but this time they’re complaining about the increase in services and how that could impact the overall costs of health care.

This truly is a great dilemma. Pennsylvanians want convenient access to care. But there are concerns related to costs. Maybe these two don’t go hand-in-hand together. But, maybe we can find a way to make things work.

The Pennsylvania Medical Society does not support going back in time and reliving the problems associated with CON. We should learn from history. But, the Pennsylvania Medical Society is willing to work on solutions so that we can build a win-win situation.

In conclusion, I once again want to thank Chairman Eachus and the members of this committee for inviting the Pennsylvania Medical Society to testify today. We appreciate the work you are doing now as well as the work you’ve done in the past.

Thank you.