Memorandum. The Health and human Services Task Force meeting will take place on Friday, July 24, 2015 from 2:30pm to 5:30pm.

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1 Memorandum To: Members of the Health and Human Services task Force From: Bartlett D. Cleland, Vice President, Center for Innovation and Technology Date: June 2015 Re: 35-Day Mailing 2015 Annual Meeting The American Legislative Exchange Council will host its 2015 Annual Meeting at the Manchester Grand Hyatt in San Diego, California from July 22 nd to July 24 th. The Health and human Services Task Force meeting will take place on Friday, July 24, 2015 from 2:30pm to 5:30pm. Please find the following materials enclosed: ALEC Annual Meeting Agenda-at-a-Glance Tentative Task Force Agenda Draft Model Policy Summaries Draft Model Policy for Consideration ALEC Mission Statement I look forward to seeing you in San Diego! As always, if you have any questions or comments regarding the meeting or the Task Force, please don t hesitate to contact me. Sincerely, Bartlett D. Cleland Vice President Center for Innovation and Technology American Legislative Exchange Council P: (703) D: (571) BCleland@alec.org

2 Task Force on Health and Human Services Tentative Meeting Agenda Annual Meeting 2015 San Diego, California Friday, July 24, :30-5:30 PM Task Force Chairs: Senator Judson Hill, Georgia, and Mr. John Schlatter, Takeda Pharmaceuticals 2:30 PM Call to Order Welcome and Introductions Approval of Minutes from the Spring Task Force Summit 2015 New Member presentation Presentations and Model Policy 2:45 PM Presentation: Innovators on the Health Policy Frontier 3:05 PM Model Policy Review: Optional Medicaid Benefits Evaluation Act 3:15 PM Model Policy Review: Resolution on Cord and Placenta Blood Banking and Research 3:45 PM Presentation: The Aftermath of King v. Burwell 4:05 PM Presentation: The Corporate Practice of Medicine 4:20 PM Focus on the States Roundtable: Public Policy Enacted in :40 PM Presentation: Health Care Law and State Taxes 4:50 PM Presentation: Safe Families for Children 5:10 PM Model Policy Consideration: Resolution in the Tax and Fiscal Effects of Medicaid Expansion 5:25 PM Good of the Order 5:30 PM Adjournment To access an electronic copy of these documents, please visit:

3 Optional Medicaid Benefits Evaluation Act Model Legislation Section 1. Title. This Act shall be known as the Optional Medicaid Benefits Evaluation Act. Section 2. Definitions. (A) Medicaid is the federal Title XIX Medical Assistance program administered by states and funded in part by the federal government. (B) Independent third party is a public or private entity or private person having no ongoing financially dependent relationship with the {insert appropriate state agency}, the Auditor General, or the {insert name of state Medicaid Agency}, and that possesses the necessary expertise to conduct the evaluation and/or write the report as described in this Act. (C) Optional benefits are medical services potentially or currently provided under the Medicaid program of this state that are categorized as optional by the federal Centers for Medicare & Medicaid Services, including recipient populations that are not required to be covered under federal law. (D) Report means a written document that comprehensively records the methods used and results of an evaluation of optional benefits. (E) Recipient is an individual who receives benefits under the Medicaid program of this state. (F) Recipient population is the group or a sub-group of all individuals or households in the state who receive benefits under the Medicaid program of this state. Section 3. Evaluations of Proposed and Existing Medicaid Benefits Required. (A) The {insert appropriate state agency} shall not promulgate and approve rules, apply for federal waivers, or otherwise take any action that would expand optional benefits under the state s Medicaid program unless the agency: (1) Provides funding to the Auditor General or the {insert appropriate state agency} who shall then contract with an independent third party to evaluate the proposed expansion and produce a report as described in this Act; and (2) Presents the proposal and report to the appropriate oversight committees of the legislature for approval to proceed. Majorities of the members of oversight committees from both houses of the legislature must approve the proposal in order for the {insert appropriate state agency} to proceed. (B) Legislative oversight committees shall consider if an optional benefits expansion:

4 (1) Creates clear and measurable net economic benefits that accrue generally to all citizens of the state, even in the absence of federal funds; (2) Does not interfere with citizens ability to engage in free enterprise in the medical industry; (3) Clearly fills a need that only government can fill; and (4) Is not likely to result in a financial obligation to the state that would necessitate a tax increase at some future time. (C) The Auditor General or the {insert appropriate state agency} shall contract with one or more independent third parties to evaluate existing optional benefits under the state s Medicaid program. The evaluation and a report of the evaluation shall be completed within two years of the date of passage of this Act and shall meet the requirements set forth in this Act. Section 4. Evaluation of Optional Benefits. Any evaluation required by this Act shall at least include an analysis of optional benefits effects on: (A) The health and productivity of the proposed recipient population; (B) The health care prices faced by the non-recipient population; (C) The demand for medical services separately delineated by recipient and non-recipient populations, including demand for medical services not included in the optional benefit(s) being studied; (D) The administrative costs faced by providers of services under the federal Title XIX Medical Assistance program; (E) Health insurance premiums; (F) Emergency room services for recipient and non-recipient populations; (G) The practices and decision of suppliers of health services that would affect the market for medicine and the possible results of those actions; and (H) The state s short- and long-term fiscal outlook including the likelihood of future tax increases to pay for the optional benefits under plausible economic scenarios. Section 5. Report. (A) A written report shall be prepared by the independent third party describing the evaluation in Section 4 and the methods used to conduct the evaluation. Copies of the written report shall be

5 submitted to the Governor, the presiding officers the legislature, and the members of the relevant oversight committees. (B) The Auditor General {insert appropriate state agency} shall review the report for: (1) Completeness; (2) Its adherence to professional standards; and (3) Sound methodology. Section 6. Judicial Review. A resident taxpayer of the state shall have standing to seek de novo judicial review as to whether the criteria set out in this Act regarding review and approval of an optional benefit have been met by filing an action seeking declaratory, injunctive, quo warranto, or writ of prohibition relief. Section 7. {Severability Clause.} Section 8. {Repealer Clause.} Section 9. {Effective Date.}

6 Resolution on Cord and Placenta Blood Banking and Research Summary This resolution recognizes the need for increased public awareness about the use and research of umbilical cord blood and placenta blood banking to provide treatment options for debilitating or terminal diseases, and encourages ongoing research and private enterprise. Model Resolution WHEREAS, Research continues to show umbilical cord blood and placenta-derived stem cells as vehicles for potential treatments of some life-threatening conditions; and WHEREAS, Stem cells obtained from umbilical cord blood and placenta blood can be used in the treatment of leukemia, multiple myeloma, sickle-cell disease, lymphoma and other terminal illnesses in some patients; and WHEREAS, These stem cells obtained from umbilical cord blood and placenta blood also are being evaluated for other diseases such as Alzheimer s, Parkinson s, cerebral palsy, diabetes, multiple sclerosis, lung diseases and spinal cord injuries; and WHEREAS, Research has found that in addition to cord blood, the placenta can yield significantly more CD 34+ stem cells cells that matter most for transplant success; and WHEREAS, Research utilizing stem cells from the umbilical cord and placenta is another promising, noncontroversial alternative to embryonic stem cell research; and WHEREAS, Private companies are working to make more umbilical cord blood and placenta-blood banking available to families and to research facilities. NOW THEREFORE BE IT RESOLVED by {insert state legislature}, that the legislature encourages increased public awareness about umbilical cord blood and placenta-blood banking and donation and acknowledges the positive contributions of private entities who are working to expand umbilical cord blood and placenta-cord banking programs and the researchers seeking to utilize these stem cells for important medical research.

7 The Corporate Practice of Medicine Background Information In recent years, independent medical practitioners have been disappearing in staggering numbers. Each year, Medicare threatens drastic cuts in reimbursement but then finalizes on what amounts to be a token change that does not reflect much larger increases in practice expenses. Over time, this has had a devastating effect on physician independence, since hospital payment increases from Medicare/Medicaid have been substantial. In order to salvage nonviable physician practices, hospitals have been purchasing physician practices and then employing the practicing physician and managing the medical practice, commonly referred to as the corporate practice of medicine. While some suggest that this practice is more efficient due to hospital cost-saving management, the reality is that hospitals increase patient charges, often substantially. Medicare and commercial insurance reimbursement for imaging centers and outpatient surgery centers are often 1.8 times the reimbursement rendered to non-hospital equivalent services. Comparison of imaging and ambulatory surgery pricing indicates that hospital-owned facilities charges are generally much, much higher. The primary reason to oppose the corporate practice of medicine is that physician independence is compromised along with the potential conflict of interest between the physician's employer and the physician's patient. After all, will an employer be pleased with a practice providing quality care at a higher price, or patient referral to other physicians or facilities that are perhaps in the patient's best interest but potentially not quite so lucrative to the employer? Employers can also demand higher productivity that might impact quality of care. Then, if the employer is not satisfied with the employed physician, the employer can simply refuse to renew the contract, thus potentially causing a serious disruption and perhaps termination of the physician's career. A law practice may not be owned by a non-lawyer. Such a situation is illegal in all states. The reason for this is that a potential conflict of interest might arise for a lawyer engaged in representing a client whose best interests might not coincide with his/her employer. If the public's legal interests merit such protection, how much more should the public's health be protected? Since hospital-employed physicians are generally expected to order imaging and laboratory services through hospital-owned facilities and generally refer patients to other hospital-owned medical practices, there exists a violation of self-referral laws, specifically Stark law violations. Summary This act bans the corporate practice of medicine with certain exceptions.

8 Model Legislation Section 1. Title. This Act shall be known as the Corporate Practice of Medicine Act. Section 2. Purpose. The purpose of this legislation is to protect the patient from a potential conflict of interest in the delivery of medical care. Section 3. Definitions. As used in this Act, the Corporate Practice of Medicine shall mean the ownership of a medical practice by anyone other than a physician. Section 4. Prohibition of the Corporate Practice of Medicine. The state of {insert state} prohibits the Corporate Practice of Medicine with the following exceptions: A. Employment of physicians by charitable foundations or clinics if there is no charge for professional services rendered to patients. B. A clinic operated primarily for the purpose of medical education by a medical school may charge for professional services rendered by physicians who hold academic appointments on the faculty of the medical school if the charges are approved by the physician in whose name the charges are made. C.A narcotic treatment program may employ a physician and charge for professional services rendered, but the narcotic treatment program shall not interfere with, control, or otherwise direct the professional judgment of the physician. D. A hospital owned and operated by a county may employ a physician and may charge for professional services provided that the county hospital provides free care to the indigent and a sliding scale of charges based on income to other patients, and only if the physician in whose name the charges are made approves the charges. However, the county hospital may not control or otherwise direct the professional judgment of the physician. E. A group of physicians may form a professional corporation provided that all members of the board of directors are physicians. Such a physician owned professional corporation may employ physicians and charge professional services rendered by the physician. Such a professional corporation may employ administrators who may be designated by various titles. However, the administrative personnel shall not interfere with, control, or otherwise direct the professional judgment of the physician. Section 5. Severability Clause. Section 6. Repealer Clause. Section 7. Effective Date.

9 ALEC Travel Reimbursement Policy Similar to other organizations such as the National Conference of State Legislatures, Council of State Governments, or the National Black Caucus of State Legislators, the purpose of the ALEC State Reimbursement Fund Account (Fund) is to provide funding for state lawmakers to attend ALEC conferences, state focused, and membership events for professional development and continuing education. The Fund may be used for reimbursement for four meetings as detailed below. State Reimbursement Fund Account Policy: All disbursements from the ALEC Fund must be in conformance with all applicable laws, regulations, and rules. Revisions and deviations from this Policy will be made whenever necessary to ensure that the State Reimbursement Fund Account is in full compliance with any applicable law, regulation, or rule. In those states which allow the establishment of a Fund, it will be administered by ALEC in Arlington, VA. The Public Sector Chair, with advice of the Private Sector Chair, monitors both contributions and expenditures from that account. All expenditures from the Fund must be reviewed by the State Chair. The Coordinator of Membership Services maintains the Fund account and issues monthly summary reports of Fund activity to the regional representatives at ALEC. Regional Representatives provide fund activity updates to the Public and Private State Chairs and Regional Vice-Chairs for their review. No expenditures shall be approved for the Fund with negative balances. Likewise, no expenditures shall be approved if such will result in the Fund having a negative balance. State Chairs must use the template letter with the ALEC logo and the template invoice. The Public Sector State Chair must sign the template letter. Public Sector State Chairs have the flexibility to add the signature(s) of the Private Sector State Chair, National Chair or Chief Executive Officer. State delegations are encouraged to complete fundraising efforts by the end of the first quarter. ALL letters and invoices must be approved by ALEC. All legislators are strongly encouraged to review all state reporting requirements annually. As ALEC is a non-profit 501(c)(3) corporation, all contributions to the ALEC Fund are tax deductible.

10 American Legislative Exchange Council Bylaws: Section State Reimbursement Funds. All funds for ALEC State Reimbursement Funds shall be deposited in accounts designated by the ALEC Legislative Board of Directors. State Chairs are prohibited from establishing, maintaining, or utilizing the accounts. Account expenses can be for ALEC only. Violation of this section shall constitute grounds for (1) immediate removal from a leadership position, and (2) dismissal from membership in accordance with these bylaws. Travel Reimbursement policy by meeting: Spring Task Force Summit (Spring Task Force Summit Reimbursement Form): ALEC Task Force members are reimbursed by ALEC up to $ for travel expenses. Receipts must be forwarded to the Membership Coordinator. ALEC Task Force Members room & tax fees for a two-night stay are reimbursed by ALEC. Official Alternate Task Force Members (chosen by the State Chair and whose names are given to ALEC more than 35 days prior to the meeting to serve in place of a Task Force Member who cannot attend) will be reimbursed in the same manner as Task Force Members. Expenses exceeding $ for travel, room, and other expenses can be submitted by Task Force Members for payment from the state account upon the approval of the State Chair. Receipts must be submitted to the State Chair who will approve disbursement. However, ALEC has ultimate authority over final disbursement. Each member, not the State Chair, is responsible for mailing their signed request to the Membership Coordinator, ALEC, 2900 Crystal Drive, Suite 600, Arlington, VA Valuation of hotel expenses can be obtained through the Membership Coordinator. Non-Task Force Members may be reimbursed by the Fund upon approval. Receipts must be submitted to the State Chair who will submit the signed form to the Membership Coordinator. ALEC Annual Meeting (State Reimbursement Form): State funds are available for reimbursement by approval of the ALEC State Chair. Expenses are reimbursed after the conference and may cover the cost of travel, room & tax, and registration. Receipts must be submitted to the State Chair who will approve disbursement. However, ALEC has ultimate authority over final disbursement. Each member is responsible for mailing their signed request signed form to the Membership Coordinator, ALEC, 2900 Crystal Drive, Suite 600, Arlington, VA

11 ALEC States & Nation Policy Summit (States & Nation Policy Summit Reimbursement Form): Two reimbursements per state are available to cover the cost of travel, room & tax, and registration not to exceed $1, per person for a total of $2, per state for newly elected legislators. The State Chair selects the recipients. Expenses are submitted to the State Chair and reimbursed after the conference. The State Chair submits the signed form to the VP of Membership and Development. State Reimbursement Form: Additional expenses can be reimbursed out of the state Fund with ALEC approval. Receipts must be submitted to the State Chair who submits the signed form to the Membership Coordinator. ALEC Academies (Academy Reimbursement Form): Attendees to ALEC Academies are reimbursed by the hosting Task Force Committee. Attendees will receive a form at the academy and will be reimbursed up to $ for travel, and room & tax fees for a two-night stay by ALEC. ALEC has ultimate authority over final disbursement. It is the responsibility of each member to mail their signed request signed form to the hosting Task Force Committee staff, ALEC, 2900 Crystal Drive, Suite 600, Arlington, VA Receipts must be forwarded to the Task Force Committee staff. Valuation of hotel expenses can be obtained through the Task Force Committee staff.

12 Wednesday, July 22 7:00 AM 6:00 PM Registration 7:30 AM 4:00 PM Exhibit Hall Open ALEC 2015 Annual Meeting Preliminary Agenda Annual Meeting 2015 San Diego, California 8:30 AM 11:30 AM Subcommittee Meetings 8:30 AM 11:30 AM State Chair Meetings 8:30 AM - 4:30 PM Media Check-In 12:00 PM 2:00 PM Opening Luncheon 2:15 PM 3:30 PM Policy Workshops 2:15 PM 3:30 PM Task Force Chairs Meeting 3:45 PM 5:00 PM Policy Workshops 5:00 PM - 6:00 PM National Chair s Reception 7:00 PM 8:00 PM California Welcome Reception Thursday, July 23 7:30 AM 4:00 PM Exhibit Hall Open 7:30 AM 5:30 PM Registration 7:30 AM 2:00 PM Media Check-In 8:00 AM 9:15 AM Plenary Breakfast 9:30 AM - 10:45 AM Policy Workshops 11:00 AM - 12:15 PM Policy Workshops 12:30 PM - 2:00 PM Plenary Lunch 2:00 PM - 2:30 PM Ice Cream Social 2:30 PM 5:30 PM Task Force Meetings 5:30 PM 6:30 PM Iron Lady Reception 6:00 PM 7:00 PM Indianapolis Preview Reception

13 Friday, July 24 7:30 AM 2:30 PM Exhibit Hall Open 7:30 AM 3:00 PM Registration 7:30 AM 2:00 PM Media Check-In 8:00 AM 9:30 AM Plenary Breakfast 9:30 AM 10:45 AM Policy Workshops 11:00 AM - 12:15 PM Policy Workshops 12:30 PM 2:15 PM Plenary Lunch 2:30 PM - 5:30 PM Task Force Meetings 5:30 PM 6:30 PM Incoming Chair s Reception 7:00 PM 11:00 PM State Night

14 Mission Statement To advance free markets, limited government, and federalism.