Each month, this page features selected short items about state health-care policy digested from newspapers around the country.
Clip File
Pennsylvania rebuffs requests for data on payment rates to Medicaid managed care plans
PHILADELPHIA—Hospitals and consumers in Pennsylvania want the state to disclose the rates it will pay four private managed care companies to cover 500,000 Medicaid beneficiaries in the Philadelphia area. However, state officials, while providing an average rate, have refused to disclose specific rates for seven categories of patients such as low-income mothers with children. The state turned down a request for the information filed by the Hospital Association of Pennsylvania under the Right To Know Act.
Without the rate information, hospital and consumer groups say they cannot assess whether Health Choices has enough money to cover medically necessary care for the area’s poor.
Margaret Dierkers, welfare policy director, said the release of the figures would compromise the state’s ability to negotiate rates on a competitive basis in the future.
The Inquirer, Philadelphia, PA, April 19, 1997
Marshfield Clinic wins key federal court ruling; judge throws out Blue Cross bid for damagesthe contract.
A 21-page letter to EDS informing it of the contract termination was highly critical of its performance. The state is determining how much in damages it will seek from EDS. Virginia has already paid EDS $1 million of the promised $9.3 million to develop the claims payment program. The rest of the money would have come from administering the new system. State officials said there would be no disruption of service and payments for Medicaid beneficiaries and providers.
Virginia said First Health Services Corp., which has administered its Medicaid claims payment system for 20 years, will continue to do so. First Health sued when it lost out on its bid for the new system despite bidding $15 million less than EDS. (The state said First Health did not respond fully to its request for proposals.) First Health charged that EDS might have violated state procurement laws because a senior Virginia Medicaid official was hired shortly before the competing companies submitted their proposals.While ruling against First Health, the Richmond judge noted that the EDS award "did create an appearance of impropriety."
A spokesman for EDS told State Health Watch May 12 the company was in talks with the state about resolving the current contract dispute.
Richmond Times-Dispatch, April 25, 1997
Colorado HMOs rebel against competitive bidding for Medicare, saying it could cost them $40 million
DENVER—Colorado HMOs in the Denver area are rebelling against a competitive bidding program for Medicare managed care which is scheduled to go into effect next year. With bids due May 15, less than four months after the project was introduced, some critics are accusing the government of hasty implementation (At presstime, the US. Senate Appropriations Committee had approved an amendment to a spending bill that would kill the pilot project.)
Local HMO executives estimate that competitive bidding will cut the average reimbursement for Medicare patients, now at about $450 per member per month, by at least 10%. Denver-area HMOs, which have about 76,500 Medicare members, stand to lose about $40 million.
Medicare officials say they will not base price on the lowest bid, but they also are determined to reap the benefit of competition. A study by the independent Physician Payment Review Commission found that HMOs were making $2 billion a year in excess MADISON, WI—The Marshfield Clinic, target of anti-competitive lawsuits by Blue Cross & Blue Shield United of Wisconsin and by consumers in northern Wisconsin, chalked up a victory in federal court recently. U.S. District Judge Barbara Crabb threw out Blue Cross’ bid for $7 million in damages, ruling that the insurer cannot show evidence of damages because of antitrust violations. A jury trial had been scheduled in mid-April to set damages.
The insurer is unable to supply the jury with a method for computing how much less Blue Cross would have paid Marshfield Clinic had the clinic refrained from dividing markets, Ms. Crabb wrote.The decision is being appealed by Blue Cross.
In January 1995, Blue Cross won a $48 million antitrust verdict against Marshfield Clinic and its Security Health Plan HMO. The jury found that Blue Cross lost money due to monopolistic practices by Marshfield. The award was later lowered to $17 million. An appeals court also overturned much of the jury’s verdict, concluding that the clinic’s rural location made it a natural, legal monopoly and that HMOs are not a distinct health-care market. But the court upheld the jury’s finding that Marshfield and its competitors divided markets and it ordered a new trial on damages for those actions.
The Federal Trade Commission is now reviewing a proposed merger between Marshfield and the Wausau Medical Center. A decision is expected June 1.
Wisconsin State Journal, April 8, 1997
Virginia terminates $45 million contract with EDS, charging that firm failed to produce claims system
RICHMOND, VA—Virginia has terminated a $45 million contract with Electronic Data Systems, Inc., charging that the politically well-connected company has failed to produce a system for Virginia’s Medicaid claims payments.
"We feel they’ve breached the contract," Joseph M. Teefey, the state’s Medicaid director told the Richmond Times-Dispatch. Mr. Teefey said the company was 20 months late on profits from Medicare. Many experts estimate Medicare profit margins are as high as 8% compared to only 2-3% for commercial business.
A standard plan mandated by the government may provide
savings for HMOs. For instance, the plan mandates $1,000 in annual prescription coverage, which is $500 less than some HMOs provide currently.
Stock anaylsts say the competitive bidding program has long-term implications. If it succeeds in Denver, it is likely to be rolled out nationally, which could impact the profits and the stock prices of HMOs.
One state senator has sent a letter to Donna Shalala, Secretary of Health and Human Services, protesting the change, saying that seniors health care could be disrupted and that they stand to lose benefits or face higher costs under the program.
Rocky Mountain News, April 26 and 28, 1997
Kansas abandons plan to establish Medicaid
managed care network in four counties
WICHITA, KS —Efforts to set up a managed-care provider-run network for the Medicaid population in four Kansas counties have been abandoned by state welfare and network officials. The initiative was abandoned after 3 1/2 years of work by the Department of Social and Rehabilitative Services, and Community Care of Kansas, a group of 175 doctors and seven hospitals.
About half of the 133,000 poor women and children in Sedgwick, Finney, Bourbon and Montgomery counties, were expected to enroll.
The state offered to pay about $20 million for coverage each year to the provider-organized health plan. But, Community Care said it needed an additional $1.6 million to $2.2 million to provide the levels of health care the state was looking for. Community Care hoped to increase health education and preventative care as well as case management, nutritional counseling, etc.
The Wichita Eagle, Wichita, KS, April 13, 1997
New report on Florida doctors available on Internet shows only 2% have clouded professional record
TALLAHASSEE, FL—A first-time state report shows that only 2% of Florida physicians have a clouded professional record. The Florida Report on Physician Discipline and Malpractice shows that 949 of the state’s 43,000 licensed medical and osteopathic physicians received state sanctions or settled three or more medical malpractice claims from 1991 to 1996. The information can be obtained by mail for a $10 fee, by phone or on the internet (http://www.state.fl.us/fdhc/). Medical associations, originally opposed to the project, have now accepted it, but they continue to be concerned that any inaccuracies could take up to six months to correct.
Sun Sentinel, April 15, 1997
Maryland HMOs fend off efforts to regulate them
ANNAPOLIS, MD—By one lobbyist’s count, the HMO industry was the target of more than 60 bills in this year-s 90-day session. In the end, the HMO industry succeeded in fending off most of the attack, including one bill, approved by the Senate, that would have subjected medical directors to physician disciplinary procedures.
A bill to allow hospitals and providers to establish non-profit "community health networks’ to compete with HMOs died in committee as did an emotionally charged bill to mandate a minimum 48-hour hospital stay after breast cancer surgery.
Another HMO bill, which won the support of the industry itself, would have streamlined appeals for patients denied medical coverage. It was approved overwhelmingly by the House, only to die in the Senate because it failed to reach the floor before senators adjourned for the year.
D. Robert Enten, chief lobbyist for the Maryland Association of Health Maintenance Organizations, declared the session a success. "I don’t think there’s anything that has a significantly negative impact," he said.
Baltimore Sun, April 13, 1997.
TennCare opens doors to displaced workers
NASHVILLE,TN—In the second expansion of the $3.3 billion TennCare program this year, Gov. Don Sundquist said workers displaced by plant and business closing will be eligible for coverage for themselves and their families. The governor also opened the program in April to all Tennessee children who do not have access to health insurance from a parent’s employer.
The latest change will cost the state about $1.7 million—money that is already in the TennCare budget and for which the state draws federal matching funds. Critics have called for the state to go further—to insure all uninsured children and all laid-off workers—options that Health Commissioner Nancy Menke said she is still exploring. Enrollment in TennCare, which covers about 1.2 million state residents, has been closed to uninsured Tennesseeans for two years, both because the state could not afford a huge influx of new enrollees and because it didn’t want employers to drop their health plans just to shift employees to TennCare.
Commercial Appeal, Memphis, TN, April 24, 1997.
Federal judge rules Washington state can’t require ERISA plans to cover alternative medical care
TACOMA, WA—A federal judge ruled May 6 that ERISA prohibits Washington State from requiring employer-provided insurance plans to provide alternative medical coverage.
U.S. District Court Judge Franklin Burgess ruled that the Employee Retirement Income Security Act bars the state from enforcing a provision of a 1993 state law requiring health plans to cover services such as massage, acupuncture and naturopathy.
The ruling came in response to a lawsuit filed by 12 health care and insurance providers who argued that Insurance Commissioner Deborah Senn could not apply the law to them.
Seattle Post-Intelligencer, May 8, 1997
Governor vetoes bill that would have rolled back Washington state insurance reforms
OLYMPIA, WA—Gov. Gary Locke has vetoed portions of a bill backed by the insurance industry. HB2018 would have eliminated a four-year-old law requiring an insurer to issue a policy to any applicant willing to pay the premium rate at any time and to maintain coverage once it is offered.
The bill also would have limited health insurance sign-ups to the months of July and August, guaranteed rate increases and profits for health carriers and allowed insurers to use national private-sector standards instead of Washington state laws when deciding whether patients must be covered.
Rep. Phil Dyer (R), the bill sponsor, reacted angrily to the veto, predicting that many insurers may leave the state.
Seattle Post-Intelligencer, April 28, 1997
Each month, this page features selected short items about state health-care policy digested from newspapers around the country.
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