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* FYI -- The Food and Drug Administration (FDA) is urging individuals, health care organizations and medical product distributors to stop dispensing and/or distributing certain injectable medications marketed by Phyne Pharmaceuticals of Scottsdale, Arizona. AMRAM Inc. of Rathdrum, Idaho manufactured these products for Phyne Pharmaceuticals, who was their sole customer. FDA's January 25, 2001 news release, which includes a complete list of the products included in the recall, can be viewed at the following address: http://www.fda.gov/bbs/topics/NEWS/2001/NEW00750.html

* Recall Announced - Great Southern Laboratories has announced the recall of all bottles of Cydec Drops, Lot #02950, a prescription pediatric cold drug, which it made exclusively for Cypress Pharmaceutical, Inc. Great Southern Laboratories initiated the Class I recall upon learning that the outer carton in which each Cydec Drops bottle was packaged from Lot #02950 bore an incorrect dosage correlation chart. The chart incorrectly equates a dropperful and partial dropperfuls to a teaspoonful and partial teaspoonfuls. If, instead of using the dropper that is packaged in the carton containing the Cydec Drops bottle, a consumer used the incorrect chart to determine how much of the medication to give a child using a teaspoon, an overdose could occur. Overdoses of this medication can cause serious illness or death, depending on a number of factors including the health of the pediatric patient and the extent of the overdose. Only Cydec Drops from Lot #02950 are involved in this recall. The product label bears NDC #60258-439-30, with an expiration date of 12/2005. Each one-ounce bottle contains 2 mg. of carbinoxamine maleate (an antihistamine) and 25 mg. pseudoephedrine hydrochloride (a decongestant) in each 1 ml of product. Cypress distributed 6,135 one-ounce bottles of the antihistamine/decongestant prescription drug product to wholesalers for national distribution to pharmacies beginning on December 19, 2000. All pharmacies that received any shipments of Cydec Drops after December 19, 2000 are being contacted. The pharmacies, in turn, are asked to contact their customers to ensure that Cydec Drops from Lot #02950 are not used and instead, are returned. Any consumer in possession of Cydec Drops, lot # 02950, is asked to discontinue use of this product and return it their pharmacist. In addition, consumers may call Great Southern Laboratories at 800-747-0783 for further instruction information.

* Important Medical Product Safety Alert - Novartis Pharmaceuticals Corp. announced changes to the Prescribing Information (PI) for Exelon (rivastigmine tartrate), a drug indicated for the treatment of mild to moderate dementia of the Alzheimer's type. The "Dear Healthcare Provider" letter from Novartis has been posted on the MedWatch web site at http://www.fda.gov/medwatch/safety/2001/exelon.htm

NICHD Funded Researchers First to Genetically Modify Non Human Primate

Researchers funded by the National Institute of Child Health and Human Development (NICHD) and the National Center for Research Resources of the National Institutes of Health have completed the first successful effort to introduce a new gene into the unfertilized eggs of rhesus monkeys, a member of the family of mammals that includes human beings. The eggs were then fertilized, resulting in several pregnancies and the birth of three live monkeys. The gene was successfully incorporated into one monkey's DNA, making this the first genetically modified non-human primate. Previous gene transfer attempts in animals have been confined largely to rodents and agricultural animals.

Although scientists have often inserted genes into other animals, they have lacked the technical means to introduce new genes into primates. These researchers succeeded by adapting to rhesus monkeys a technology that previously was used for transferring genes to cattle. The Oregon group transferred a gene for green fluorescent protein (GFP) into the egg cells of rhesus monkeys. As its name implies, GFP fluoresces green, allowing researchers to observe and track the progress of the implanted gene.

The researchers began by adding the gene for GFP to some 224 rhesus monkey egg cells. Then, using a technique known as intracytoplasmic sperm injection (ICSI), they next injected a single rhesus sperm into each of the modified eggs. Of the fertilized eggs, 40 developed into embryos; after transfer to female monkeys, five developed into pregnancies. Two were stillborn; of the survivors, three male births resulted. Of these, only one carried the inserted DNA. This infant monkey was dubbed "ANDi," a reverse acronym for "inserted DNA." Two of the stillborn animals also carried the inserted DNA. (Excerpted from NIH news release, 1-11-2001)

FDA Approves Femara as First-line Therapy for Advanced Breast Cancer

Newborn Lung Treatment Poses Risk of Intestinal Perforation

A treatment commonly prescribed to reduce the risk of chronic lung disease in extremely premature infants does not reduce the risk of death or chronic lung disease in these infants and may increase the risk for perforation of the intestines, according to a study by the National Institute of Child Health and Human Development (NICHD) Neonatal Research Network.

In the largest, most comprehensive study of its kind, the study authors concluded in the January 11, "New England Journal of Medicine", that early postnatal doses of the drug, dexamethasone, are not indicated to prevent lung disease in extremely low birth weight infants.

"This study shows that early moderate doses of dexamethasone do not increase the survival of preterm infants or prevent chronic lung disease and may actually endanger their health," said NICHD Director, Duane Alexander, M.D.

Approximately 70 percent of extremely low birth weight infants (weighing less than 1 kg or 2.2 pounds) survive to hospital discharge; of these, about 30 percent develop chronic lung disease requiring supplemental oxygen to breathe. The lungs of these infants -- most of whom are extremely premature -- are incompletely developed at birth and easily injured by mechanical ventilators, oxygen, and infection. In addition, there is preliminary evidence that these infants have inadequate levels of the stress hormone cortisol, which may make them susceptible to an exaggerated response to injury and infection. (Cortisol plays a role in "switching off" an immune response after an infection or other threat has subsided.) Dexamethasone is an anti-inflammatory drug chemically resembling cortisol that may be prescribed to dampen the inflammatory response.

Some studies have suggested that dexamethasone given from 24 to 48 hours after birth may reduce the risk for chronic lung disease. However, infants in these studies were typically given large doses of the drug, which interfered with infants' growth and increased their blood sugar and blood pressure.

"We began the trial with the hope that we could lower the dose of dexamethasone, and reduce the risk of these side effects," said study co-author Linda Wright, NICHD program official for the Network.

In all, the researchers enrolled 220 infants from the 13 centers taking part in the trial. Roughly half were treated with dexamethasone and half with a placebo. Fewer infants in the dexamethasone group needed oxygen therapy after 28 days but by 36 weeks corrected age this advantage had disappeared. Also, significantly more infants in the dexamethasone group than the control group (13 percent versus 4 percent) developed spontaneous perforation of the intestines. After review of the data by the trial's Data and Safety Monitoring Committee, the researchers terminated the trial early.

"Given these serious complications and the lack of discernible benefit," the researchers wrote, "we think that early dexamethasone treatment to prevent chronic lung disease in extremely low birth weight infants is not indicated." (NIH news release, 1-10-2001)

Hospital Stays for Childbirth and Mental Disorders are Often Uninsured

New Rules for Pain Management Monitoring Introduced by the Joint Commission on Accreditation of Health Care Organizations Went into Effect January 1

The rules require hospitals and other health care facilities regularly to assess, monitor and manage pain in all patients or risk losing their accreditation, including patients suffering from acute illnesses and those with chronic conditions such as cancer, arthritis or diabetes. Health care facilities are also required to employ consistent pain rating scales that patients can understand and use easily. About 90 percent of hospitals accredited by the commission are already complying with the new standards. (Bergen Record, 1-29-2001)

FDA Approves New Treatment for Invasive Fungal Infection

White Blood Cells Should be Filtered Out of All Donated Blood, According to the Department of Health and Human Services' Blood-Safety Advisory Committee

By a vote of 11-2, the committee recommended that the FDA mandate leukoreduction gradually for all donated blood "as soon as feasible" to make transfusions less risky, a policy projected to cost the nation half a billion dollars a year. The FDA is considering the recommendation and is reportedly supportive of it. (Associated Press, 1-27-2001)

HIV Treatment Guidelines Updated for Adults and Adolescents

An updated version of the "Guidelines for the Use of Antiretroviral Agents in HIV-Infected Adults and Adolescents", which includes revised recommendations for when to initiate anti-HIV therapy, was posted to the HIV/AIDS Treatment Information Service (ATIS) Web site (http://www.hivatis.org) at 9:00 a.m. ET on Feb. 5, 2001.

The "Guidelines" were developed by the Panel on Clinical Practices for the Treatment of HIV Infection, a joint effort of the Department of Health and Human Services and the Henry J. Kaiser Family Foundation. Initially published in 1998, the Guidelines were constructed as a "living document" and are updated by the Panel as new data emerge.

The new "Guidelines" recommend considering starting antiretroviral therapy when an asymptomatic HIV-infected person's CD4+ T-cell count falls below 350 cells per cubic millimeter (mm3); previous Guidelines recommended consideration of therapy for asymptomatic patients with a CD4+ T-cell count lower than 500 cells/mm3.

For asymptomatic HIV-infected patients with CD4+ T-cell counts higher than 350 cells/mm3, treatment should be considered when the level of HIV in plasma is high [more than 30,000 copies per milliliter (ml) when using the branched DNA test, or more than 55,000 copies/ml when using the RT-PCR test]; previous Guidelines recommended consideration of therapy at lower levels of plasma HIV (10,000 copies/ml measured by branched DNA, or 20,000 copies/ml measured by RT-PCR). The "Guidelines" continue to recommend antiretroviral therapy for all patients with the acute HIV syndrome, those within six months of HIV seroconversion, and all patients with symptoms ascribed to HIV infection.

The Panel stresses that the Guidelines should be considered as a tool to help patients and their physicians make individual treatment decisions based on the best available information, but that much remains to be learned about how best to treat HIV-infected individuals.

"The updated "Guidelines" recognize that we do not yet have the data we need to make definitive recommendations about the optimal time to start treatment," says John G. Bartlett, M.D., chief of the division of infectious diseases at the Johns Hopkins University Medical Center and co-chair of the Panel. "We highlight the uncertainty, allow for flexibility, encourage an individualized approach to treatment, and, at the same time, try to provide guidance."

The "Guidelines" also include new drug-specific recommendations. Two new entries are included in the "strongly recommended" category of anti-HIV drug treatments. One of these is the recently approved protease inhibitor Kaletra, which is a co-formulation of ritonavir (approved in 1996) and lopinavir. The other new entry is the combination of ritonavir and indinavir (another protease inhibitor approved in 1996). These treatment options take advantage of the ability of ritonavir to boost the levels of other protease inhibitors, creating a potent anti-HIV combination. The protease inhibitor combinations are used along with combinations of certain nucleoside analogue reverse transcriptase inhibitors, which represent the "backbone" of anti-HIV treatments.

Also in the revised Guidelines is a section on the importance of adherence to therapy. "Extraordinarily high rates of adherence to an antiviral drug regimen are necessary to maintain control over HIV replication," says Dr. Bartlett. "HIV is very unforgiving in this regard. It is impossible to over-emphasize the importance of maximizing adherence once the decision is made to begin therapy."

Another important addition to the Guidelines is an updated section on the expanding scope of antiretroviral drug toxicities. "We are very concerned about a number of toxicities associated with the long-term use of antiretroviral drugs," says Dr. Fauci. "Particularly alarming is the alteration of fat metabolism that can emerge during treatment. We are seeing an increasing number of patients with dangerously high levels of cholesterol and triglycerides. The good news is that new anti-HIV treatments have dramatically improved the quality of life for many patients, and the incidence of AIDS and AIDS-related deaths has dramatically decreased. The bad news is that we now must find ways to deal with unanticipated toxicities, including the potential for premature coronary disease."

Co-conveners of the Panel on Clinical Practices for the Treatment of HIV Infection are Eric Goosby, M.D., on behalf of the Department of Health and Human Services, and Jennifer Kates, M.A, M.P.A., on behalf of the Henry J. Kaiser Family Foundation. Oren J. Cohen, M.D., NIAID Assistant Director for Medical Affairs, serves as the Panel's Executive Secretary.( NIH news release, 2-5-2001)

Washington Update
By Margaret J. Hardy, J.D.
Vice President for Federal Relations and Policy

The American Osteopathic Healthcare Association

In Brief

Physicians are Spending More Time with Patients than in the Past Despite Pressures by Managed Care Insurers for Greater Efficiencies, According to a Study Published in the New England Journal of Medicine

An analysis of over 200,000 office visits based on physician surveys from the National Center for Health Statistics and the American Medical Association found that the amount of time spent face-to-face with patients by physicians across a variety of diagnoses and specialties increased by one to two minutes per visit between 1989 and 1998, and the difference in time spent on HMO patients and those with other types of insurance was less than a minute. Managed care patients accounted for a growing share of office visits during the period, climbing from 15 percent to 33 percent, the study noted. Possible reasons cited by the study for the lack of decline in patient office visit duration included physician competition for patients and the desire to keep patients happy, prevalence of HMO patient surveys that include physician satisfaction ratings, increasing complexity of medicine and an increasing number of questions asked by patients during office visits. (New England Journal of Medicine and Philadelphia Inquirer, 1-18-2001)

Medicare Medical Savings Accounts (MSAs) are not Worth Pursuing as a Health Insurance Option, According to the Medicare Payment Advisory Commission

A MedPAC report noted that no health insurance company has ever taken up an offer extended in the 1997 Balanced Budget Act to provide MSAs to Medicare beneficiaries, and concluded that market considerations rather than legislative limitations prevented MSAs from being widely offered. The report said that risk-averse Medicare beneficiaries were not attracted to the plans and the expense and difficulty of marketing the new product to so few interested consumers discouraged insurers from offering them. The report nevertheless included suggestions for improving the Medicare MSA program, including removing limits on the number of enrollees and the time limit on enrollment, and decreasing the data-gathering requirements for insurance companies. (American Medical News, 1-15-2001)

The National Committee for Quality Assurance (NCQA) Launched New Certification Programs for Utilization Management and Credentialing

The new programs will certify specific managed care functions instead of accrediting particular types of entities with the hope of encouraging different types of organizations, such as PPO networks and physician organizations, to participate in NCQA's programs for the first time. Organizations will earn one of two possible outcomes, certification or denial of certification, based on their performance against NCQA's standards, while results will be reported on NCQA's Web site, along with information about the organization such as size, location, coverage area and contact information. (NCQA, 1-10-2001)

The Bush Administration Said it will Support State-level HMO Patient Bill of Rights Laws

The U.S. Supreme Court, reviewing court cases from Texas and Illinois as to whether states can require HMOs to provide an independent physician review after they rule that a specific treatment is not medically necessary, asked the Justice Department for its views and received indications from the Bush transition team that Bush would support such laws as a way to protect patients. The Texas Insurance Department said that, of 996 patients who have challenged decisions of HMOs and insurance companies from November 1997 to July 2000, independent reviewers reversed the insurers' decisions in 50 percent of the cases and overturned parts of the decisions in seven percent of the cases, while insurers were upheld in 43 percent of the cases. Thirty-nine other states also provide some type of independent review for patients denied care or coverage. (New York Times, 1-14-2001)

Global Capitation Rates were Up an Average of More than Seven Percent in 2000

A National Health Information survey of 500 provider groups and HMOs also found that payments for primary care services in 2000 increased almost nine percent. Average global capitation was $115.95 per-member, per-month in 2000, while capitation represented 43.2 percent of the total group revenue for primary care practices and 34.5 percent for multispecialty practices. (Managed Care, 1-15-2001)

U.S. Pharmacopeia (USP) Released 1999 Data from its New Hospital Medication Error Database

The Summary of 1999 Information Submitted to MedMARx, USP's first annual report of data reflecting voluntary and anonymous reporting of medication errors from about one percent of U.S. hospitals, reported 6,224 medication errors from 56 hospitals, over two-thirds of which were not intercepted before reaching the patient and three percent of which caused temporary or permanent impairment requiring intervention. The report noted that errors occurred at the point of administration in 40 percent of cases and with prescribing in 11 percent of cases; that insulin and anticoagulants were most likely to be involved in an error; that omission, improper dose and unauthorized drugs were the three most frequently reported types of errors; and that performance deficits, failure to follow procedures or protocols and knowledge deficits were the most frequent causes identified. (American Medical News, 1-15-2001)

High Out-of-pocket Expenses Reduce the Use of Medically Necessary Drugs by the Elderly, According to a Study Published in Health Affairs

A study using data from the 1995 Medicare Current Beneficiary Survey found that Medicare beneficiaries with high blood pressure and high out-of-pocket drug expenses purchased fewer medically necessary antihypertensive medicines than those seniors with coverage through Medicaid, state and employer plans with traditionally lower out-of-pocket costs. For seniors without private health insurance but who qualified for state assistance, state drug coverage requiring only 27 percent out-of-pocket cost was associated with adjusted average spending for antihypertensive drugs of $302, compared to $191 for those with Medicare FFS who paid 96 percent out-of-pocket. (Health Affairs, January, 2001; Ascribe News, 1-19-2001)

Reports of a Growing Physician Specialist Shortage Prompted a Federal Advisory Committee to Reconsider Limits on the Number of Physicians in Training

The U.S. Food and Drug Administration Proposed Allowing Sharing of Data on Human Trials of Experimental Gene-based Medicines and Transplants from Animals to Humans

Intended to boost public confidence in experimental gene trials, the proposed new rule would disclose on the FDA's Web site certain types of information, such as outcomes when animals are given an experimental drug and any serious side effects suffered by people enrolled in human trials of the medicines, but would not reveal names of enrollees in clinical trials. The proposed rule was applauded by patient advocates but denounced by the biotech industry, which claimed that the proposal did not ensure the protection of patient rights and confidential industry information. (Philadelphia Inquirer, 1-18-2001)

Most Small HMOs Failed to See Profits During the First Half of 2000, As Medical Costs Rose Faster than Premiums

According to Weiss Ratings, medical expenses per enrollee rose 4.4 percent at small HMOs, eclipsing a corresponding 3.9 percent increase in health care revenues per enrollee and making profitability an elusive goal for most small HMOs. While large HMOs during the first half of 2000 also experienced a sharp rise in medical costs per enrollee (7.2 percent on average), they were able to more than offset the increase by boosting revenues at a quicker pace (7.8 percent). The 373 small HMOs reviewed in the Weiss study had an aggregate loss of $127 million for the first half of 2000, with 52 percent posting a loss for the period. In contrast, the 35 largest HMOs reviewed reported a combined net profit of $528 million. Overall, the HMO industry recorded aggregate net income of $370 million in the first six months of 2000, up from $91 million in the first half of 1999. (Weiss Ratings, 1-23-2001)

United States Attorneys More than Quadrupled the Rate of Convictions for Criminal Health Care Fraud from 1992 to 1999, from One per Week to One per Weekday

Justice Department data also reveals that $840 million of the $1.5 billion recovered by the federal government from all fraud cases last year was from those involving health care. Congress has given the Federal Bureau of Investigation $88 million this year solely to investigate health care fraud, while the Department of Justice received $43 million to prosecute it, up from 1996 totals of $47 million and $22.2 million, respectively. (New York Times, 1-23-2001)

A Federal Judge Ordered HCA-The Health Care Company to Pay $65 Million in Criminal Fines after it Pleaded Guilty to Fraud Charges

HCA-The Health Care Company, formerly known as Columbia HCA Corp., pleaded guilty to conspiring to defraud Medicare, paying kickbacks, overstating patient illnesses and submitting false bills in a case consolidating several prosecutions involving hospitals in Florida, Georgia and Tennessee. As part of the agreement, the company also paid a fine of $30 million to settle similar charges filed against it in Texas. (Tampa Tribune, 1-25-2001)

The American Academy of Family Physicians Proposed a Plan to Offer Health Care Coverage to All Americans

The Majority of Americans Continue to Report Being Satisfied with their Health Plans

Physicians for Responsible Negotiation (PRN) Filed Charges with the National Labor Relations Board (NLRB) Against an Illinois Hospital, Claiming that it Committed Unfair Labor Practices

PRN, the AMA's labor union for physicians, claimed that Advocate-Lutheran General Hospital in Park Ridge, Ill. has engaged in "repeated and willful actions for the express purpose of restraining, coercing and otherwise interfering" with the rights of residents and fellows to form and join a labor organization; and that hostility to the organizing efforts of residents and fellows manifested itself in at least six unlawful actions on the hospital's part. The charges come in the midst of efforts by the hospital's residents and fellows to secure PRN as their bargaining representative. (AMA/Federation News, 1-10-2001)

Health Care Costs are Increasing at Double-digit Rates in 2001

A survey of 360 large employers by Watson Wyatt Worldwide, the Washington Business Group on Health and the Healthcare Financial Management Assn. found that employers' health care costs are up by 10.3 percent in 2001 compared with costs the previous year, and that the cost of prescription drugs is 14.6 percent higher than a year ago. HMOs posted a 10.5 percent rate increase, PPOs posted a 9.1 percent increase and indemnity plans and point-of-service plans both had increases of 9.6 percent. (Business Insurance, 1-25-2001)

Solutions to Problems Confronting Health Care in the U.S. Enjoy Varying Degrees of Voter Consensus

A post-election survey of 1,415 voters by the Kaiser Family Foundation and Harvard School of Public Health found that 76 percent support a patients' rights bill; over 70 percent support government spending to treat particular diseases, more money for community health clinics, expanding Medicaid and Medicare, requiring businesses to help pay for workers' coverage, and offering tax breaks to help people buy insurance. The survey also found that only 32 percent of voters support a universal government health care plan financed with tax dollars; that 56 percent prefer the Democratic approach toward adding prescription drug coverage to Medicare; and that 32 percent favor a GOP plan that would help seniors purchase private plans that would pay part of their drug costs. Voters are evenly split as to whether the government should give people tax credits to buy their own insurance or expand programs such as Medicaid and the Children's Health Insurance Program. (Associated Press, 1-25-2001)

President Bush Unveiled a Plan to Provide Billions of Dollars to States to Help Nearly One-fourth of the Nation's 39 Million Medicare Beneficiaries Buy Prescription Drugs

Aetna Inc. Posted a $406 Million Loss for the Three Months Ended December 31

The loss represented a decline of more than half a billion dollars from the same period in 1999, when the company earned $134.4 million. Aetna attributed most of the loss to one-time charges of $381.9 million associated with leaving unprofitable Medicare markets and selling Aetna International and Aetna Financial Services to ING Group NV. Aetna reported a net loss of $127.1 million for the year, compared with net income of $716.5 million in 1999. (Washington Post, 1-31-2001)

Preferred Provider Organization (PPO) Enrollment Nationwide Outnumbers HMO Enrollment

According to a new analysis by InterStudy Publications, the number of PPO members nationwide is between 90 million and 100 million, while total HMO enrollment now stands at about 80 million and is declining. The study also found that over 75 percent of PPOs own rather than rent or lease their physician networks; that national PPOs have substantially larger physician networks than independent or regional PPOs; and that national PPOs reported discounts of between 25 and 35 percent on physicians' usual and customary fees, while regional PPOs are reported discounts between 15 to 25 percent. (WebMD, 1-29-2001)

The National Jury Award Median for Medical Malpractice Cases Rose Seven Percent in 1999

According to Jury Verdict Research, jury awards in medical malpractice claims rose from a median of $750,000 in 1998 to $800,000 in 1999, and jumped 76 percent from 1996 to 1999. The overall plaintiff recovery rate--number of plaintiff verdicts to defense verdicts--fell two percent for 1999 medical malpractice cases, to 35 percent. (Jury Verdict Research, 1-30-2001)

Overall Physician Income Continues to Remain Relatively Stagnant, While Certain Subspecialists are Seeing Double-digit Increases in Reimbursement

According to the Medical Group Management Association (MGMA), median compensation for all internists rose to $145,397 in 1999, a one-year increase of three percent from 1998 and a five-year increase of 4.4 percent from 1995 to 1999; while family practitioners' pay rose 9.6 percent from 1995 to 1999 and pay for pediatric/adolescent primary care doctors rose 10.8 percent. Over the same five-year period, hematologist/oncologist compensation rose 35.3 percent, while pay for gastroenterologists jumped 26 percent. The MGMA also noted that productivity-based salary affected physician income in 1999: general internists earned a median of $151,188 when their pay was based entirely on productivity; $145,610 when more than half of their compensation was based on productivity; $143,857 when more than half of compensation was based on salary; and $134,688 when they were salaried. (ACP-ASIM Observer, 2/2001)

The Department of Health and Human Services is Creating its First Trial Medicare Prescription Drug Program

The three-year trial program, to be made available on July 1 only to retired members of the United Mine Workers of America, is an attempt to see whether federal subsidization of prescription drugs saves Medicare money by keeping the elderly healthy and out of the hospital, and could provide data necessary to design a national prescription drug benefit plan for all seniors. Program beneficiaries will receive health benefits from a retirement fund underwritten by Medicare which will be reimbursed for 27 percent of the costs of its existing prescription drug program. (Associated Press, 1-19-2001)

HCFA Issued a Final Rule to Extend Provisions of the Patient Bills of Rights to Medicaid Beneficiaries

The final rule: eliminates the need for states to obtain HCFA waivers for mandatory managed care enrollment if Medicaid beneficiaries have at least two health plans from which to choose; requires states to establish new beneficiary protections for quality assurance, grievance rights and emergency services; prohibits plans from requiring prior approval for emergency care or requiring patients to go only to approved facilities; applies a prudent layperson standard to emergency services; allows women direct access to network gynecologists; and allows all beneficiaries to seek a second opinion. The new rule also requires states and plans to identify enrollees with special health care needs and to assess the quality and appropriateness of their care, and establishes specific requirements for state rate-setting to ensure that all managed care capitation rates are actuarially sound, removing what HCFA said was an outdated regulatory ceiling on what states may pay managed care plans. (Medical Industry Today, 1-23-2001)

Medicare and its Beneficiaries would have Saved $1.6 Billion on Two Dozen Popular Prescription Drugs in 1999 if They had Been Able to Purchase Them at Prices Available to the Veterans Health System

A Department of Health and Human Services' inspector general report also said that paying the actual wholesale price for the same drugs would have saved $761 million. Medicare recipients are required under current law to pay 95 percent of the average wholesale price for such drugs--which is often inflated by drug manufacturers--with Medicare reimbursing them 80 percent of the total, while the Department of Veterans Affairs is not covered by that law and can negotiate directly with drug manufacturers and suppliers for bulk purchases. (Associated Press, 1-23-2001)

For the First Time, Three States Won Federal Permission to Use Money from the Children's Health Insurance Program (CHIP) to Cover Parents as Well as Children

Medicare Reimbursement Increases to HMOs Recently Authorized by Congress are not Being Used as Intended

Intended by Congress to be used as inducements for HMOs to return to the Medicare program and to allow HMOs to increase benefits and reduce premiums for Medicare beneficiaries, HMOs are instead using most of the increased funding--the first installment of which totals $11 billion over the next five years--to increase payments to physicians and hospitals. Only five health plans have expressed an interest in returning to Medicare. (New York Times, 1-26-2001)

A Group of 39 Health Industry Organizations Asked the Federal Government to Postpone Federal Patient Privacy Rules Written by the Clinton Administration

In a letter sent to Health and Human Services Secretary Tommy Thompson on February 5, the health groups--which include the American Pharmaceutical Organization, the Association of American Medical Colleges and the Blue Cross and Blue Shield Association--argued that the rules will prevent physicians from getting refills for their patients in a timely manner and that the health care industry would be severely slowed. The new regulations, scheduled to become policy on Feb. 26 and to take effect in two years, permit patients to sign a one-time consent form on their first visit to a physician allowing disclosures for routine matters like billing and treatment, but requiring explicit patient authorization for most other uses of their records. (Associated Press, 2-5-2001)

About 30,000 Lives and $1.5 Billion Could be Saved Each Year if All Hospitals Ran their Intensive Care Units (ICUs) According to a Best Practices Approach, According to a Study by Solucient Leadership Institute, Formerly HCIA-Sachs

The Bush Administration Asked Rep. Charlie Norwood (R-Georgia) to Withdraw his Sponsorship from a New Patients' Bill of Rights

Norwood, who was the bill's primary author and who played a central role in the patients' rights debate for five years, pulled his name from the bill to allow Bush to put forth his own patients' rights proposal before Congress launches a full-fledged effort to pass a final bill. A bipartisan group of House and Senate lawmakers led by Sen. John McCain (R-Arizona) proposed a bill to allow patients to sue their health insurers for damages in state court while attempting to protect employers that pay premiums from lawsuits, and allowing some lawsuits over managed care contract terms in federal court. Among supporters of the measure were Sens. Edward Kennedy (D-Massachusetts) and Lincoln Chafee (R-Rhode Island), and Rep. Greg Ganske (R-Iowa). President Bush complained that the bill, as drafted, could spur a rash of lawsuits, and that its proposed $5 million cap on punitive damages was too high. (Dallas Morning News, 2-7-2001)

The FDA Took Nearly 40 Percent More Time Last Year Than in 1999 to Approve Prescription Drugs with New Active Ingredients

The slowdown ended a seven-year trend of faster approval times and spurred industry and Wall Street concern about the slowdown. The FDA last year approved 27 medicines that have active ingredients never before sold in the U.S., and took an average of 17.6 months to approve the experimental drugs, compared with only 12.6 months for the 35 it approved in 1999. The FDA attributed review time increases for drugs in the "new molecular entity" category to the agency's requiring additional clinical data about the safety and effectiveness of such products. (WebMD, 2-5-2001)

New Guide Helps Break Down Cultural barriers in Providing Health Care to Hispanics

Texas FYI

A Tight State Budget may Impede Efforts to Make it Easier for Texans to Enroll their Children in Medicaid

State officials expect to have $300 million left over after allocating funds to maintain state programs through 2003, while one of Medicaid reformers' highest priorities--eliminating the face-to-face interview required when a parent enrolls a child in Medicaid--would cost the state about $56 million for the 2002-03 biennium and a proposal to switch to an annual enrollment renewal procedure instead of every six months is estimated to cost an additional $160 million for the biennium. Several bills seeking to change Medicaid enrollment are expected to be filed in the Texas House and Senate. (Houston Chronicle, 1-10-2001)

Arlington Memorial Hospital Purchased Two Neighboring Facilities

Texas Cancer Care Named 'Better Performer' by Medical Group Management Association

Galveston County Commissioners Voted 4-1 to Make Creating a Health Care Pilot Program One of the County's Top Priorities

A county health care task force recommended a 1-cent sales tax to raise about $14.6 million a year to fund the program, while commissioners agreed to ask lawmakers for permission to use temporary fees to raise $4 million of $7 million needed to fully fund an existing county program that subsidizes health care for poor people. According to the Galveston County Medical Society, private practice physicians are leaving the county because of the large uninsured population. (Galveston County Daily News, 1-19-2001)

Humana Inc. is Terminating its HMO in North Texas, Effective August 1

Humana's decision was based on low enrollment numbers, totaling only 16,000 members in its North Texas HMO, while employers and members will have the opportunity to switch to the insurer's preferred provider organization. Humana said it will eliminate HMO service in 16 counties, including Collin, Cooke, Dallas, Denton, Ellis, Grayson, Hill, Hunt, Johnson, Kaufman, Navarro, Parker, Rockwall, Somervell, Tarrant and Wise. (Dallas Morning News, 1-19-2001)

The Number of Licensed Physician Assistants in Texas Increased by 45 Percent from 1994 to 2000

TWCC Advisory 2001-01 - Notice of Revised Form: TWCC-53, Employee's Request to Change Treating Doctor

Settlement Reached over Medicaid Overcharging

A New Houston IPA is in the Process of Signing on Hundreds of Physicians from Several Other IPAs in the Region

Two months after purchasing the assets of North American Medical Management (NAMM), Herb Fritch is signing on IPA members that left the ailing organization to the new Renaissance Physicians Organization. Fritch has signed 300 physicians from the six existing IPAs remaining from the failed NAMM to merge into the citywide Renaissance IPA and is in talks with other physician groups in the area to join the group. Renaissance will feature one governing board that negotiates for the entire physician base instead of a separate governing board for each IPA in the network. (Houston Business Journal, 1-22-2001)

Two Large Physician Groups, an HMO and Three Individual Physicians have Filed an Involuntary Chapter 7 Bankruptcy Petition Against Heritage Southwest Medical Group P. A.

A Package of Bills was Introduced by Texas Lawmakers to Streamline the State's Medicaid Application Process in the Hope of Eliminating Obstacles to Hundreds of Thousands of Poor Children Obtaining Health Care Coverage

The bills would cut Medicaid application paperwork--currently requiring a 17-page application, up to 14 forms and up to 20 verifications of those forms from the Texas Department of Human Services--to a volume comparable to the Children's Health Insurance Program, which has a one-page application and up to five verification forms. Three bills filed in the House and one filed in the Senate would extend the period of children's Medicaid eligibility from six to 12 months, replace face-to-face interviews with a mail-in application, require applicants to document fewer claims on an application, and eliminate assets tests which exclude families from Medicaid coverage if they have more than $2,000 in assets other than their home and one vehicle. (Associated Press, Houston Chronicle, 1-24-2001)

Texas Lawmakers Questioned Texas Health Department Officials on Why the State's Medicaid Program is $602 Million in the Red

State House Appropriations Committee members criticized the health department and the Health and Human Services Commission for miscalculating the state's projected Medicaid needs last session, which produced the large budget overrun. The Health and Human Services Commission's 1999 budget request said it expected its 1.8 million Medicaid cases to decline by about 81,000 in 2000, while the actual caseload declined by only about 15,000, costing Texas an additional $294.8 million. An additional $307.2 million in program overruns were attributed to higher-than-anticipated prescription drug, physician and hospital costs and fees to the state's Medicaid contractor, as well as lower-than-expected reimbursement from the federal government. (Associated Press, 1-25-2001)

Demand for Bacterial Meningitis Inoculations Almost Outstripped the Supply in Houston

Officials at the Kelsey-Seybold main campus clinic near the Texas Medical Center had to call in vaccine from some of its satellite facilities after having vaccinated about 2,000 people. Clinic officials were uncertain how much vaccine they would receive because state health authorities are giving priority to Montgomery County, where five confirmed cases of meningococcal meningitis were reported in Conroe, 5,000 Conroe residents have been inoculated per day and 40,000 are expected to have been vaccinated by the time the mass vaccination program ends Thursday. The state Health Department confirmed 39 meningitis cases in the Houston area since October 1 and added that only in Montgomery County and northeast Harris County are the cases above the number that normally would be expected during this time of year. The Health Department confirmed three cases in Liberty County, including one death; 17 in Harris County; two in Fort Bend County; and one each in Galveston, Brazoria, Chambers, Jefferson and Austin counties. (Houston Chronicle, 1-30-2001)

Ralph Feigin, M. D., Will Remain as President and CEO of Baylor College of Medicine

A January 26 letter from Baylor's board of trustees to its faculty and staff indicated that, following extensive discussions to find a way to maintain the current momentum of the institution under Feigin's leadership, Feigin has agreed to continue at the helm until he reaches 65 years of age, at which time he will assume the position of Chancellor. Feigin will also continue in his position as chairman of the school's Department of Pediatrics. (Baylor College of Medicine, (1-26-2001)

Texas Lawmakers Urged the State Department of Health to Expedite a Federal Medicaid Waiver Application that Could Bring Hundreds of Millions of Federal Dollars to the State for Women's Health Programs

The waiver would allow Texas to provide health services to an estimated one million of the state's 1.5 million uninsured women, including routine exams and screening for early detection of diseases such as diabetes, cervical and breast cancer and anemia. While Medicaid accounts for 82 percent of the $13.2 billion in total state money allocated to the Texas Health and Human Service Commission, the waiver would allow Texas to get $9 in federal money for every $1 in state money spent on women's health care. (Associated Press, 2-1-2001)

The Casa Hospital has Closed

The subacute facility near the Texas Medical Center, Casa, specialized in post-surgery and recuperative care, but suffered from the exodus from the region of Medicare HMOs, leaving fewer medical options available to the elderly. Dr. Richard Plessala, the hospital's president and chief executive officer, said he is checking with other physicians who may want to reopen the operations as another type of facility. Medicare HMO departures from Texas left about 200,000 beneficiaries without an HMO, including about 107,000 in Houston. (Houston Chronicle, 2-1-2001)

A Bill in Favor of Medical Marijuana was Introduced in the Texas Legislature

State Rep. Terry Keel (R-Austin), a former Travis County prosecutor and sheriff, filed House Bill 513, which would allow a defendant charged with marijuana possession to claim as a defense that the drug was recommended by a physician for treatment of a medical condition. The bill does not decriminalize marijuana or conflict with federal laws banning its use, and physicians would still be prohibited from prescribing the drug. (Austin American-Statesman, 2-2-2001)

HCFA Gave Permission to AmCare Health Plans of Texas and SelectCare of Texas to Offer Medicare HMO Plans

The AmCare plan will be available this March to residents of Harris and Tarrant counties, while the SelectCare plan will be offered to seniors in Harris, Fort Bend and northern Brazoria counties, and in three months to residents of Jefferson, Hardin and Orange counties. Prior to HCFA's approval, every Medicare HMO except PacifiCare of Texas had abandoned the Houston market, while PacifiCare said it won't accept new members until it can enhance its network of doctors. (Houston Chronicle, 2-5-2001)

AOA Eye on Federal Agencies

GAO Highly Critical of National Practitioner Data Bank

Small Business Administration Changes Policy

Sentinel Clinicians: Are They Really Necessary?

Sustainable Growth Rate Under Study by MedPAC

AOA Critiques Carrier Performance Standards