July 2001 - In Brief

Contact Information

1415 Lavaca Street
Austin, TX 78701-1634
Phone:
(512) 708-8662
Fax:
(512) 708-1415
toma@txosteo.org

In Brief

Texas D.O. Online
July 2001

The Biotechnology Industry is Lobbying Legislators for a Research Tax Credit

The industry wants the U.S. Treasury to pay money-losing biotech firms five cents for every dollar they spend on research to speed the delivery of new medicines. To qualify, a research company would have to have less than $500 million in gross assets, have been unprofitable for three years and not be in bankruptcy. The proposal would modify the federal government's existing research- and-development tax credit and is expected to be introduced in the House of Representatives by Robert Matsui (D-Sacramento) and Philip Crane (R-Ill.). (San Francisco Chronicle, 6-4-2001)

Error and Accident Reports from Blood Banks Jumped 51 Percent Last Year After New Restrictions Aimed at Reducing the Risks of the Human Form of Mad-Cow Disease Went into Effect

According to a new FDA report, blood banks, plasma centers and makers of blood-derived products filed 23,528 reports of such errors or accidents in collecting and processing blood during the fiscal year
that ended last September, up from 15,532 reports the previous year. Most of the reports stemmed from a rule adopted last spring to curb the risk of spreading a variant of Creutzfeldt-Jakob disease, barring certain people who had traveled in the United Kingdom from donating blood, requiring blood banks to check if ineligible donors had given blood or plasma in the past, and requiring the centers to destroy the previously donated blood or plasma and file an error report to the FDA. (Wall Street Journal, 6-4-2001)

A Number of States are Revising Their Health Plan Prompt Payment Laws to Tighten Deadlines, Stiffen Fines and Close Loopholes, in Response to Physician Complaints that Existing Laws have Failed to Produce Insurer Compliance

According to a National Conference of State Legislatures survey of legislators, 40 states currently have prompt-payment laws and 33 are expected to look at changing their laws, such as adding a definition to the term "clean claim" and mandating fines for insurers who fail to meet state-mandated time limits. According to more than 30 state medical society surveys nationwide, 38 percent of doctors report that it takes on average more than 45 days to receive payment on a clean claim, even though states typically require 30 days or 45 days to pay a clean claim. (American Medical News, 6-4-2001)

A Federal Program to Protect Patients is Failing Because HMOs and Hospitals Rarely Report Disciplinary Actions Taken Against Doctors for Incompetence or Misconduct, as Required

According to a report by the inspector general of the Department of Health and Human Services, 84 percent of HMOs and 60 percent of hospitals never reported an adverse action to the National Practitioner Data Bank in the last decade, while HMOs reported only 715 adverse actions and physician groups reported only 60. Federal investigators said HMOs submitted more than eight million inquiries in the last ten years to the national data bank to check on doctors' qualifications, but rarely contributed any information of their own. (New York Times, 5-29-2001)

Many Hospital Credit Ratings Have Been Downgraded Because of Losses in the Stock Market

The bull market of the 1990s allowed many hospitals to make up for shrinking operating margins with investment income, but as the market has taken a downturn, bond-rating agencies such as Fitch and Standard & Poor's Corp. have been sounding the alarm by slashing hospitals' credit ratings. And as hospitals' finances have grown shakier, bond investors have started to demand higher interest rates from them to offset the higher risk of defaults. Thus, at the same time hospitals have a pressing need to borrow to make up for their plunging investment income, they also have to pay more for those borrowings. (Wall Street Journal, 5-31-2001)

Cancer Victims for Quality Healthcare Filed a Class-Action Lawsuit Claiming that Five California HMOs are Unlawfully Denying Coverage for Proton Beam Radiation Therapy to Treat Prostate Cancer

The complaint was filed under the state's unfair business practices law and seeks a court order to stop the HMOs from denying coverage of the treatment. It does not seek monetary damages aside from legal fees and restitution to class-action members who have paid for the treatment. (Los Angeles Times, 5-31-3001)

Medicare HMOs are Seeking Extra Federal Funding Next Year, Having Spent Much of this Year’s Pay Increase on Stabilizing Their Hospital and Physician Networks

According to the HCFA, 65 percent of the plans in Medicare+Choice used last year's $6.2 billion increase for the sole purpose of increasing payments demanded by their hospital and physician networks, while most of the remaining plans put the money into a fund to protect their own long-term viability as Medicare HMOs. Only six percent used the extra money to reduce premiums, one percent to enhance benefits, and about 0.25 percent to enhance or add a prescription drug benefit. (American Medical News, 6-4-2001)

Online Health Information is Often Incomplete, Confusing or Contradictory, According to a Study Published in the Journal of the American Medical Association

A RAND Corp. study found that most English-language online health sites offered only 70 percent of the minimum information needed for readers to make intelligent decisions about their health care, while Spanish-language sites provided only about half the needed information. Comparing content on four health problems--obesity, depression, breast cancer and childhood asthma--on 25 leading health sites, researchers found that some of the missing information was medically significant, such as failing to urge that a woman with a persistent breast mass and a negative mammogram get further evaluation, failing to describe the symptoms of a life-threatening asthma attack, and failure to urge people with suicidal thoughts to seek care immediately. Conflicting information also existed on individual web sites involving recommended treatment, definitions of diseases, and adverse effects and risk factors. The study's authors recommended that site operators make their material easier to read, submit it to health experts for accuracy and develop standards to ensure medical information is up to date. (Journal of the American Medical Association, 5-23-2001; Philadelphia Inquirer, 5-23-2001)

OIG Issues Advisory Opinion on Physician Recruitment

In the first Advisory Opinion to address physician recruitment, the OIG declined to impose administrative sanctions for acts described in the Anti-Kickback Statute where a hospital proposed to offer recruitment incentives to a resident to induce the resident to establish a practice in the hospital's community after completion of the residency program. The recruitment incentives consisted of annual loans to the physician during the residency, to be forgiven over a three year period commencing with establishment of a practice in the hospital's community. The OIG declined to impose sanctions despite the fact that the physician's practice would not be located in a Health Professional Shortage Area, a necessary component for protection under the practitioner recruitment safe harbor. The hospital was, however, located in a medically underserved area ("MUA") and the OIG acknowledged that incentives are necessary to attract physicians to MUAs. Most instructive, the OIG pointed to certain indicia in its evaluation of whether arrangements not qualifying for the safe harbor pose a risk of violating the Anti-Kickback Statute, including: (a) whether there is documented evidence of a need for the specialty services provided by a potential recruit in the provider's geographic locale; (b) whether the practitioner has an existing stream of referrals in the provider's service area; (c) whether the incentives are designed to be the minimum necessary to attract the recruit; and (d) whether the incentives also directly or indirectly benefit other referral sources, such as assistance given to a local physician practice to recruit new practitioners. (Vinson & Elkins Health Headlines, 5-15-2001)

Ninety-five Percent of Physicians Have Witnessed a Serious Medical Error, and 58 Percent of Health Care Providers Say the Health System Is Not Very Good

According to respondents of a Robert Wood Johnson Foundation survey of 600 physicians, 400 nurses and 200 senior-level hospital executives conducted in March and April, 61 percent of health care providers also said they accept common errors as routine practice, while 29 percent said they believe they can provide leadership to change the system. The foundation said it will spend $20.9 million over three years to fund Pursuing Perfection, an initiative involving projects by hospitals and physician groups to improve health care. The initiative has received more than 220 applications, 12 of which will get money to develop business plans and six will get up to $3.5 million to make changes throughout their systems. (USA Today, 5-9-2001)

The Health Care Financing Administration (HCFA) Has Been Renamed As the Centers for Medicare and Medicaid Services (CMS)

The Bush administration announced the name change of the agency that runs Medicare and Medicaid in the hope of repairing its image as a bureaucratic behemoth, while Secretary of Health and Human Services Tommy Thompson said the change symbolized his commitment to improving the agency's services to beneficiaries, doctors, hospitals and other health care providers. Thompson announced that CMS will be reorganized into three divisions: the Center for Beneficiary Choices, which will provide information to Medicare patients in private health plans; the Center for Medicare Management, which will run the traditional fee-for-service version of the insurance program; and the Center for Medicaid and State Operations, which will handle Medicaid and the State Children's Health Insurance Program. CMS plans to conduct a $35 million national media campaign this fall to highlight the types of health insurance available to the elderly, including HMOs, fee-for-service Medicare, private insurance to fill gaps in Medicare and medical savings accounts, while the agency's Administrator Thomas Scully recently indicated that the Bush administration would try to double the enrollment of Medicare beneficiaries in HMOs within four years--putting 30 percent of elderly patients in managed care by 2005. (New York Times, 6-15-2001; Washington Post, 6-15-2001)

A Jury Awarded a Medical Malpractice Verdict of $1.5 Million Against a California Physician for Undermedicating an Elderly Patient

The jury awarded the verdict to the family of a man who accused his doctor of not prescribing enough pain medication during a battle with lung cancer, finding the physician guilty of elder abuse and recklessness, and deadlocking on whether the physician was guilty of malice, oppression or intentional emotional distress. The lawsuit alleged that the physician did not prescribe strong enough pain medicines to ease the 85-year-old patient's back pain in his final days. (Associated Press, 6-14-2001)

Less Than Six Percent of Medicare Payments Are Protested, While Six in Ten of Those That are Protested Result in Increased Compensation for the Physician

According to the federal General Services Administration, as many as 90 percent of the decisions by Medicare about whether services are medically necessary are made by workers with only a high school education and no medical training or background. Also boosting the chance of a successful appeal is the fact that the dozens of carriers processing Medicare claims have widely different ways of interpreting HCFA policy. (Managed Care, May 2001)

HRSA Releases a New Web Resource on Providing Culturally Appropriate Services

Health care professionals looking for a way to provide culturally and linguistically appropriate services to multicultural populations can now use a new Web-based tool supported by the Health Resources and Services Administration.

“The Provider’s Guide to Quality and Culture” features an interactive quiz that helps users enhance their knowledge and skills. The guide also has 11 modules on topics such as common health problems in selected minority, ethnic and cultural groups, and understanding immigrant, refugee and minority populations. Each module contains readings, mnemonics, exercises, references and annotated links to other relevant Web resources.

The Provider’s Guide was developed by Management Sciences for Health, a nonprofit organization dedicated to the improvement of global health. In the near future, MSH intends to expand the interactivity of this site to include computer-assisted approaches to build a virtual learning community of experts and practitioners of culturally and linguistically competent health care.

The Provider’s Guide is a “work in progress” that will be periodically updated. Comments and suggestions are encouraged. Contact information is listed on the first page of the Web site.

To access “The Provider’s Guide to Quality and Culture,” go to: http://erc.msh.org/quality&culture.