Cigna settles with New York attorney general over use of flawed insurance database.
The New York Times /AP (2/18, B4) reports that the Cigna Corporation has agreed to "stop using a faulty database to calculate reimbursement rates for patients who see doctors outside of their insurance networks" as part of a settlement with New York Attorney General Andrew Cuomo. In doing so, "Cigna joins several other major insurers that have reached" similar "agreements with Mr. Cuomo in the nationwide push to reform how healthcare reimbursement rates are set."
The Wall Street Journal (2/18, Fuhrmans) adds that the agreements resolve allegations "from a year-long probe by New York Attorney General Andrew Cuomo into whether the industry systematically underpays for out-of-network care" through the use of "a database, run by UnitedHealth's unit Ingenix." The investigation revealed that "providers that don't belong to" insurers' networks "are typically reimbursed for only a portion of 'usual and customary' charges," which "were found to be set by insurers below what the doctor or hospital was actually billing, leaving patients to pay the difference." As part of the settlement, Cigna will "contribute $10 million to a new, independent database that it and other insurers plan to use to calculate" out-of-network payments.
Cuomo also announced that "he intends to sue Excellus Blue Cross Blue Shield for manipulating reimbursements for out-of-network services, Bloomberg News (2/18, Freifeld) notes. And, in a separate lawsuit, the American Medical Association "sued Aetna Health Inc. and Cigna Corp. in New Jersey federal court, alleging the insurers used 'a corrupt system'...to underpay physicians and patients." MSNBC (2/18) and Modern Healthcare (2/18, Blesch) also covered the story.
WellPoint agrees to $10 million settlement with New York over out-of-network reimbursement rates. Bloomberg News (2/18, Freifeld) reports that WellPoint Inc., the second-largest US insurer, "agreed to pay $10 million to settle an investigation by New York into how the insurer reimburses clients for out-of-network services, according to a person familiar with the probe." New York Attorney General Andrew Cuomo "has been investigating how the health insurance industry handles out-of-network claims for about a year." Cuomo "says insurers industrywide have used a 'rigged' database operated by UnitedHealth's Ingenix subsidiary to set artificially low reimbursement rates." The settlement by WellPoint "may be announced as early as today," Bloomberg adds. "Cuomo has scheduled an 11 a.m. event at North Shore University Hospital in Manhasset, New York." The settlement makes WellPoint "the fourth major company known to come to terms with...Cuomo over how it determines 'reasonable and customary charges' for out-of-network doctor visits."
Fraud and Abuse
Pfizer unit faces at least $144 million in damages for Medicaid fraud.
The AP (2/18, Foley) reports, "A subsidiary of Pfizer, Inc. could pay $153 million or more to the state of Wisconsin for artificially inflating prescription drug prices for years, the attorney general said Tuesday." A jury ruled Monday that Pharmacia, Inc. "violated the state's Medicaid fraud law more than 1.4 million times over a decade." Because "each violation carries a minimum of a $100 fine and a maximum of $15,000," Pharmacia "will be required to pay at least $144 million when a judge sets fines in the coming weeks unless a settlement is reached," Attorney General J.B. Van Hollen stated. He added that "he hoped the jury's verdict would lead to settlements worth hundreds of millions of dollars between the state and 32 other drugmakers it has sued."
"The companies are accused of posting artificially inflated AWP prices and then 'marketing the spread' to win business by encouraging pharmacies and doctors to seek reimbursement from state Medicaid programs at the full AWP price," Bloomberg News (2/18, O'Reilly) adds. Attorneys for the state claimed that "the wider the spread, the more likely a doctor or pharmacy was to prescribe or promote the company's product." Pharmacia in particular was accused of reporting "an AWP of $241.36 for a 20 milligram dose of the cancer drug Adriamycin [doxorubicin] in April 2000 when the medicine was actually selling at wholesale for as low as $33.43." The company allegedly told physicians "they could keep the difference. The state requested $9 million in compensatory damages." Wisconsin's Journal Sentinel (2/17, Boulton, Marley) and the Milwaukee Business Journal (2/18) also covered the story.
Three Miami physicians arrested in alleged Medicare fraud scheme.
UPI (2/18) reports, "Three Miami doctors have been arrested and charged with of taking part in an alleged Medicare fraud scheme, investigators say. The physicians were arrested during the holiday weekend as part of an investigation into a ring that allegedly submitted millions of dollars in false Medicare claims." With this arrest, the doctors join "a growing list of Miami physicians and medical clinic operators charged in alleged schemes to bilk Medicare for administering an obsolete HIV infusion therapy that was replaced about 15 years ago by more effective antiretroviral drugs taken orally."
Federal Agency News
Report says FDA is not enforcing medical device safety standards.
The Dow Jones Newswires (2/18, Favole) reports, "The Food and Drug Administration (FDA) isn't enforcing quality and safety testing standards for medical devices, potentially putting patients at risk, according to a report to be released Wednesday by a nonpartisan watchdog group." The watchdog's report elaborates that an "official within the FDA's medical device division told an organization of researchers and scientists that many medical device companies weren't following federal quality and safety testing standards for medical devices and that requiring those standards wasn't 'feasible.'"
McClatchy (2/18, Gordon) reports, "The Food and Drug Administration put patients' lives at risk by halting enforcement of 30-year-old requirements that medical device makers meet federal laboratory standards prior to testing their products on humans, a watchdog group charges in a new report." According to the report, "at present, if a manufacturer knowingly violates the GLP regulation and falsely asserts compliance with GLP, that manufacturer is safe -- safe from discovery, safe from disciplinary action by the FDA, safe from prosecution."
The AP (2/18, Alonso-Zaldivar) adds, "The Project on Government Oversight found that the Food and Drug Administration has dramatically reduced inspections of 'good laboratory practices' at facilities that do the earliest testing of medical devices." The group wrote in the report, "The decision...to not enforce (lab standards) is stunning in its contempt for the protection of patients."
General Health Law
Appellate court panel upholds New York City calorie posting rule.
The New York Times (2/18, A24, Chan) reports, "In a victory for New York City's campaign against obesity, a federal appellate court on Tuesday rejected the New York State Restaurant Association's challenge to the city's 2007 regulation requiring most major fast-food and chain restaurants to prominently display calorie information on their menus." The decision "eliminates, for now, lingering uncertainty over the rule." The city's health commissioner hailed the three-judge panel's ruling that rejected arguments that the city's rules were pre-empted by FDA regulations or infringed restaurants' free-speech rights, finding instead that Congress intended to exclude restaurant food from the Nutrition Labeling and Education Act of 1990 and thus left state and local governments free to mandate that restaurants post information such as calorie counts. The Times adds that the restaurant association could ask the panel to reconsider its ruling, or seek review by the full Court of Appeals or the US Supreme Court.
An AP story carried by at least 50 media outlets (2/17, Westfeldt) reports that the court "upheld the city's regulation requiring some chain restaurants to post calories on menus and menu boards, saying it "mandates a simple factual disclosure of caloric information and is reasonably related to New York City's goals of combating obesity." New York City health officials say that over half of New Yorkers are overweight or obese, and claim that the calorie disclosure rules will keep "150,000 New Yorkers from becoming obese," while preventing "another 30,000 from developing diabetes and other health concerns over the next five years." The AP notes that New York's first-in-the-nation calorie posting rules have been followed by similar enactments in California, Philadelphia, and Seattle.
Dow Jones (2/17, Bray) adds that the court noted that despite terming federal laws on food labeling and branding of food "a labyrinth" complicated by "a series of agency regulations that sometimes appear to conflict and are difficult to harmonize," but found the Congress intend to exclude restaurant food from its pre-emption sections, so New York City "merely stepped into a sphere that Congress intentionally left open to state and local governments." The city's regulations, originally adopted in December 2006 but later modified in January 2008 after an earlier court challenge, since last May have covered restaurants that are part of chains with at least 15 US outlets and required that calorie content be shown "clearly and conspicuously, adjacent or in close proximity to the menu item." It also notes that the FDA filed a "friend of the court" brief supporting the city rules, and notes that a lawyer for the New York Restaurant Association said that the group was still considering what further steps to take.
DC water authority sued for inaction over allegations of lead contamination.
Continuing coverage of the NIH journal reevaluation of George Washington University professor Tee Guidotti's 2007 research of possible lead contamination in the Washington, DC, water supply the AP (2/18) reports, "A single father is suing the D.C. Water and Sewer Authority for $200 million, claiming lead-contaminated tap water poisoned his twin sons as infants, causing them ongoing health problems." John Parkhurst claims WASA "hid elevated levels of lead from customers and federal authorities," and "failed to take steps to remedy the situation, omitted language from public education campaigns that would have warned people about the problem and continued to encourage residents to drink the water." In response, "WASA officials said linking lead in water to children's developmental and behavioral problems requires 'scientific and case-specific substantiation.'"
The Washington Post (2/18, B4, Alexander, Leonnig) reports, "In an emailed statement, WASA spokeswoman Michelle Quander-Collins said that her office had not seen the lawsuit, and added that more studies need to be completed to link lead in water to health and behavior concerns." Quander-Collins said, "We continue to consult with health experts and the scientific community to learn more, but even the experts disagree. ... It is important for researchers to determine the health impacts of exposure to lead in water, and we continue to support that effort."
The DC Examiner (2/18, Neibauer) notes, "In an interview with The Examiner, Parkhurst said he approached the law firm a few weeks ago after learning that his sons' classmates had also tested positive for lead and suffered from similar ailments. Around the same time, new research was released that concluded the number of DC children with dangerously high lead levels more than doubled after 2001 -- contradicting an earlier report touted by WASA."
Health activists to file suit demanding household cleaner makers disclose chemical ingredients.
The Los Angeles Times (2/18, Carpenter) reports, "The makers of Tide, Ajax, and other common household cleansers are being asked to come clean about their ingredients." A suit to be filed in New York Wednesday by environmental and health activists seeks "to make Procter & Gamble Co., Colgate-Palmolive Co., and two other major firms reveal the chemical ingredients of their cleaning products and their research on their effects." The LA Times notes that the CPSC "is the federal agency charged with overseeing home cleaning products, but it doesn't require cleaning product manufacturers to provide comprehensive ingredient lists, so few companies do."
Health Business
Medtronic 3Q net income climbs.
The Wall Street Journal (2/18, Kamp, Burton) reports, "Medtronic Inc. posted quarterly net income far exceeding last year's charge-laden results, but the medical-device maker said sales fell four percent in its core franchise of selling heart defibrillators and pacemakers."
Medtronic "said net income for the fiscal third quarter rose to $723 million, or 65 cents a share, from $77 million, or 7 cents, a year earlier," Bloomberg News (2/18, Nussbaum) adds. "Sales rose 2.6 percent to $3.49 billion." According to the company, "revenue would have increased twice that much without the impact of exchanging foreign currencies into dollars, which strengthened from a year earlier."
The AP (2/18), the Minneapolis Star Tribune (2/18, Moore) and Minnesota Public Radio (2/18, Baxter) also covered the story.
HGS receives milestone payment from Glaxo for type 2 diabetes drug candidate.
The AP (2/17) reported, "Human Genome Sciences [HGS] Inc. said Tuesday it received a $9 million milestone payment after partner GlaxoSmithKline started late-stage testing of a type 2 diabetes drug candidate." HGS "said GlaxoSmithKline started a trial to determine the safety, tolerability, and effectiveness of Syncria [albiglutide]."
Glaxo "is recruiting 4,000 patients for phase 3 clinical trials of Syncria, which treats type 2 diabetes mellitus," the Washington Business Journal (2/18, Clabaugh) adds.
"The study will collect data on cardiovascular safety, a frequent concern with diabetes drugs, including GlaxoSmithKline's Avandia [rosiglitazone maleate]," the Philadelphia Inquirer (2/17) noted.
Teva posts 4Q net loss.
The Wall Street Journal (2/18, B6, Daniel) reports, "Teva Pharmaceutical Industries Ltd. posted a fourth-quarter net loss of $688 million due mainly to a write-down on its December acquisition of Barr Pharmaceuticals." The company's "fourth-quarter loss came to 88 cents a share, though the company said that excluding a $992 million write-down for the Barr deal and other items it earned 76 cents a share. A year earlier, Teva reported net income of $570 million, or 69 cents a share." The drugmaker's "fourth-quarter sales rose to $2.85 billion from $2.58 billion despite some drag from currency fluctuations."
Healthcare Policy/Legislation
Missouri bill would require doctor's visit, prescription for many cold medicines.
The AP (2/18) reports, "A doctor's visit and a prescription would be needed for many cold medicines under a Missouri bill aimed at targeting methamphetamine production." Opponents of the bill contend that "requiring a prescription would increase waiting times and costs for patients who need only basic medical care." Supporters of the bill "say requiring a prescription for medicine containing the decongestant pseudoephedrine would stymie meth cooks who hit up multiple pharmacies, buying the maximum amount of the drug allowed by law. Currently, the state allows consumers to "buy up to nine grams of pseudoephedrine every 30 days." The St. Louis Post-Dispatch (2/18, Greenbaum) Talk Of The Day blog also covers the story.
Iowa bill would ban mercury preservatives in flu shots given to children.
The Des Moines Register (2/17, Leys) reported that last week, after the "US Court of Federal Claims in Washington, DC, declared there was no compelling evidence that vaccinations cause autism," some "mainstream medical authorities said they hoped the ruling would help settle the issue." Nevertheless, "Iowa autism prevention activists say they will press ahead with efforts to ban mercury from all childhood vaccinations, despite" the court's ruling. In 2004, Iowa became "the first state to ban the preservative" thimerosal "from most childhood vaccinations. But the law exempted flu shots, and anti-autism activists have pressed to close the loophole." Now, a new bill, "House File 56, would ban mercury preservatives from flu shots given to Iowa children, except in emergencies."
New rule sparks conflict among anti-abortion, reproductive rights activists.
The AP (2/18) reports, "A new rule granting sweeping protection to a broad range of health workers who won't provide abortions and other care could set up the first big reproductive rights fight of the Obama era." The rule "cuts off federal funding for governments, hospitals, or health plans that don't accommodate healthcare workers who refuse to provide certain kinds of care out of moral beliefs." Supporters claim "the rule...is about preserving the freedom to follow their moral values." But, Planned Parenthood Federation of America, "along with seven states and another family planning group," filed a lawsuit last month arguing that "the rule limits a patient's right to accurate information and is part of a push to restrict access to abortion and, among the extreme fringe, to birth control."
Health Information Technology
Analysts expect significant health IT adoption to occur by early next year.
The AP (2/18, Perrone) reports, "With President Barack Obama's massive stimulus plan set to become law, analysts cautioned investors that it could take at least a year before the government's investment in electronic medical records translates into industry sales." The measure "includes about $2 billion for infrastructure to support...new medical records systems, with the remaining $17 billion as incentive payments and grants designed to spur adoption by healthcare providers. The payments will be administered to establishments that participate in Medicare and Medicaid." The AP notes that "bold expectations for the health IT industry have driven shares of software makers higher in recent months. Shares of Cerner Corp., the leader in hospital-installed electronic records, is up nearly 10 percent for the past three months, while shares of rival McKesson have risen more than 30 percent, even as the broader market fell sharply." But, analysts say that meaningful adoption will not occur until early 2010.
Insurance and Managed Care
Blue Shield of California, Anthem Blue Cross charging premiums exceeding state-issued rates, investigation finds.
The Los Angeles Times (2/18, Girion) reports, "Two of California's largest insurers have been selling health coverage intended to be a safety net for the state's sick and jobless at premiums that exceed state-issued rates, in some cases by thousands of dollars a year." According to an investigation by the Times, "Aetna and Health Net uniformly adhere to the state-issued rates." However, "Blue Shield of California's premiums are as much as 55 percent higher," and Anthem Blue Cross' "have been as much as 36 percent higher." When the Times pointed out the higher rates to "Anthem, the company said it had erred and moved swiftly to make amends. In contrast, Blue Shield defended its rates," saying "it was not required to follow the state-issued rate structure because the company did not believe it was legally binding." The Times notes, "Regulators acknowledged that they had not scrutinized these premiums for years. But they have recently opened investigations."
Biotechnology
Researchers say fetal stem cells may have caused tumors in patient with rare genetic disease.
The AP (2/18, Neergaard) reports, "A family desperate to save a child from a lethal brain disease sought highly experimental injections of fetal stem cells" which have "triggered tumors in the boy's brain and spinal cord, Israeli scientists reported Tuesday" in the journal PLoS Medicine. The patient was treated for "a rare, fatal genetic disease" called ataxia telangiectasia [A-T] that causes "degeneration of a certain brain region" and "gradually robs...children of movement." This is "the first documented case of a human brain tumor...after fetal stem cell therapy."
"The boy, now 17, received the stem cells in 2001 at a Moscow hospital," BBC News (2/18) adds. Four years later, "he was investigated for recurrent headaches and his doctors at the Sheba Medical Centre in Tel Aviv found two tumours -- one in the spine and one in the brain at the same sites the injections had been given." After removing and testing an "abnormal growth from his spine," the investigators found that it contained "cells that could not have arisen from the patient's own tissue and had in all probability grown from the donated stem cells."
Legislation/Regulation
Three bills seek to "strengthen stem cell research."
CQ (2/18, Attias) reports, "Reps. J. Randy Forbes (R-VA) and Daniel Lipinski (D-IL) have introduced legislation to strengthen stem cell research that may improve the understanding and treatment of diseases and other adverse health conditions." The measure, "(HR 877), would promote research and clinical trials using stem cells that are 'ethically obtained, and that show evidence of providing near-term clinical benefit for human patients,' according to a news release." It would also "support the creation of pluripotent stem cell lines without creating," destroying "or discarding, or risking injury to human embryos. Pluripotent cell lines have the ability to develop into any tissue in the body." Meanwhile, Diana DeGette's (D-CO) "bill (HR 873) would allow human embryonic stem cell research, overturning restrictions put in place during the Bush administration," and Michael N. Castle's (R-DE) "measure (HR 872) also would reverse those restrictions, and...establish an ethical framework for conducting human embryonic stem cell research."
Medical Devices
Wisconsin Supreme Court rules in favor of Medtronic.
The AP (2/17, Foley) reported, "Patients cannot sue the makers of potentially unsafe medical devices approved for sale by federal regulators, the Wisconsin Supreme Court ruled Tuesday." The state's high court "ruled against a Wisconsin man who had surgery to remove a defibrillator after the manufacturer, Medtronic, Inc., warned its battery had a chance of failing." The ruling is said to be "a victory for Minneapolis-based Medtronic and other manufacturers who want to limit product liability." However, "two justices warned the decision leaves Wisconsin residents at the mercy of the US Food and Drug Administration, which has a poor track record of ensuring the safety of medical devices." Also, "the Wisconsin Association of Justice, which represents trial lawyers, said dismissing it would shield companies from being held accountable for marketing dangerous products."
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