News in brief - Jan. 27, 2003

West Virginia governor proposes tort reforms to help doctors - More federal Medicaid funds proposed - Appeals court upholds Texas independent review law - Maine drug assistance program struck down by appeals court - HCA tentatively agrees to multimillion fraud settlement - Medicare OKs covering oxygen therapy for diabetes-related leg wounds - CMS delays cap on physical therapy - CMS extends grandfathering of independent pathology labs

West Virginia governor proposes tort reforms to help doctors

Caps on noneconomic damages and the transfer of $20 million from the state's tobacco fund to offset physicians' insurance costs are part of the package of medical liability reforms that West Virginia Gov. Bob Wise unveiled in his state-of-the-state speech earlier this month.

In most cases, medical malpractice awards would be limited to between $250,000 and $350,000. In trauma cases, caps would be set at $500,000 for physicians and emergency workers. Wise also is asking the state Legislature to make expert testimony qualifications more stringent, to hold physicians responsible for only their portion of the damages and to allow juries to hear about money plaintiffs receive from other sources.

West Virginia has some tort reform measures in place, but physicians there are still leaving the state, retiring early or discontinuing high-risk procedures because they can't afford insurance.

On Jan. 1, more than a dozen surgeons in Wheeling took 30-day leaves of absence from the area's hospitals to protest high insurance rates. Many patients were transferred to other hospitals, but physicians have treated the most serious cases, patients who may not have survived a ground or air transfer.

More federal Medicaid funds proposed

Sen. John D. Rockefeller (D, W.Va.) and a bipartisan group of senators have proposed a bill that would inject an estimated $20 billion into states' Medicaid programs over the next 18 months.

Governors and state Medicaid directors have been calling on lawmakers to provide new funds to carry their programs through hard economic times.

"For the upcoming state legislative session, battle lines are being drawn between draconian cuts in eligibility or services, or big tax increases, or both," said David Parrella, chair of the National Assn. of State Medicaid Directors.

Appeals court upholds Texas independent review law

Texas physicians and patients will be able to use an independent review law that the state Legislature passed in 1997.

In light of a U.S. Supreme Court ruling last summer that upheld a similar Illinois law, the 5th U.S. Circuit Court of Appeals in December 2002 reversed its earlier ruling that the federal Employee Retirement Income Security Act of 1974 preempted the Texas law.

The independent review board is used when a patient's physician and health plan disagree on what is medically necessary. The law applies to patients who are in health plans that actually carry the insurance risk and aren't simply acting as a facilitator for an employer's self-insured health plan.

Physicians say independent review laws help bolster the physician-patient relationship.

Maine drug assistance program struck down by appeals court

The U.S. Circuit Court of Appeals for the District of Columbia in late December 2002 struck down a Medicaid demonstration program that aimed to extend prescription drug discounts to low-income, uninsured citizens in Maine who don't qualify for Medicaid.

The program was modeled after a demonstration program in Vermont that used drug manufacturers' rebates to pay for the program. After the appeals court found the Vermont program unlawful, Maine officials decided to add a 2% state contribution to the drug manufacturer contribution that was going to subsidize the program.

The Dept. of Health and Human Services never approved the modification, and the Maine program was unlawful, the court said in its opinion in Pharmaceutical Research and Manufacturers of America v. Tommy G. Thompson, in his capacity as Secretary of the Dept. of Health and Human Services.

HCA tentatively agrees to multimillion fraud settlement

HCA, formerly Columbia/HCA Healthcare Corp., and the Dept. of Justice reached a tentative $631 million settlement to resolve civil litigation alleging that the company overcharged the government when it billed for Medicare, Medicaid and other federally funded health care programs.

The litigation also alleges that the company had paid physicians kickbacks in exchange for patient referrals.

The proposed settlement includes an additional $250 million payment to the Centers for Medicare & Medicaid Services. If the settlement is approved, HCA will have paid the government about $1.7 billion since 2000 to resolve whistle-blower lawsuits, according to the Justice Dept. Earlier, the company settled criminal and other civil accusations.

Medicare OKs covering oxygen therapy for diabetes-related leg wounds

Medicare approved the use of hyperbaric oxygen therapy for the treatment of wounds of the lower extremities caused by type 1 or type 2 diabetes. The therapy involves exposure of the entire body to oxygen under increased atmospheric pressure.

The wound must be classified as Wagner grade III or higher, and the patient must have failed an adequate course of standard wound therapy. Wounds must be evaluated at least every 30 days during administration of the HBO therapy and must show measurable signs of healing to qualify for continued treatment. The coverage is effective for services provided after April 1.

CMS delays cap on physical therapy

The Centers for Medicare & Medicaid Services announced it would delay enforcement of a $1,500 cap on Medicare Part B physical therapy services that was scheduled for implementation on Jan. 1. Congress approved the limit in 1997 but delayed its implementation until this year. In a memo to Medicare carriers, CMS said it would not enforce the cap until at least July.

"Many patients would exceed this cap for medically necessary treatments and may have been forced to either pay for therapy out of their own resources or limit access to this essential medical benefit," said Tracy Gregg, a member of the board of directors for the National Assn. for the Support of Long Term Care. "The CMS action is a clear win for patients who can now receive therapy in the amount specified by their physician."

Recent studies have found that one in seven therapy patients, or one in 13 Medicare beneficiaries, will exceed the cap. If enforced, the limit would save an estimated $1.6 billion over the next 10 years in therapy spending.

CMS extends grandfathering of independent pathology labs

Federal officials extended for a year the ability of independent laboratories to bill Medicare directly for the technical component of pathology services provided to hospital inpatients.

In 1999, the Centers for Medicare & Medicaid Services announced it would limit payment to hospitals. That would require independent laboratories to bill hospitals for their services. But Congress passed a provision in 2000 allowing Medicare carriers to continue to pay independent laboratories for the services though 2002 if they had existing arrangements with hospitals. In late December 2002, CMS extended the policy through 2003.

The College of American Pathologists said the agency made "the right decision" not to require labs to bill hospitals directly. "Such a change would create a costly and administratively burdensome billing scheme for both hospitals and laboratories and potentially threaten local access to surgical pathology services, especially in rural areas," CAP said in a statement on the extension.