News in brief - Oct. 6, 2003

N.C. group makes up with Blues - HealthSouth draws more scrutiny - More consider consumer-driven plans - Fetter stays as Tenet CEO - Plans less restrictive, more profitable - Alabama Blues target uninsured - Wound care market expected to slow - Disease management vendor sold - Money given for e-health projects

N.C. group makes up with Blues

An anesthesiology group involved in the successful fight against Blue Cross and Blue Shield of North Carolina's for-profit conversion is contracting with the plan again after more than a year's separation.

Critical Health Systems of North Carolina, a 44-doctor anesthesiology practice in Raleigh, signed a contract with the North Carolina Blues that puts the doctors back in the Blue Cross network through 2006. The group had bolted in the summer of 2002 after its doctors grew dissatisfied with reimbursement levels.

Bert Coffer, MD, a Critical Health anesthesiologist, spearheaded a group of doctors and pharmacists dubbed the ProCare Coalition that opposed the proposed conversion of the North Carolina Blues to a publicly traded, shareholder-owned corporation. Blue Cross recently decided to stay nonprofit.

The group said the Blues plan offered additional compensation for certified nurse anesthetists on top of the plan's regular reimbursement rates. Also, some administrative hassles were eased, the group said.

HealthSouth draws more scrutiny

HealthSouth, the embattled outpatient services giant at the center of a major accounting scandal, is under more scrutiny by federal investigators in the wake of a civil lawsuit that raised questions of possible Medicare fraud at the company.

A jury in Texas Sept. 8 awarded $1.5 million to a physician who claimed she was wrongfully fired from her job as medical director of a HealthSouth hospital for refusing to boost inpatient admissions by unnecessarily keeping beds filled.

The verdict prompted U.S. Attorney Alice H. Martin, who is leading the government's prosecution of the HealthSouth accounting scandal, to ask the Justice Dept. to see if any Medicare rules were violated. Martin said the investigators were examining whether HealthSouth's accounting practices led to Medicare fraud. The latest inquiry, she said, was one more layer to the investigation.

HealthSouth spokesman Andy Brimmer said the Birmingham, Ala.-based company was cooperating. Brimmer also said the company planned to ask a judge to throw out the jury verdict in Texas.

More consider consumer-driven plans

Consumer-driven health plans, touted by many as the best hope for slowing health care costs, are viewed by only a small percentage of employers as a powerful tool for alleviating health insurance costs, a new study found. A national survey of companies by the Kaiser Family Foundation and the Health Research and Education Trust said just 14% of employers identified consumer-driven insurance plans as offering a "very effective" cure to the upward spiral of health insurance premiums. Nevertheless, a significant proportion of big firms are offering such plans to workers or are considering offering them -- regardless of whether management is sure the plans will have much impact. The survey found 17% of companies with 5,000 or more employees now offer a high-deductible plan and another 16% of employers say they are highly likely to introduce a high-deductible option in 2004.

Fetter stays as Tenet CEO

Tenet Healthcare Corp. has hired acting chief executive officer Trevor Fetter to fill the job at the helm of the troubled hospital chain.

Fetter, 43, has held the role on an interim basis since May, when former chief executive Jeffrey Barbakow resigned under pressure following a series of legal and financial setbacks. After a search by the board, Fetter was named CEO and elected to serve as the only management director on the board.

He is taking over a company that has suffered several setbacks in the last year, including federal investigations of its Medicare billing practices and its physician relocation agreements. In August, Tenet agreed to pay $54 million to settle claims that doctors at a California hospital performed hundreds of unnecessary heart procedures to boost profits. Tenet did not admit any wrongdoing.

Plans less restrictive, more profitable

The loosening of managed care restrictions such as gatekeeper rules not only has been welcomed by many doctors and patients but also hasn't prevented HMOs that have introduced the changes from being profitable, according to a national publisher of research on managed care companies.

A new updating of the national HMO financial database of St. Paul, Minn.-based InterStudy Publications shows that nine in 10 HMOs have "adapted to market demands" and attained greater profits while at the same time easing up on network restrictions such as referral procedures, said Richard Hamer, InterStudy director. The "recipe for success" for these plans has been to reduce network regulation on patients and doctors while increasing the price of coverage, he said.

Only a "small minority," or about one in 10 of HMOs nationwide, continue to seek to increase profits through a highly restrictive management style that limits care through increased administrative oversight and decreased expenditures on medical treatment, Hamer said.

The database of 476 HMOs, based on financial data filed with state regulatory agencies, shows that the median profit level for HMOs was 1.7% of total revenue last year, including investment income. The median profit has been rising by about one-half of a percent each year since 1998, when more than half of HMOs in the nation reported losses, Hamer said.

Alabama Blues target uninsured

Blue Cross and Blue Shield of Alabama announced in September it would offer moderately priced individual health insurance plans to all uninsured residents of the state as a partial means of addressing the state's uninsured problem. About 500,000 people in the state lack insurance.

The plan will sponsor an open-enrollment period between Oct. 1 and Nov. 30 in which any state resident under 65 who is currently without coverage may apply for a policy and not be denied acceptance for health reasons. Preexisting conditions will not be covered for a year, though.

The new plan is intended to guarantee coverage to thousands of state residents who otherwise could not easily get insurance and at lower rates than they might typically find in the individual insurance market. Premiums will be about $145 a month for individuals with a per-person deductible of $1,000 and will include a prescription drug benefit.

Wound care market expected to slow

Wound care products are expected to generate $4.3 billion in revenues this year, according to research by New York-based Kalorama Information, a life sciences market research firm.

However, growth in the market is expected to slow considerably over the next several years, according to the Kalorama study, "Wound Care Markets Volume III: Surgical and Trauma Wounds." Growth the last few years was driven by new advancements, like adhesives and sealants, according to the study.

Disease management vendor sold

American Healthways Inc. has acquired StatusOne Health Systems, a Westboro, Mass.-based disease management vendor, for $65 million.

American Healthways, Nashville, Tenn., said the acquisition will help it become a "single-source" provider of disease management services to health insurers. StatusOne uses predictive modeling technology to identify health plan members who are at highest risk for acute -- and the costliest -- episodes of care. American Healthways uses call centers and nurses to manage and provide continuing care to those with have one or more chronic conditions.

Money given for e-health projects

The Robert Wood Johnson Foundation has awarded $4.8 million in grants to fund projects designed to evaluate whether interactive, Internet-based technologies are effective tools for disease management, and whether they improve patient behavior and outcomes.

The one- to three-year projects will be conducted primarily by academic medical centers and universities. Those include the Baylor College of Medicine, Houston; Kansas University Medical Center, Kansas City, Kan.; and Johns Hopkins Bloomberg School of Public Health, Baltimore.