News in brief - Oct. 20, 2003

Calif. Medicaid fraud bill adopted - AMA continues tort reform push - Calif. employer mandate becomes law - Wis. lawmakers vote to preserve injury compensation funds - Oregon group proposes tort reform ballot measures - U.S. joins suit over Medco's handling of mail-order prescriptions - Minnesota charges Glaxo with blocking drug reimportation - Insurance mandates increase premiums slightly

Calif. Medicaid fraud bill adopted

California Gov. Gray Davis on Oct. 1 signed legislation aimed at reducing fraud and abuse in Medi-Cal, the state's Medicaid program.

The law requires beneficiaries and physicians to sign for prescribed drugs or devices. It also establishes a system to respond to problems more quickly by issuing warning notices for improper billing patterns or cost computations, and creates financial penalties for repeat offenses. California estimates that fraud costs Medi-Cal $2.9 billion annually.

AMA continues tort reform push

The American Medical Association went back before Congress in early October to talk about tort reform.

The AMA will continue to seek passage of Senate legislation similar to the measure approved by the House earlier this year, AMA President-elect John C. Nelson, MD, MPH, told the House Committee on Government Reform's subcommittee on wellness and human rights. The House legislation includes a $250,000 cap on noneconomic damages awarded in medical malpractice cases, and the AMA wants to see the same language passed in the Senate.

"You know that our health care system is facing a crisis when patients have to leave their state to receive urgent surgical care or when pregnant women cannot find an obstetrician to monitor their pregnancies and deliver their babies," said Dr. Nelson, an obstetrician-gynecologist.

Calif. employer mandate becomes law

California Gov. Gray Davis has signed into law legislation requiring all companies with 50 or more workers to offer health benefits or pay into a state-run program that will offer their employees coverage. The law is expected to increase access for more than 1 million of California's 6 million uninsured residents. A recent poll of Californians showed that 63% support the measure. The law is to be phased in starting in 2006.

"It is a dramatic step in solving not only our state's uninsured problem, but also in dealing with the crisis in our emergency rooms," said Jack Lewin, MD, executive vice president of the California Medical Assn. "It should serve as a model for the rest of the nation."

Wis. lawmakers vote to preserve injury compensation funds

The Wisconsin General Assembly Oct. 2 passed a bill that would help ensure that money collected to compensate patients injured through medical negligence would not be diverted to other state funds. The vote comes after Wisconsin Gov. Jim Doyle earlier this year suggested taking money from the Patients Compensation Fund to help offset budget shortfalls. The Senate is expected to pass the legislation, which would then require Doyle's signature to become law.

Oregon group proposes tort reform ballot measures

Oregonians for Quality, Affordable and Reliable Health Care filed four proposed ballot measures in late September to address the medical liability insurance crisis facing the state. The group is a political committee created by the Oregon Medical Assn.

Two proposed ballot measures call for capping the amount that personal injury lawyers could collect so that more money goes to injured patients. The other two call for limiting the noneconomic damages awarded in medical malpractice cases to $500,000. The ballot questions would go before voters in November 2004 but face potential court challenges before then.

U.S. joins suit over Medco's handling of mail-order prescriptions

The U.S. government is joining in a whistle-blower action against Medco Health Solutions Inc. The suit alleges that the company violated federal and state false-claims acts in the way it provided mail-order prescription drugs to federal employees, retirees and their families.

The complaint filed by the U.S. Attorney's Office in Philadelphia charges that the company created false records to show that physicians were contacted to discuss the proper drug, proper dosage or proper dispensing instructions, when the contact was never made. The suit also alleges that Medco created false records to show that physicians were contacted to discuss the risk of adverse drug interactions and changed prescriptions based on misleading or false information it gave to treating physicians. The company canceled, deleted or destroyed patients' mail-order prescriptions so it could avoid penalties for delaying filling prescriptions, the government charges.

Medco Health said the claims lack merit. "Each of the allegations is false, overstated or pertains to unauthorized instances over several years that were identified and corrected, and in no case are we aware of any situation that compromised our high level of patient care," Medco Health General Counsel David Machlowitz stated.

Minnesota charges Glaxo with blocking drug reimportation

Minnesota Attorney General Mike Hatch has filed a lawsuit in an attempt to force GlaxoSmithKline to produce documents the state says will show the company broke antitrust laws. The Sept. 30 suit was filed in state court in Hennepin County.

Hatch contends the company's decision to restrict shipments of medicines to wholesalers and pharmacies in Canada that sell drugs to U.S. citizens violates antitrust laws. Many Minnesotans buy drugs from Canadian pharmacies because it is less expensive. In May, Hatch served GlaxoSmithKline with a civil investigative demand in connection with the office's investigation, and the company has not produced the documents.

GlaxoSmithKline has defended its decision to prevent prescription medications sent to Canada from being re-imported to the United States. In a statement, the company said: "Critics allege that the company's motives are purely financial; this is not the case. ... Canadian Internet pharmacies engaged in these practices violate U.S. laws designed to protect patients."

Insurance mandates increase premiums slightly

Federal and state health coverage laws add about 3% to 5% to small businesses' insurance premiums, a General Accounting Office review found. That is a fraction of what has been shown in other studies, which did not take into account the proportion of employers already covering mandated benefits.

Health insurance offered by small businesses is usually subject to both federal and state mandates, whereas large companies are normally subject only to federal regulations. Proponents of legislation to deregulate association health plans claim that the plans could offer more affordable policies to small businesses if state mandates were removed.