News in brief - Oct. 18, 2004

Health insurance tax credits' flaws dampen interest - Rx monitoring bill passes House - Early setback for Medicare PPOs - Medicare seeks help with DME bidding

Health insurance tax credits' flaws dampen interest

Burdensome eligibility requirements have kept health care tax credits that are available to displaced workers from catching on more rapidly, according to a new report from the Government Accountability Office.

Fewer than 20,000 people claimed the tax credits in 2003, amounting to $37 million in benefits. Sixty-five percent of that group claimed the credit on their tax returns, rather than receiving it in advance.

Problems with the tax credit include an "enrollment process that is fragmented and complex and requires individuals to meet tax, labor and health criteria before they become eligible," the report states. Individuals also have to pay the full cost of premiums for three to six months while applying for the credit.

The poor performance of the credits, which were meant as a demonstration program, has been a sticking point for proponents who want to expand access to them.

Rx monitoring bill passes House

The House recently passed a bill that would provide grants to states to set up prescription drug monitoring programs designed to cut down on the illegal diversion of schedule II, III and IV controlled substances.

As of 2002, 15 states already had monitoring programs. The Government Accountability Office has found them to be effective in reducing "doctor shopping," because the programs allow physicians to check patients' prescription histories.

Kentucky has seen its program curb a burgeoning epidemic of OxyContin abuse, said the bill's sponsor, Rep. Ed Whitfield (R, Ky.). But that success has been marred by a subsequent increase in abuse of the drug in adjacent states, he said.

Early setback for Medicare PPOs

The Centers for Medicare & Medicaid Services improperly allowed managed care plans participating in a Medicare PPO demonstration project to restrict seniors from seeking care outside the plan network, according to the Government Accountability Office.

CMS agreed to instruct the plans to allow beneficiary care from non-network physicians and other health professionals. But the agency disputed GAO's assertion that the three-year demonstration, which started in 2003, is attracting few enrollees and is unable to bring down overall costs.

Critics of Medicare managed care immediately seized on the results as an indication that private plans will be unable to save money for seniors or the federal government. "Medicare Demonstration PPOs: Financial and Other Advantages for Plans, Few Advantages for Beneficiaries," GAO report 04-960 can be found online (www.gao.gov).

Medicare seeks help with DME bidding

A group of 21 durable medical equipment consumers and suppliers will advise the Centers for Medicare & Medicaid Services on how to implement competitive bidding for DME.

The panel, which plans to meet periodically in Baltimore over the next five years, will suggest standards for the bidding process that is set to be phased in under Medicare reform statute starting in 2007. Officials note that DME demonstration projects involving competition for federal money have produced average price reductions of 20%.