News in brief - Jan. 17, 2005

Mental health parity law extended - Insurance portability rule finalized - HIPAA rules on the calendar - Legal reform high on Bush's list - Pa. governor extends Mcare abatement - Drugmakers must keep price records for 10 years

Mental health parity law extended

As part of the Working Families Tax Relief Act signed into law at the end of last year, the mental health parity law was extended for this year.

The original act expired in 2001 but has been extended by Congress each year since. Mental health advocates have pushed Congress to close loopholes in the law that allow health plans to continue setting different co-payments and deductibles for mental health services. But despite strong bipartisan support for legislation that would broaden the act's protections, the issue was not taken up by Congress last year.

Insurance portability rule finalized

The Centers for Medicare & Medicaid Services in conjunction with the Dept. of Labor has published a final regulation establishing the rules that allow individuals to maintain access to health coverage after they lose or change their jobs.

The original regulation requires health insurers to properly inform people when their insurance with their former employer ends. The final rule mandates plans to include educational material about the individual's rights under the Health Insurance Portability and Accountability Act.

Under the rule, individuals have 63 days from the time they lose their health insurance to get new coverage without being subject to potential limitations on new enrollees. The rule also contains restrictions on what health plans can deem preexisting conditions and on how long coverage exclusions can last.

HIPAA rules on the calendar

Officials of the Dept. of Health and Human Services plan to publish four new proposed rules based on the Health Insurance Portability and Accountability Act during the first half of 2005. One will establish a long-awaited standard for attachments to electronic claims. The others involve enforcement of administrative simplification; a national identifier system for health plans; and transaction and code set revisions.

The claims rule should come out sometime in January and will allow physicians and others to begin working toward full implementation of electronic transactions. The enforcement rule, planned for February, will detail actions and fines applicable to covered entities not compliant with those rules. Publication of the other two rules is planned for April and June, respectively.

Legal reform high on Bush's list

At a two-day economic summit in December 2004, President Bush reiterated that legal reform is still at the top of his agenda, saying he wants Congress to pass meaningful medical liability reform in 2005.

"I looked at the impact of the defensive practice of medicine, at the unnecessary tests that doctors prescribe in order to make a defense when they get sued -- not if they get sued, but when," Bush said. "The odds are they'll be sued. And it costs the federal budget about $27 billion a year. ... We need medical liability reform. This is a vital issue for the quality of life of thousands of people in our country."

Bush has been a supporter of the AMA's push for a federal $250,000 cap on noneconomic damages in medical liability lawsuits. The House twice has passed a bill, but filibusters in the Senate have blocked the bill from going to the president's desk.

Pa. governor extends Mcare abatement

Some Pennsylvania physicians in high-risk specialties won't have to pay into the state's catastrophic fund this year, and others will pay a reduced rate.

Pennsylvania Gov. Edward G. Rendell in December 2004 signed legislation that extends the abatement for the Medical Care Availability and Reduction of Error fund, commonly referred to as the Mcare fund. Similar to abatements in the past couple of years, obstetricians, neurosurgeons, orthopedic surgeons and others in high-risk surgical specialties won't pay anything into the fund. Other physicians will pay only 50% of what they otherwise would have been asked to pay.

The state created the abatement program after physicians began leaving the state because they couldn't afford their medical liability insurance. Pennsylvania is one of 20 states that the American Medical Association lists as being in the middle of a medical liability insurance crisis.

Drugmakers must keep price records for 10 years

The Centers for Medicare & Medicaid Services has published a final rule requiring drug manufacturers participating in the Medicaid rebate program to hold onto pricing records for at least 10 years. Drugmakers who sell their products to Medicaid must give the program their lowest rebated price under federal statute. But federal and state governments recover hundreds of millions of dollars a year from companies that charge Medicaid too much.

"Before this new rule was issued, there was no permanent requirement for manufacturers to keep their pricing records for any length of time," said CMS Administrator Mark B. McClellan, MD, PhD. The rule, which became effective as of Jan. 1, will aid the agency in its antifraud efforts, he said.