News in brief - March 21, 2005

South Carolina physician group settles price-fixing charges - Kansas attorney general seeks abortion records from clinics - Medicaid paying too much for drugs - Opinion leaders' health care wish list

South Carolina physician group settles price-fixing charges

A South Carolina physician-hospital organization earlier this month settled Federal Trade Commission charges that it was fixing prices on behalf of its member doctors.

Preferred Health Services, which consists of more than 100 doctors and Oconee Memorial Hospital, based in Seneca, S.C., signed a consent order prohibiting it from negotiating collectively for its members, according to the FTC. The commission alleged that Preferred Health had acted as a "contracting representative" for its member physicians, who make up about 70% of the independently practicing physicians in the region.

The consent order prohibits the organization from doing any negotiating on behalf of physicians and helping doctors exchange information about how to deal with certain insurers. The order does not prohibit the organization from arranging "legitimate joint contracting arrangements among competing physicians."

Preferred Health Services did not admit to any wrongdoing.

The public can comment on the settlement until March 30. The FTC then will vote on whether to make it final.

Kansas attorney general seeks abortion records from clinics

Kansas Attorney General Phill Kline is seeking the medical records of about 90 abortion patients from two state clinics -- a demand he will have to prove is constitutional in court.

The request for records is related to a criminal investigation into child rape and late-term abortions. A district court issued a subpoena for the records, but the two clinics, identified only as Alpha and Beta in court briefs, have asked the Kansas Supreme Court to quash the subpoena. Both the clinics and the attorney general have filed briefs in the case.

The case is the latest in the ongoing debate over patient privacy. Last year, then U.S. Attorney General John Ashcroft sought to subpoena medical records of women who had abortions at hospitals, targeting at least six facilities around the country. In response, the AMA House of Delegates at its 2004 Annual Meeting adopted policy to communicate its concerns to the president and U.S. Dept. of Justice about the subpoenas.

In a separate 2003 case, a U.S. district judge issued a temporary injunction against a requirement Kline made for Kansas doctors to report any sexual activity by someone younger than 16 as sexual abuse. A federal appeals court is considering a challenge to the injunction. The AMA, American Academy of Family Physicians, American Medical Women's Assn. and several other organizations filed a friend-of-the-court brief in the case supporting patient confidentiality.

Medicaid paying too much for drugs

Medicaid has been overpaying for some of the drugs it buys due to a lack of federal oversight, according to a new report from the Government Accountability Office. The report faulted the Centers for Medicare & Medicaid Services for poorly regulating how companies calculate their average price and for doing infrequent checkups on the market to verify the prices charged by the firms. Federal statute requires manufacturers to offer Medicaid the lowest market price.

"For the last 10 years, federal officials have left the program vulnerable to tremendous waste, fraud and abuse," said Sen. Chuck Grassley (R, Iowa), chair of the Senate Finance Committee. "Administrators need to move quickly to update the way these prices are determined to prevent taxpayers from being shortchanged hundreds of millions, and possibly billions, of tax dollars."

President Bush's 2006 budget plan proposes fixing the faulty pricing technique as one way the government can curtail growing Medicaid costs.

Opinion leaders' health care wish list

The percentage of Americans without health insurance can and should be halved within the next 10 years, to 8% of the population, according to a survey of health policy experts conducted by the Commonwealth Fund. The majority of respondents said that result could be best achieved by the government setting up a national health program modeled on the Federal Employees Health Benefits Program from which small businesses and individuals could purchase coverage.

There was less support for purely market-based approaches, such as association health plans and health savings accounts. But those surveyed did expect more individuals to purchase HSAs in the next 10 years.