News in brief - July 3, 2006

AMA to develop model legislation covering health plan mergers - AMA advocates for help with EMRs - McKesson acquires RelayHealth - Former HealthSouth exec sentenced - Insurer reports consumer-driven growth

AMA to develop model legislation covering health plan mergers

Taking a step in the fight against consolidation of the managed care market, the AMA will prepare model state legislation to allow for more complete state review of future mergers and acquisitions of health plans.

At the AMA's Annual Meeting in June, delegates directed the Association to develop the legislation after they expressed concerns that such deals, which require both state and federal regulation, lead to too much market power over physicians and patients and siphon money away from medical care into corporate profits.

The AMA and several state medical societies spoke out last year against UnitedHealth Group's acquisition of PacifiCare Health Systems Inc. United is the nation's second largest health insurer, after WellPoint Inc. Doctors testified in state hearings before the Colorado Division of Insurance that the merger, affecting 10 states, would have a negative impact on competition and force higher premiums on patients.

"This is a 'bully on the playground' situation, and we believe there are dangerous imbalances in the health care marketplace," M. Eugene Sherman, MD, a cardiovascular disease specialist and an alternate delegate from Aurora, Colo., said at the AMA meeting.

AMA advocates for help with EMRs

The AMA House of Delegates on June 13 approved a resolution directing the Association to advocate for and support initiatives to minimize the financial cost to physician practices of buying and maintaining electronic medical records systems.

The original resolution asked the AMA to work with appropriate agencies to provide a tax credit of up to $50,000 per physician over three years to help doctors adopt EMRs. The resolution was amended after several delegates who supported the resolution's intent questioned whether a tax credit was the appropriate funding vehicle and whether $50,000 would be enough to cover the cost of the technology.

The EMR tax credit resolution was discussed jointly with two other resolutions asking the AMA to approve policies opposing any unfunded government mandate for the use of EMRs and use of these systems for reimbursement for medical care or pay-for-performance programs. Those resolutions were folded into the funding resolution that passed.

Separately, the house adopted a resolution directing the AMA to develop policy regarding the use, patient control and privacy of patient information in an EMR system.

McKesson acquires RelayHealth

McKesson Corp. announced June 12 that it acquired RelayHealth Corp., a Emeryville, Calif., seller of online consultation and other physician-patient connectivity software. Financial terms were not disclosed.

San Francisco-based McKesson, which sells pharmaceutical and medical supplies and information systems to hospitals and physicians, said RelayHealth will be part of a newly created business group that will sell personal health records services and tools to consumers. McKesson had made an undisclosed investment in RelayHealth last year.

RelayHealth has deals with at least 13 insurers to develop software that would allow them to pay physicians for online consultations.

Generally, the physicians have to buy the RelayHealth software in order to get reimbursed.

Former HealthSouth exec sentenced

The stiffest sentence yet in the HealthSouth accounting scandal has been handed down against former controller Hannibal "Sonny" Crumpler, who was ordered to spend eight years in prison.

Crumpler was sentenced on June 15 by Judge Virginia Emerson Hopkins in U.S. District Court in Birmingham, Ala. A jury had previously convicted him of conspiracy to commit securities fraud and submitting false claims to auditors and ordered him to forfeit nearly $1.4 million in criminal proceeds.

Crumpler worked for the Birmingham, Ala.-based HealthSouth from 1986 to 2000 in various capacities. Prosecutors alleged that he conspired with other executives to inflate HealthSouth's earnings, helping to add nearly $2.7 billion in fictitious income over several years. They also said he later lied to auditors conducting HealthSouth's 2001 audit.

In the wake of the accounting scandal, which first surfaced in 2003, prosecutors said 15 former executives pleaded guilty to criminal charges, and Crumpler was convicted by a jury. HealthSouth founder Richard M. Scrushy was accused of masterminding the scheme, but a jury cleared him of wrongdoing after a lengthy trial.

Previously, the longest prison term was handed down against former HealthSouth chief financial officer William Owens, who was sentenced in December 2005 to five years in prison.

Insurer reports consumer-driven growth

UnitedHealth Group said that membership in its consumer-driven health plans has surpassed 1.75 million people. The number of members with plans connected to a health savings account or a health reimbursement account jumped 75% since June 2005, with more than 750,000 new members participating in the past year, the company said.