News in brief - July 18, 2011

Oregon cuts Medicaid physician pay by average of 11.5%

Oregon lawmakers and Gov. John Kitzhaber, MD, approved a fiscal 2012 budget in late June that on average reduces physician Medicaid pay by 11.5% effective Aug. 1.

The size of the cut varies by physician specialty. The state's Medicaid agency will not reduce fees for primary care services, including ob-gyn care, said Oregon Medical Assn. spokeswoman Betsy Boyd-Flynn. The Oregon Health Authority is attempting to bring all physician pay as close as possible to 72% of Medicare rates. This calculation means anesthesiologists, for instance, are facing a 39% Medicaid pay cut that Boyd-Flynn said is "really, really difficult to sustain."

Dr. Kitzhaber had supported Medicaid pay cuts of up to 19%, but the steeper reductions were not necessary because the Legislature agreed to increase a hospital tax in an effort to secure more federal matching dollars. The medical association was still seeking more details on the cuts at this article's deadline.

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3 in 5 Medicare power wheelchair claims are improper

The Medicare program paid $95 million in improper payment for power wheelchairs during the first six months of 2007, according to a Dept. of Health and Human Services Office of Inspector General report released in July.

An audit of 375 claims showed that 61% lacked the documentation necessary to support the patients' need for power wheelchairs. The inspector general found most claims did not meet the medical necessity guidelines outlined by the Centers for Medicare & Medicaid Services, the report stated.

The OIG recommended that CMS strengthen enrollment screening standards for medical equipment suppliers and review records from prescribing physicians. CMS also should continue to educate physicians and suppliers to ensure that patients receive medically necessary power wheelchairs that are appropriate for their mobility needs, the inspector general said.

The Medicare agency has anti-fraud tools in place to scrutinize wheelchair suppliers, CMS said in response to the study. All suppliers are subject to enhanced screening standards, the agency said.

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HHS calls for greater coordination for dual Medicare-Medicaid enrollees

New demonstration programs announced by the Dept. of Health and Human Services on July 8 will allow states to share savings achieved through better care coordination for people enrolled in both Medicare and Medicaid.

HHS announced that an individual state, the Centers for Medicare & Medicaid Services, and a health plan could enter into a three-way contract that pays the managed care plan a blended rate to provide "comprehensive, coordinated care," and allows any savings to return to states. States also could sign fee-for-service care coordination contracts directly with CMS. HHS proposed a third care coordination model for nursing homes.

HHS Secretary Kathleen Sebelius said states and the federal government spend about $300 billion a year on care for the 9 million people enrolled in both Medicare and Medicaid. HHS expects the demonstration programs to affect up to 2 million of these dual eligibles. Although the population is only about 15% of Medicare and Medicaid enrollees, they account for roughly 30% of health care spending in each program.

A full explanation of the HHS demonstration program is available online (www.kff.org/medicare/upload/8200.pdf).

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Seniors struggling with out-of-pocket costs, report finds

Out-of-pocket spending on health care is expected to make up at least a quarter of most Medicare patients' personal budgets by 2020, according to a June study by the Kaiser Family Foundation.

The data analysis accompanied a report, "Living Close to the Edge," profiling how 16 Medicare patients manage their finances for health care. Health spending ranged from 4% to 59% of each senior's budget. For instance, a 78-year-old Utah woman spends 29% of her annual income of about $24,000 on health care and premiums.

Median out-of-pocket health spending for Medicare patients has risen steadily since 1997, researchers found. Spending on premium and other health costs has increased to 16.2% in 2006, up from 11.9% in 1997. Median cost-sharing for health care is projected to increase to 26% by 2020.

"As policymakers consider options to rein in federal spending, including proposals that would increase costs for some or all people on Medicare, this analysis raises important questions about how much -- and how much more -- of their incomes Medicare beneficiaries can reasonably be expected to spend on their health care," the study said.

Half of all Medicare patients had incomes below $22,000 in 2010, the report said. A quarter of all patients earn less than $13,000 per year, and less than 1% had incomes above $250,000. The report is available online (www.kff.org/medicare/upload/8200.pdf).

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High court to review diagnostic test patent case

The U.S. Supreme Court agreed on June 20 to re-examine whether a test that measures patients' metabolite levels to determine drug dosages should be patentable.

Prometheus Laboratories sued Mayo Collaborative Services and Mayo Clinic Rochester in 2004, claiming that Mayo infringed on its test patents. Prometheus' diagnostic test measures metabolite levels in patients taking thiopurine drugs, then correlates those levels with the drugs' efficacy. Mayo developed its own test, which measured the same metabolites, but said its method used different levels to determine toxicity, according to court documents.

In 2008, a federal trial court ruled in favor of Mayo, but an appeals court reversed that decision in 2009. The Supreme Court vacated the appellate decision in 2010 in light of a similar case that changed how patent validity is measured. The case then was sent back to the lower court for reconsideration. In December 2010, the appellate court again ruled for Prometheus.

The high court will make a final determination on whether the tests can be patented. At this article's deadline, a date had not been scheduled for oral arguments.

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