By Ben Persing - Capitol Briefings - Tuesday, July 15, 2008
UPDATE 7:05 PM: The Senate has now also voted to override the veto, 70-26. Four Republicans switched from voting against the measure previously to voting in favor of the override today: Kit Bond (Mo.), Thad Cochran (Miss.), Roger Wicker (Miss.) and Richard Lugar (Ind.).
The House had voted to override President Bush's veto of a bill to block cuts in payments to doctors under Medicare, and the caravan of Republicans moving away from the president on the issue turned into a stampede.
The chamber voted 383-41 to override the veto, with 153 Republicans joining all 230 Democrats present to vote "aye." That's an increase of 24 Republicans in favor since the bill's original passage last month. The administration and GOP leaders did their best in both the House and Senate to prevent the measure from passing the first time around, urging their members to vote "no" so they could try to negotiate a better bill, but many rank-and-file Republicans didn't listen. Even more ignored Bush's wishes today.
The Senate vote to override is scheduled to happen within the hour.
Read more in the Federal Insider
Wednesday, July 16, 2008
Medicare Advantage: Congress rightly overrides President Bush's veto of a bill that levels the playing field between health-care providers
By Washington Post - Wed., July 16, 2008
WHY DID President Bush veto the Medicare bill, only to be swiftly overridden by both houses of Congress? It's not because he disagrees with the fundamental purpose, to reverse a 10.6 percent cut in Medicare payments to doctors. The administration's main beef is paying the cost, $13.8 billion over five years, by reducing projected payments to Medicare Advantage plans. These are the private plans -- HMOs or preferred-provider networks -- set up to compete with traditional fee-for-service Medicare, in which seniors go to doctors of their choice who accept Medicare reimbursements.
Medicare Advantage plans, which currently enroll about 20 percent of Medicare beneficiaries, could be a cost-effective alternative to traditional Medicare. The problem is that these plans now enjoy an undue advantage: They are paid, on average, 13 percent more per beneficiary than traditional Medicare costs. Numerous experts have recommended leveling the playing field between private plans and traditional Medicare. The legislation takes a few small, sensible steps in that direction.
How small? The savings from Medicare Advantage plans would amount to less than 2 percent of the money the government is projected to spend on them in the next five years. The Congressional Budget Office projects that enrollment in Medicare Advantage plans would still grow by 25 percent over that period. The changes would eliminate double payments for educational activities (since the plans don't engage in these) and impose new requirements on so-called private fee-for-service plans, which operate much like traditional Medicare but end up costing more.
The president said he vetoed the bill because "taking choices away from seniors to pay physicians is wrong." But no choices are taken away. The changes in the costly private fee-for-service plans, for instance, apply only in areas where at least two other Medicare Advantage plans are operating. Enrollment in these plans is projected to grow 39 percent by 2013 under the new rules. The CBO estimates only that the slightly more level playing field would result in about 2 million fewer seniors choosing the private plans than would have otherwise. It's telling that not even lawmakers of his own party were cowed by the president's effort to scare seniors.
Read more in the Washington Post
WHY DID President Bush veto the Medicare bill, only to be swiftly overridden by both houses of Congress? It's not because he disagrees with the fundamental purpose, to reverse a 10.6 percent cut in Medicare payments to doctors. The administration's main beef is paying the cost, $13.8 billion over five years, by reducing projected payments to Medicare Advantage plans. These are the private plans -- HMOs or preferred-provider networks -- set up to compete with traditional fee-for-service Medicare, in which seniors go to doctors of their choice who accept Medicare reimbursements.
Medicare Advantage plans, which currently enroll about 20 percent of Medicare beneficiaries, could be a cost-effective alternative to traditional Medicare. The problem is that these plans now enjoy an undue advantage: They are paid, on average, 13 percent more per beneficiary than traditional Medicare costs. Numerous experts have recommended leveling the playing field between private plans and traditional Medicare. The legislation takes a few small, sensible steps in that direction.
How small? The savings from Medicare Advantage plans would amount to less than 2 percent of the money the government is projected to spend on them in the next five years. The Congressional Budget Office projects that enrollment in Medicare Advantage plans would still grow by 25 percent over that period. The changes would eliminate double payments for educational activities (since the plans don't engage in these) and impose new requirements on so-called private fee-for-service plans, which operate much like traditional Medicare but end up costing more.
The president said he vetoed the bill because "taking choices away from seniors to pay physicians is wrong." But no choices are taken away. The changes in the costly private fee-for-service plans, for instance, apply only in areas where at least two other Medicare Advantage plans are operating. Enrollment in these plans is projected to grow 39 percent by 2013 under the new rules. The CBO estimates only that the slightly more level playing field would result in about 2 million fewer seniors choosing the private plans than would have otherwise. It's telling that not even lawmakers of his own party were cowed by the president's effort to scare seniors.
Read more in the Washington Post
Monday, July 14, 2008
Fibromyalgia: Little understood, often frustrating
By Judy Fortin - CNN Medical Correspondent - Monday, July 14, 2008
ATLANTA, Georgia (CNN) -- You wouldn't know it by looking at her, but at any given moment Dana Poole hurts all over.
"It's kind of like a burning, but an ache. It's almost like you have the flu," said Poole, 31, a receptionist from Canton, Georgia.
Poole is one of almost 6 million Americans who suffer from a chronic condition called fibromyalgia.
In addition to widespread pain, patients may complain about fatigue and sleep disturbances, depression, headaches, irritable bowel syndrome and heightened sensitivity.
"Dana is typical of a lot of fibromyalgia patients," said Dr. Jefrey Lieberman, an Atlanta, Georgia-based rheumatologist. "She came into my office complaining of a lot of diffuse pain all over her body and fatigue. She really didn't know why she was getting it."
That's part of the frustration of having fibromyalgia. Experts aren't sure what causes it, but many believe many factors are involved.
Some think the condition, which is not progressive or life-threatening, may be triggered by an emotional or traumatic event.
Lieberman believed it is related to a disordered sleep pattern and poor exercise. "It appears to be more of a neuro-chemical process," he said. "In other words, there really is no inflammation in patients with fibromyalgia." Health Minute: More on identifying fibromyalgia »
Getting a proper diagnosis can sometimes be just as frustrating as finding out what's behind the disease.
"Fibromyalgia is to some extent a diagnosis of exclusion," Lieberman said. "There are lot of things it can be confused with such as thyroid disorders, metabolic disorders and certain rheumatologic inflammatory conditions."
For almost five years, Poole jumped from doctor to doctor trying to figure out what was causing her symptoms. "They were constantly saying I'm a tall, thin female. 'You're getting older -- your body is going to change,' and it was frustrating."
Lieberman understood Poole's frustration. "Sometimes fibromyalgia is used as a wastebasket term if a patient has pain and they don't know what it is from," he said. "It is frequently misdiagnosed. In fact, it is overdiagnosed and it is underdiagnosed."
Specialists such as Lieberman can make a proper diagnosis based on criteria set by the American College of Rheumatology.
"Those criteria are diffuse pain in three or more quadrants of the body and the presence of what are called tender points in the body," Lieberman explained. "There are 18 total tender points, and by definition we like to see 11 of those tender points being present."
It's estimated that up to 90 percent of patients are women. Most of them start feeling symptoms in early and middle adulthood.
Poole remembered that the pain first started when she was 20. It wasn't until she met Lieberman about five years ago that she got some relief.
She took part in a drug study for Cymbalta, one of two medications approved for the management of fibromyalgia. The other drug is called Lyrica.
"Both of them are geared toward the patient's well-being as well as improving their pain," Lieberman said.
He also encouraged Poole to control her condition through a healthy diet, stress reduction, getting enough sleep and regular low-impact exercise.
"We think that aerobic exercise helps to stimulate endorphins and enkephlins from the body which are your own natural pain relievers," Lieberman said.
The doctor is quick to point out that even with proper medication and adequate exercise, fibromyalgia has no cure.
Although Lieberman said some of his patients report the symptoms tapering off in their mid-50s and -60s, others are faced with years of managing the condition.
"For most of my patients, I tell them that I can get you 50 to 75 percent better and many of those patients will jump at that," he said.
Poole is one of them, but knowing that she'll need to follow a careful daily regimen can be daunting, she said. "It wears you out, mentally, physically and emotionally."
READ MORE ON CNN
ATLANTA, Georgia (CNN) -- You wouldn't know it by looking at her, but at any given moment Dana Poole hurts all over.
"It's kind of like a burning, but an ache. It's almost like you have the flu," said Poole, 31, a receptionist from Canton, Georgia.
Poole is one of almost 6 million Americans who suffer from a chronic condition called fibromyalgia.
In addition to widespread pain, patients may complain about fatigue and sleep disturbances, depression, headaches, irritable bowel syndrome and heightened sensitivity.
"Dana is typical of a lot of fibromyalgia patients," said Dr. Jefrey Lieberman, an Atlanta, Georgia-based rheumatologist. "She came into my office complaining of a lot of diffuse pain all over her body and fatigue. She really didn't know why she was getting it."
That's part of the frustration of having fibromyalgia. Experts aren't sure what causes it, but many believe many factors are involved.
Some think the condition, which is not progressive or life-threatening, may be triggered by an emotional or traumatic event.
Lieberman believed it is related to a disordered sleep pattern and poor exercise. "It appears to be more of a neuro-chemical process," he said. "In other words, there really is no inflammation in patients with fibromyalgia." Health Minute: More on identifying fibromyalgia »
Getting a proper diagnosis can sometimes be just as frustrating as finding out what's behind the disease.
"Fibromyalgia is to some extent a diagnosis of exclusion," Lieberman said. "There are lot of things it can be confused with such as thyroid disorders, metabolic disorders and certain rheumatologic inflammatory conditions."
For almost five years, Poole jumped from doctor to doctor trying to figure out what was causing her symptoms. "They were constantly saying I'm a tall, thin female. 'You're getting older -- your body is going to change,' and it was frustrating."
Lieberman understood Poole's frustration. "Sometimes fibromyalgia is used as a wastebasket term if a patient has pain and they don't know what it is from," he said. "It is frequently misdiagnosed. In fact, it is overdiagnosed and it is underdiagnosed."
Specialists such as Lieberman can make a proper diagnosis based on criteria set by the American College of Rheumatology.
"Those criteria are diffuse pain in three or more quadrants of the body and the presence of what are called tender points in the body," Lieberman explained. "There are 18 total tender points, and by definition we like to see 11 of those tender points being present."
It's estimated that up to 90 percent of patients are women. Most of them start feeling symptoms in early and middle adulthood.
Poole remembered that the pain first started when she was 20. It wasn't until she met Lieberman about five years ago that she got some relief.
She took part in a drug study for Cymbalta, one of two medications approved for the management of fibromyalgia. The other drug is called Lyrica.
"Both of them are geared toward the patient's well-being as well as improving their pain," Lieberman said.
He also encouraged Poole to control her condition through a healthy diet, stress reduction, getting enough sleep and regular low-impact exercise.
"We think that aerobic exercise helps to stimulate endorphins and enkephlins from the body which are your own natural pain relievers," Lieberman said.
The doctor is quick to point out that even with proper medication and adequate exercise, fibromyalgia has no cure.
Although Lieberman said some of his patients report the symptoms tapering off in their mid-50s and -60s, others are faced with years of managing the condition.
"For most of my patients, I tell them that I can get you 50 to 75 percent better and many of those patients will jump at that," he said.
Poole is one of them, but knowing that she'll need to follow a careful daily regimen can be daunting, she said. "It wears you out, mentally, physically and emotionally."
READ MORE ON CNN
Tuesday, June 3, 2008
Study Finds State Gains in Insurance
By KEVIN SACK - The New York Times - June 3, 2008
Massachusetts reduced its proportion of uninsured adults by nearly half in the first year of mandatory health coverage and made gains in the share of people receiving routine preventive care, according to the first major study of the 2006 law.
The decline in the share of residents without insurance was nearly equivalent for those with low or moderate incomes and those with higher incomes.
The study, conducted by the Urban Institute and scheduled for online publication Tuesday by the journal Health Affairs, found no evidence that residents were dropping private health coverage to take advantage of state-subsidized policies, or that employers viewed the availability of new public programs as a reason to eliminate health benefits.
“The entire increase in coverage appears to have been drawn from the ranks of the uninsured, because there is no evidence that publicly funded programs are crowding out employer coverage,” wrote the study’s author, Sharon K. Long, a principal research associate with the Urban Institute, a nonpartisan research group in Washington.
Indeed, contrary to national trends, the share of residents receiving insurance through their employers increased in Massachusetts by nearly three percentage points from fall 2006 to fall 2007. Nationally, the percentages of employers that offer benefits and of workers who receive them have been sliding steadily throughout the decade.
Undercutting the positive trends for Massachusetts are signs that the state’s supply of primary care physicians is not sufficient to handle the increased demand created by newly insured residents. Though there were overall declines in the percentage of residents who said they were not receiving needed care, the study showed increases in the share who said they did not get care because they could not find a doctor.
That finding may support anecdotal reports from internists and family practitioners that they have been stretched by an influx of newly insured patients, causing long delays for some appointments. The study actually found a slight increase in the share of low-income residents who sought treatment in hospital emergency rooms for conditions that were not urgent.
“It would appear that there are opportunities to improve access to community-based care,” Ms. Long wrote.
Jon M. Kingsdale, director of the state authority that oversees the health plan, questioned whether the unmet demand for primary care was more severe in Massachusetts than elsewhere. Regarding emergency room use, he said the state was sometimes finding it easier to enroll the uninsured than to break their longstanding links to local hospitals.
“We’ve clearly identified that as behavior that has to be changed,” Mr. Kingsdale said.
The Massachusetts law, which took effect last year, made the state the largest to strive for universal coverage and a laboratory for federal policies proposed by Democratic presidential candidates. Senator Hillary Rodham Clinton has proposed mandatory coverage for all Americans, similar to the Massachusetts plan, while Senator Barack Obama would require coverage only for children, promising to make premiums affordable enough for adults that no mandate would be necessary.
Massachusetts residents were required to obtain insurance beginning in 2007, and state subsidies were provided on a sliding scale to make policies affordable for low-income residents. The 86,000 residents who did not comply faced modest first-year tax penalties of $219. The penalties will stiffen this year.
Mr. Kingsdale said that more than 350,000 of the estimated 600,000 residents who were uninsured before the program began had since gained coverage. Exemptions were granted to about 60,000 people who demonstrated that they could not afford even subsidized insurance. Enrollment in the subsidized plans has exceeded projections, and lawmakers and Gov. Deval Patrick, a Democrat, are negotiating a tobacco-tax increase to help sustain the program.
The Urban Institute survey found that 7 percent of Massachusetts adults ages 18 to 64 remained uninsured in the fall of 2007, compared with 13 percent in 2006. Those still uninsured are largely male, low-income and healthy, and a third of them said they did not know health insurance was now mandatory.
For adults with family incomes of less than three times the federal poverty level, or $66,600 for a family of four, the uninsured dropped to 13 percent from 24 percent. For those earning more, the rate dropped to 3 percent from 5 percent.
Among the lower-income group, 70 percent said they had received preventive care in the previous year, compared with 65 percent who said they had in 2006. Fifty-nine percent said they had visited a dentist in the past year, compared with 49 percent in 2006. There was a drop of 10 percentage points in the share who said they had deferred needed care in the past year because of cost, to 17 percent from 27 percent.
Massachusetts reduced its proportion of uninsured adults by nearly half in the first year of mandatory health coverage and made gains in the share of people receiving routine preventive care, according to the first major study of the 2006 law.
The decline in the share of residents without insurance was nearly equivalent for those with low or moderate incomes and those with higher incomes.
The study, conducted by the Urban Institute and scheduled for online publication Tuesday by the journal Health Affairs, found no evidence that residents were dropping private health coverage to take advantage of state-subsidized policies, or that employers viewed the availability of new public programs as a reason to eliminate health benefits.
“The entire increase in coverage appears to have been drawn from the ranks of the uninsured, because there is no evidence that publicly funded programs are crowding out employer coverage,” wrote the study’s author, Sharon K. Long, a principal research associate with the Urban Institute, a nonpartisan research group in Washington.
Indeed, contrary to national trends, the share of residents receiving insurance through their employers increased in Massachusetts by nearly three percentage points from fall 2006 to fall 2007. Nationally, the percentages of employers that offer benefits and of workers who receive them have been sliding steadily throughout the decade.
Undercutting the positive trends for Massachusetts are signs that the state’s supply of primary care physicians is not sufficient to handle the increased demand created by newly insured residents. Though there were overall declines in the percentage of residents who said they were not receiving needed care, the study showed increases in the share who said they did not get care because they could not find a doctor.
That finding may support anecdotal reports from internists and family practitioners that they have been stretched by an influx of newly insured patients, causing long delays for some appointments. The study actually found a slight increase in the share of low-income residents who sought treatment in hospital emergency rooms for conditions that were not urgent.
“It would appear that there are opportunities to improve access to community-based care,” Ms. Long wrote.
Jon M. Kingsdale, director of the state authority that oversees the health plan, questioned whether the unmet demand for primary care was more severe in Massachusetts than elsewhere. Regarding emergency room use, he said the state was sometimes finding it easier to enroll the uninsured than to break their longstanding links to local hospitals.
“We’ve clearly identified that as behavior that has to be changed,” Mr. Kingsdale said.
The Massachusetts law, which took effect last year, made the state the largest to strive for universal coverage and a laboratory for federal policies proposed by Democratic presidential candidates. Senator Hillary Rodham Clinton has proposed mandatory coverage for all Americans, similar to the Massachusetts plan, while Senator Barack Obama would require coverage only for children, promising to make premiums affordable enough for adults that no mandate would be necessary.
Massachusetts residents were required to obtain insurance beginning in 2007, and state subsidies were provided on a sliding scale to make policies affordable for low-income residents. The 86,000 residents who did not comply faced modest first-year tax penalties of $219. The penalties will stiffen this year.
Mr. Kingsdale said that more than 350,000 of the estimated 600,000 residents who were uninsured before the program began had since gained coverage. Exemptions were granted to about 60,000 people who demonstrated that they could not afford even subsidized insurance. Enrollment in the subsidized plans has exceeded projections, and lawmakers and Gov. Deval Patrick, a Democrat, are negotiating a tobacco-tax increase to help sustain the program.
The Urban Institute survey found that 7 percent of Massachusetts adults ages 18 to 64 remained uninsured in the fall of 2007, compared with 13 percent in 2006. Those still uninsured are largely male, low-income and healthy, and a third of them said they did not know health insurance was now mandatory.
For adults with family incomes of less than three times the federal poverty level, or $66,600 for a family of four, the uninsured dropped to 13 percent from 24 percent. For those earning more, the rate dropped to 3 percent from 5 percent.
Among the lower-income group, 70 percent said they had received preventive care in the previous year, compared with 65 percent who said they had in 2006. Fifty-nine percent said they had visited a dentist in the past year, compared with 49 percent in 2006. There was a drop of 10 percentage points in the share who said they had deferred needed care in the past year because of cost, to 17 percent from 27 percent.
Sunday, June 1, 2008
Texas advisory panel calls for state oversight of PPO health insurance plans
By TERRENCE STUTZ - The Dallas Morning News - Wednesday, May 21, 2008
AUSTIN – A state commission, citing the fact that four out of five insured Texans now receive health care through preferred provider organizations, urged the Legislature on Wednesday to protect consumers by placing all PPOs under state regulation for the first time.
The staff of the Texas Sunset Advisory Commission said the lack of state authority over PPOs is "outdated" in the current health care environment and may result in harm to a large number of consumers if the situation remains unchanged.
A report from the commission on the Texas Department of Insurance called for the state agency to begin licensing of all PPOs in the state similar to the way HMOs are now regulated. The commission periodically evaluates all state agencies for effectiveness and recommends changes to the Legislature.
In addition, the Sunset Commission staff recommended that the Office of Public Insurance Counsel – a state agency that represents insurance consumers – be abolished and its employees and duties into the shifted into the insurance department.
It also called for changes in state regulation of auto and home insurance rates that Sunset Commission staffers said would improve the current system for setting rates. Under the current system, called "file-and-use," insurers can put rate hikes into effect immediately after notifying the state Insurance Department.
The insurance commissioner has authority deem rate increases as excessive and to deny them, but in recent years that authority mainly has been used against the largest companies in the state.
AUSTIN – A state commission, citing the fact that four out of five insured Texans now receive health care through preferred provider organizations, urged the Legislature on Wednesday to protect consumers by placing all PPOs under state regulation for the first time.
The staff of the Texas Sunset Advisory Commission said the lack of state authority over PPOs is "outdated" in the current health care environment and may result in harm to a large number of consumers if the situation remains unchanged.
A report from the commission on the Texas Department of Insurance called for the state agency to begin licensing of all PPOs in the state similar to the way HMOs are now regulated. The commission periodically evaluates all state agencies for effectiveness and recommends changes to the Legislature.
In addition, the Sunset Commission staff recommended that the Office of Public Insurance Counsel – a state agency that represents insurance consumers – be abolished and its employees and duties into the shifted into the insurance department.
It also called for changes in state regulation of auto and home insurance rates that Sunset Commission staffers said would improve the current system for setting rates. Under the current system, called "file-and-use," insurers can put rate hikes into effect immediately after notifying the state Insurance Department.
The insurance commissioner has authority deem rate increases as excessive and to deny them, but in recent years that authority mainly has been used against the largest companies in the state.
Wednesday, May 28, 2008
Justices Say Law Bars Retaliation Over Bias Claims
By LINDA GREENHOUSE - The New York Times - Published: May 28, 2008
WASHINGTON — The Supreme Court on Tuesday ruled that employees are protected from retaliation when they complain about discrimination in the workplace, adopting a broad interpretation of workers’ rights under two federal civil rights laws.
By decisions of 7 to 2 in one case and 6 to 3 in the other, the court found that the two statutes afford protection from retaliation even though Congress did not explicitly say so.
The decisions are significant both as a practical matter and as evidence of a new tone and direction from the court this year, following a term in which there were sharp divisions and an abrupt conservative turn.
The new rulings were in distinct contrast to one of the signature decisions of the last term, a 5-to-4 decision that placed tight time limits on plaintiffs seeking to file pay-discrimination cases. Justice Samuel A. Alito Jr., who wrote the majority opinion almost exactly a year ago in that case, Ledbetter v. Goodyear Tire and Rubber Company, wrote one of the two majority opinions on Tuesday. Justice Stephen G. Breyer wrote the other.
One of the cases began as a lawsuit by a clerk for the United States Postal Service in Puerto Rico. The plaintiff, Myrna Gómez-Pérez, 45 at the time, complained that she had been denied a transfer to a different office because of age discrimination. Her lawsuit alleged that as a result of her complaint, she became the target of retaliatory actions by her supervisors.
The other case was brought by a former assistant manager of a Cracker Barrel restaurant, a black man named Hedrick G. Humphries. Mr. Humphries had complained that a white assistant manager had been motivated by racial discrimination in dismissing a black employee. In his lawsuit, Mr. Humphries claimed that he then lost his own job in retaliation for his complaint.
Retaliation complaints are a growing subset of workplace discrimination cases, because it is often easier for employees to demonstrate that they were retaliated against than that they were victims of discrimination in the first place. Retaliation complaints filed annually with the Equal Employment Opportunity Commission doubled in the last 15 years to 22,000 from 11,000.
Congress has provided explicit protection against retaliation in two major federal statutes. One is Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination on the basis of race and sex. The other is the provision of the Age Discrimination in Employment Act that applies in the private sector.
However, there is no such explicit protection in the portion of the age-discrimination law that applies to federal government workers. Nor is there explicit language in a post-Civil War-era statute that gives “all persons” the same right “as is enjoyed by white citizens” when it comes to making and enforcing contracts, such as contracts of employment. Those were the two statutes that the court interpreted on Tuesday.
In both decisions, the majority relied heavily on precedent, reasoning by analogy from recent cases that dealt with claims of retaliation under other statutes. The most recent such case was a ruling issued in 2005, before either Justice Alito or Chief Justice John G. Roberts Jr. joined the court. By a vote of 5 to 4, the court held then that a law known as Title IX, which bars sex discrimination in schools and colleges that receive federal money, also prohibits school officials from retaliating against those who bring sex-discrimination complaints. The statute itself does not mention retaliation.
In his opinion on Tuesday in the federal age-discrimination case, Justice Alito said that the provision in question, broadly prohibiting “discrimination based on age,” was “not materially different” from the anti-discrimination language the court had interpreted both in the Title IX case and in an earlier decision from 1969, interpreting a Reconstruction-era statute that bars racial discrimination in property ownership.
“The context in which the statutory language appears is the same in all three cases,” Justice Alito said. “That is, all three cases involve remedial provisions aimed at prohibiting discrimination.”
In the Postal Service case, Gómez-Pérez v. Potter, No. 06-1321, the federal appeals court in Boston, which has jurisdiction over federal cases from Puerto Rico, dismissed the suit on the ground that the age-discrimination provision that applies to federal workers does not cover retaliation claims.
In his opinion, which overturned the appeals court and reinstated the lawsuit, Justice Alito said that understood in the context of its enactment, the provision did cover retaliation. He noted that while the basic age-discrimination law was passed in 1967, it was not extended to federal workers until 1974.
In the interval, the Supreme Court had issued its decision deeming that the 19th-century property-rights law covered retaliation. Congress was “presumably familiar” with that case, Justice Alito said, and “had reason to expect” that the new age-discrimination provision would be interpreted with similar breadth.
In a dissenting opinion, Chief Justice Roberts said that, to the contrary, Congress was “well aware” that the Civil Service Commission had issued detailed regulations protecting federal employees against retaliation. The chief justice said that Congress should be understood to have made a judgment that retaliation problems in the federal work force should be dealt with administratively rather than judicially.
Justices Antonin Scalia and Clarence Thomas joined the dissenting opinion.
These two justices were the only dissenters in Mr. Humphries’s case, CBOCS West, Inc. v. Humphries, No. 06-1431, which held that Congress intended to cover retaliation claims brought under the provision of the Civil Rights Act of 1866 that is usually referred to as Section 1981. The court upheld a ruling by the federal appeals court in Chicago, rejecting an appeal brought by the company that operates the Cracker Barrel restaurant chain.
The Supreme Court’s decision last September to hear the company’s appeal was a surprise, because all the federal appeals courts that had weighed in on the question interpreted Section 1981 as covering retaliation. Resolving disputes among the lower federal courts is the Supreme Court’s main reason for accepting a case. The decision to grant this case in the absence of such a dispute spread alarm throughout the civil rights community on the assumption that a majority was prepared to shut the door on retaliation claims.
There was ample reason for that assumption, since Chief Justice Roberts had earlier made clear his distaste for precedents in which the court has gone beyond a statute’s text to infer a basis for a lawsuit.
It was especially significant, therefore, that both he and Justice Alito signed on to Justice Breyer’s discussion of the importance of “stare decisis,” the court’s doctrine of adherence to precedent. Even if the court’s approach to statutory interpretation was changing, Justice Breyer wrote, “we could not agree that the existence of such a change would justify re-examination of well-established prior law.”
He added: “Principles of stare decisis, after all, demand respect for precedent whether judicial methods of interpretation change or stay the same. Were that not so, those principles would fail to achieve the legal stability that they seek and upon which the rule of law depends.”
In a dissenting opinion, Justice Thomas, joined by Justice Scalia, accused the majority of hiding behind “the fig leaf of ersatz stare decisis,” relying on precedents that had been incorrectly decided in the first place.
See Text Opinion: Gomez -Perez v. Potter and CBOCS West, Inc. v. Humphries
WASHINGTON — The Supreme Court on Tuesday ruled that employees are protected from retaliation when they complain about discrimination in the workplace, adopting a broad interpretation of workers’ rights under two federal civil rights laws.
By decisions of 7 to 2 in one case and 6 to 3 in the other, the court found that the two statutes afford protection from retaliation even though Congress did not explicitly say so.
The decisions are significant both as a practical matter and as evidence of a new tone and direction from the court this year, following a term in which there were sharp divisions and an abrupt conservative turn.
The new rulings were in distinct contrast to one of the signature decisions of the last term, a 5-to-4 decision that placed tight time limits on plaintiffs seeking to file pay-discrimination cases. Justice Samuel A. Alito Jr., who wrote the majority opinion almost exactly a year ago in that case, Ledbetter v. Goodyear Tire and Rubber Company, wrote one of the two majority opinions on Tuesday. Justice Stephen G. Breyer wrote the other.
One of the cases began as a lawsuit by a clerk for the United States Postal Service in Puerto Rico. The plaintiff, Myrna Gómez-Pérez, 45 at the time, complained that she had been denied a transfer to a different office because of age discrimination. Her lawsuit alleged that as a result of her complaint, she became the target of retaliatory actions by her supervisors.
The other case was brought by a former assistant manager of a Cracker Barrel restaurant, a black man named Hedrick G. Humphries. Mr. Humphries had complained that a white assistant manager had been motivated by racial discrimination in dismissing a black employee. In his lawsuit, Mr. Humphries claimed that he then lost his own job in retaliation for his complaint.
Retaliation complaints are a growing subset of workplace discrimination cases, because it is often easier for employees to demonstrate that they were retaliated against than that they were victims of discrimination in the first place. Retaliation complaints filed annually with the Equal Employment Opportunity Commission doubled in the last 15 years to 22,000 from 11,000.
Congress has provided explicit protection against retaliation in two major federal statutes. One is Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination on the basis of race and sex. The other is the provision of the Age Discrimination in Employment Act that applies in the private sector.
However, there is no such explicit protection in the portion of the age-discrimination law that applies to federal government workers. Nor is there explicit language in a post-Civil War-era statute that gives “all persons” the same right “as is enjoyed by white citizens” when it comes to making and enforcing contracts, such as contracts of employment. Those were the two statutes that the court interpreted on Tuesday.
In both decisions, the majority relied heavily on precedent, reasoning by analogy from recent cases that dealt with claims of retaliation under other statutes. The most recent such case was a ruling issued in 2005, before either Justice Alito or Chief Justice John G. Roberts Jr. joined the court. By a vote of 5 to 4, the court held then that a law known as Title IX, which bars sex discrimination in schools and colleges that receive federal money, also prohibits school officials from retaliating against those who bring sex-discrimination complaints. The statute itself does not mention retaliation.
In his opinion on Tuesday in the federal age-discrimination case, Justice Alito said that the provision in question, broadly prohibiting “discrimination based on age,” was “not materially different” from the anti-discrimination language the court had interpreted both in the Title IX case and in an earlier decision from 1969, interpreting a Reconstruction-era statute that bars racial discrimination in property ownership.
“The context in which the statutory language appears is the same in all three cases,” Justice Alito said. “That is, all three cases involve remedial provisions aimed at prohibiting discrimination.”
In the Postal Service case, Gómez-Pérez v. Potter, No. 06-1321, the federal appeals court in Boston, which has jurisdiction over federal cases from Puerto Rico, dismissed the suit on the ground that the age-discrimination provision that applies to federal workers does not cover retaliation claims.
In his opinion, which overturned the appeals court and reinstated the lawsuit, Justice Alito said that understood in the context of its enactment, the provision did cover retaliation. He noted that while the basic age-discrimination law was passed in 1967, it was not extended to federal workers until 1974.
In the interval, the Supreme Court had issued its decision deeming that the 19th-century property-rights law covered retaliation. Congress was “presumably familiar” with that case, Justice Alito said, and “had reason to expect” that the new age-discrimination provision would be interpreted with similar breadth.
In a dissenting opinion, Chief Justice Roberts said that, to the contrary, Congress was “well aware” that the Civil Service Commission had issued detailed regulations protecting federal employees against retaliation. The chief justice said that Congress should be understood to have made a judgment that retaliation problems in the federal work force should be dealt with administratively rather than judicially.
Justices Antonin Scalia and Clarence Thomas joined the dissenting opinion.
These two justices were the only dissenters in Mr. Humphries’s case, CBOCS West, Inc. v. Humphries, No. 06-1431, which held that Congress intended to cover retaliation claims brought under the provision of the Civil Rights Act of 1866 that is usually referred to as Section 1981. The court upheld a ruling by the federal appeals court in Chicago, rejecting an appeal brought by the company that operates the Cracker Barrel restaurant chain.
The Supreme Court’s decision last September to hear the company’s appeal was a surprise, because all the federal appeals courts that had weighed in on the question interpreted Section 1981 as covering retaliation. Resolving disputes among the lower federal courts is the Supreme Court’s main reason for accepting a case. The decision to grant this case in the absence of such a dispute spread alarm throughout the civil rights community on the assumption that a majority was prepared to shut the door on retaliation claims.
There was ample reason for that assumption, since Chief Justice Roberts had earlier made clear his distaste for precedents in which the court has gone beyond a statute’s text to infer a basis for a lawsuit.
It was especially significant, therefore, that both he and Justice Alito signed on to Justice Breyer’s discussion of the importance of “stare decisis,” the court’s doctrine of adherence to precedent. Even if the court’s approach to statutory interpretation was changing, Justice Breyer wrote, “we could not agree that the existence of such a change would justify re-examination of well-established prior law.”
He added: “Principles of stare decisis, after all, demand respect for precedent whether judicial methods of interpretation change or stay the same. Were that not so, those principles would fail to achieve the legal stability that they seek and upon which the rule of law depends.”
In a dissenting opinion, Justice Thomas, joined by Justice Scalia, accused the majority of hiding behind “the fig leaf of ersatz stare decisis,” relying on precedents that had been incorrectly decided in the first place.
See Text Opinion: Gomez -Perez v. Potter and CBOCS West, Inc. v. Humphries
Tuesday, April 15, 2008
AP Exclusive: Hundreds of employees mistreated Texas patients
By JEFF CARLTON - Associated Press Writer - Tuesday, April 15, 2001
DALLAS -- More than 800 employees at Texas' 13 large facilities for the mentally and developmentally disabled have been suspended or fired for abusing patients since fiscal year 2004, state officials said Tuesday.
In response to an open records request from The Associated Press, the Department of Aging and Disability Services said that 239 employees were fired in fiscal year 2007 for the abuse, neglect or exploitation of residents.
There were 200 such disciplinary actions in 2006, 203 in 2005 and 180 in 2004, according to state records. The breakdown by school was unavailable. The 13 state schools and centers combined have about 12,000 full-time employees.
The revelations come a month after Gov. Rick Perry's office confirmed that the civil rights department at the U.S. Department of Justice is investigating allegations of abuse and neglect at the Denton State School, the state's largest with about 650 residents. It's at least the second such investigation into state facilities, including one at the Lubbock State School in 2006 that revealed widespread abuse.
An advocate for the mentally retarded called the number of employees disciplined "stunning."
"It indicates to me that there is clearly a culture of abuse or neglect in these facilities," said Jeff Garrison-Tate, president of San Antonio-based Community Now.
Texas has 13 large institutions, called state schools or centers, in which nearly 5,000 mentally retarded or mentally ill residents live full-time with round-the-clock care. That's about five times the national average. By comparison, New York and California combined have about 4,600 residents living in 17 institutions, according to data compiled by United Cerebral Palsy.
State records show more than 450 incidents of verified abuse or neglect in fiscal year 2007, a year in which the Texas Department of Family and Protective Services investigated nearly 3,500 allegations at state schools. About 51 percent of the confirmed incidents involved neglect, 31 percent involved physical abuse and 16 percent involved emotional or verbal abuse. Less than one percent of the cases involved sexual abuse.
State officials also acknowledge at least three state school residents have died since 2002 in which abuse or neglect by caretakers was a factor.
Laura Albrecht, a spokeswoman for the Aging and Disability Services office, said the firings and suspensions reflect the state's "strict policy" on abuse and neglect.
"We have gotten even tougher," Albrecht said. "Our employees go through training to recognize abuse and neglect and to report any incidents."
Perry told The AP that the suspensions and firings indicate that state schools are trying to rid themselves of bad employees.
"What I make of it is that the agency is doing its job," Perry said. "If there are individuals who have broken those parameters of employment, they need to be removed, they need to be fired, need to be dealt with."
The Denton facility, where a notorious abuse case occurred in 2002, underwent its most recent comprehensive inspection last April. The school was cited 25 times for failing to meet federal standards.
Citations included:
- Failure to "ensure clients' rights were protected, including the right to be free from abuse, neglect and mistreatment."
- Failure to "have or to use policies and procedures that prohibit mistreatment, neglect or abuse of clients."
- Failure to "have evidence to show that all allegations of abuse, neglect, or mistreatment were thoroughly investigated.
A more recent inspection in January found that the Denton State School "failed to educate direct care staff on basic first aid, health, and emergency needs."
Perry was notified in March that the Justice Department was investigating the Denton school, said Perry spokeswoman Allison Castle. The notification letter, obtained by The AP, said the investigation "will focus on protection of residents from harm; medical and nursing care; habilitation and treatment; and the failure to place residents in the most integrated setting as required by the Americans with Disabilities Act ... ."
"We certainly welcome their findings and the governor wants to ensure all residents of state schools receive the highest quality care," Castle said.
State Rep. John Zerwas, a member of a legislative committee studying state schools, said lawmakers need to look into allegations of abuse coming from the institutions.
"If the state is going to assume some of the responsibility for the ongoing care for these individuals then we have to make sure they be provided the highest quality and the greatest safety," said Zerwas, R-Richmond.
Garrison-Tate said he has personally witnessed incidents of abuse and suspects only the most egregious cases result in firings and suspensions.
"The bottom line is people are getting really injured, and they are not safe," he said.
---
Associated Press reporter Kelley Shannon in Austin contributed to this story.
Read more in the Fort Worth Star Telegram
DALLAS -- More than 800 employees at Texas' 13 large facilities for the mentally and developmentally disabled have been suspended or fired for abusing patients since fiscal year 2004, state officials said Tuesday.
In response to an open records request from The Associated Press, the Department of Aging and Disability Services said that 239 employees were fired in fiscal year 2007 for the abuse, neglect or exploitation of residents.
There were 200 such disciplinary actions in 2006, 203 in 2005 and 180 in 2004, according to state records. The breakdown by school was unavailable. The 13 state schools and centers combined have about 12,000 full-time employees.
The revelations come a month after Gov. Rick Perry's office confirmed that the civil rights department at the U.S. Department of Justice is investigating allegations of abuse and neglect at the Denton State School, the state's largest with about 650 residents. It's at least the second such investigation into state facilities, including one at the Lubbock State School in 2006 that revealed widespread abuse.
An advocate for the mentally retarded called the number of employees disciplined "stunning."
"It indicates to me that there is clearly a culture of abuse or neglect in these facilities," said Jeff Garrison-Tate, president of San Antonio-based Community Now.
Texas has 13 large institutions, called state schools or centers, in which nearly 5,000 mentally retarded or mentally ill residents live full-time with round-the-clock care. That's about five times the national average. By comparison, New York and California combined have about 4,600 residents living in 17 institutions, according to data compiled by United Cerebral Palsy.
State records show more than 450 incidents of verified abuse or neglect in fiscal year 2007, a year in which the Texas Department of Family and Protective Services investigated nearly 3,500 allegations at state schools. About 51 percent of the confirmed incidents involved neglect, 31 percent involved physical abuse and 16 percent involved emotional or verbal abuse. Less than one percent of the cases involved sexual abuse.
State officials also acknowledge at least three state school residents have died since 2002 in which abuse or neglect by caretakers was a factor.
Laura Albrecht, a spokeswoman for the Aging and Disability Services office, said the firings and suspensions reflect the state's "strict policy" on abuse and neglect.
"We have gotten even tougher," Albrecht said. "Our employees go through training to recognize abuse and neglect and to report any incidents."
Perry told The AP that the suspensions and firings indicate that state schools are trying to rid themselves of bad employees.
"What I make of it is that the agency is doing its job," Perry said. "If there are individuals who have broken those parameters of employment, they need to be removed, they need to be fired, need to be dealt with."
The Denton facility, where a notorious abuse case occurred in 2002, underwent its most recent comprehensive inspection last April. The school was cited 25 times for failing to meet federal standards.
Citations included:
- Failure to "ensure clients' rights were protected, including the right to be free from abuse, neglect and mistreatment."
- Failure to "have or to use policies and procedures that prohibit mistreatment, neglect or abuse of clients."
- Failure to "have evidence to show that all allegations of abuse, neglect, or mistreatment were thoroughly investigated.
A more recent inspection in January found that the Denton State School "failed to educate direct care staff on basic first aid, health, and emergency needs."
Perry was notified in March that the Justice Department was investigating the Denton school, said Perry spokeswoman Allison Castle. The notification letter, obtained by The AP, said the investigation "will focus on protection of residents from harm; medical and nursing care; habilitation and treatment; and the failure to place residents in the most integrated setting as required by the Americans with Disabilities Act ... ."
"We certainly welcome their findings and the governor wants to ensure all residents of state schools receive the highest quality care," Castle said.
State Rep. John Zerwas, a member of a legislative committee studying state schools, said lawmakers need to look into allegations of abuse coming from the institutions.
"If the state is going to assume some of the responsibility for the ongoing care for these individuals then we have to make sure they be provided the highest quality and the greatest safety," said Zerwas, R-Richmond.
Garrison-Tate said he has personally witnessed incidents of abuse and suspects only the most egregious cases result in firings and suspensions.
"The bottom line is people are getting really injured, and they are not safe," he said.
---
Associated Press reporter Kelley Shannon in Austin contributed to this story.
Read more in the Fort Worth Star Telegram
Friday, February 15, 2008
INSURANCE: Fort Worth death that wasn't puts us all on notice
By Gina Best - Special to the Star-Telegram - Feb. 12, 2008
Longtime Fort Worth resident Mary G. Anderson recently had a near-death experience of the most perplexing kind.
Her unusual story began Nov. 18 when an obituary for Mary Ann Anderson, an 83-year-old Alvord homemaker, was published in the Star-Telegram. Her survivors include a daughter and grandchildren.
The obituary caught the eye of a staff member at the Employees' Retirement Fund of Fort Worth who apparently scans the obituary columns daily looking for pension recipients who have died. The employee inexplicably decided that the Alvord woman was in fact Mary G. Anderson, also 83, who receives a portion of her late husband's pension. Her husband, Guy Anderson, who died in 2004, worked for the city of Fort Worth for more than 30 years.
The pension fund employee didn't call the funeral home or survivors to confirm. She also didn't call Anderson's residence or send a certified letter. Instead, based solely on the obituary, the employee canceled the December pension check that had been automatically deposited into Mary G. Anderson's bank account. And the fund didn't remit her January pension deposit.
The two Marys lived in different cities and had different middle names and different birthdays.
Mary G. Anderson has lived and worked in Fort Worth her entire life, and her address must be on file with the retirement fund. Her middle name is Guthrie, her maiden name. And her birthday is in August; Mary Ann Anderson's was in March.
That mistake triggered another problem. When the pension fund canceled its deposit, the bank returned a December Social Security check that was supposed to be automatically deposited into Anderson's account.
Meanwhile, Anderson was unaware that anything was amiss until Jan. 11, when the Social Security Administration contacted her to ask about the returned check. "I had to prove to them that I am indeed alive," she said.
Her Social Security check was redeposited immediately.
She then contacted her bank, discovered the problem with her pension checks and realized that she hadn't received a statement from the retirement fund.
She called the fund, where a pension fund employee explained that her obituary had been printed in the newspaper.
Anderson asked why the pension fund didn't call or write to verify her death; the employee told her that "they did not have the staff to make telephone calls to people," Anderson said. The employee also said -- wrongly -- that the Alvord woman had the same birth date and Social Security number.
"I will never understand why they tried to tag me as deceased," she said. "They ought to have a better way to research it before they automatically declare somebody dead."
Anderson, who worked in the title business for more than 30 years, said she knows how important facts and figures are. "When I'd see something, you know, a red flag, I was never above making a telephone call."
A watchdog in her own right, Anderson had the situation resolved by late January, and because she had enough savings, she avoided an overdraft. She contacted The Watchdog because she doesn't want anyone else who receives a pension from the Fort Worth fund to face the same situation.
Wanda Valentine, deputy director of benefits and administration at the pension fund, said she has "apologized profusely" to Anderson. She also said her office is not understaffed.
Employees do scan obituaries to look for people who may have worked for the city and are of retirement age. They then key those names into the fund's database to see whether there is a match with a recipient. If it isn't clear, employees are supposed to take additional measures.
"The goal is to try to reach the retiree or some family member," Valentine said. If they can't talk to someone, employees are supposed to send a certified letter to the recipient's residence.
"This one just kind of fell through the cracks. ... We can't make an excuse for that," Valentine said.
The bank apparently handled the matter of Anderson's supposed death as it should.
It appears that when the pension fund reported Anderson as deceased to the clearinghouse that processes direct deposits, the clearinghouse notified the bank.
If a bank learns of the death of a recipient, it must return federal payments such as a Social Security deposit, said Tom Clark, a public affairs specialist for the Social Security Administration office in Fort Worth.
But Social Security takes steps to confirm a death. That also enables the administration to see whether someone else is eligible for the benefits of the deceased.
And so Mary G. Anderson was returned to the living. Mistakes such as the one she experienced can happen. But take comfort in this: There are everyday Watchdogs who walk among us, keeping an eye out for others. Thanks for sharing your story, Mary.
Need a watchdog?
Requests should be made in writing to watchdog@star- telegram.com or mailed to P.O. Box 1870, Fort Worth, TX 76101.
If you have a tip about an investigative story, contact the Star-Telegram investigative team at 817-390-7027.
watchdog@star-telegram.com
Read more in the Fort Worth Star-Telegram
Longtime Fort Worth resident Mary G. Anderson recently had a near-death experience of the most perplexing kind.
Her unusual story began Nov. 18 when an obituary for Mary Ann Anderson, an 83-year-old Alvord homemaker, was published in the Star-Telegram. Her survivors include a daughter and grandchildren.
The obituary caught the eye of a staff member at the Employees' Retirement Fund of Fort Worth who apparently scans the obituary columns daily looking for pension recipients who have died. The employee inexplicably decided that the Alvord woman was in fact Mary G. Anderson, also 83, who receives a portion of her late husband's pension. Her husband, Guy Anderson, who died in 2004, worked for the city of Fort Worth for more than 30 years.
The pension fund employee didn't call the funeral home or survivors to confirm. She also didn't call Anderson's residence or send a certified letter. Instead, based solely on the obituary, the employee canceled the December pension check that had been automatically deposited into Mary G. Anderson's bank account. And the fund didn't remit her January pension deposit.
The two Marys lived in different cities and had different middle names and different birthdays.
Mary G. Anderson has lived and worked in Fort Worth her entire life, and her address must be on file with the retirement fund. Her middle name is Guthrie, her maiden name. And her birthday is in August; Mary Ann Anderson's was in March.
That mistake triggered another problem. When the pension fund canceled its deposit, the bank returned a December Social Security check that was supposed to be automatically deposited into Anderson's account.
Meanwhile, Anderson was unaware that anything was amiss until Jan. 11, when the Social Security Administration contacted her to ask about the returned check. "I had to prove to them that I am indeed alive," she said.
Her Social Security check was redeposited immediately.
She then contacted her bank, discovered the problem with her pension checks and realized that she hadn't received a statement from the retirement fund.
She called the fund, where a pension fund employee explained that her obituary had been printed in the newspaper.
Anderson asked why the pension fund didn't call or write to verify her death; the employee told her that "they did not have the staff to make telephone calls to people," Anderson said. The employee also said -- wrongly -- that the Alvord woman had the same birth date and Social Security number.
"I will never understand why they tried to tag me as deceased," she said. "They ought to have a better way to research it before they automatically declare somebody dead."
Anderson, who worked in the title business for more than 30 years, said she knows how important facts and figures are. "When I'd see something, you know, a red flag, I was never above making a telephone call."
A watchdog in her own right, Anderson had the situation resolved by late January, and because she had enough savings, she avoided an overdraft. She contacted The Watchdog because she doesn't want anyone else who receives a pension from the Fort Worth fund to face the same situation.
Wanda Valentine, deputy director of benefits and administration at the pension fund, said she has "apologized profusely" to Anderson. She also said her office is not understaffed.
Employees do scan obituaries to look for people who may have worked for the city and are of retirement age. They then key those names into the fund's database to see whether there is a match with a recipient. If it isn't clear, employees are supposed to take additional measures.
"The goal is to try to reach the retiree or some family member," Valentine said. If they can't talk to someone, employees are supposed to send a certified letter to the recipient's residence.
"This one just kind of fell through the cracks. ... We can't make an excuse for that," Valentine said.
The bank apparently handled the matter of Anderson's supposed death as it should.
It appears that when the pension fund reported Anderson as deceased to the clearinghouse that processes direct deposits, the clearinghouse notified the bank.
If a bank learns of the death of a recipient, it must return federal payments such as a Social Security deposit, said Tom Clark, a public affairs specialist for the Social Security Administration office in Fort Worth.
But Social Security takes steps to confirm a death. That also enables the administration to see whether someone else is eligible for the benefits of the deceased.
And so Mary G. Anderson was returned to the living. Mistakes such as the one she experienced can happen. But take comfort in this: There are everyday Watchdogs who walk among us, keeping an eye out for others. Thanks for sharing your story, Mary.
Need a watchdog?
Requests should be made in writing to watchdog@star- telegram.com or mailed to P.O. Box 1870, Fort Worth, TX 76101.
If you have a tip about an investigative story, contact the Star-Telegram investigative team at 817-390-7027.
watchdog@star-telegram.com
Read more in the Fort Worth Star-Telegram
Sunday, January 13, 2008
Judge rules insurance company falsified document
By BRETT SHIPP - WFAA-TV - Jan. 10, 2008DALLAS - A Dallas judge ruled that the state's largest workers compensation insurance carrier committed fraud against an injured worker.
Texas Mutual Insurance Company has already been accused of callously denying claims against injured workers, but allegations of falsifying records could be a first.
Questions about Texas Mutual's business practices were first raised in a News 8 Investigation four years ago.
Injured workers complained that the insurance carrier was randomly denying their claims and robbing them of much needed medicine and benefits.
In an attempt to deny the claims of injured worker Juan Narvaez of Dallas, Texas Mutual is suing him in civil court.
Only now, Texas Mutual is on the defensive.
District Judge Martin Hoffman issued a ruling declaring "Texas Mutual Insurance Company committed fraud on this court" by "falsifying a critical medical record."
The record was a doctor's report in which someone added letters that tend to support the insurance company's position in the case.
"This fraudulent conduct was committed knowingly by agents and representatives of Texas Mutual Insurance Company," Judge Hoffman said.
"I'm upset by it, certainly," said Peter Rogers, who represents the injured worked.
Rogers said his client, who hurt his back on the job four years ago, is tired of fighting Texas Mutual for his care.
The judge ordered Texas Mutual to pay $30,000 and publish the court's ruling on their home page on the Internet.
State Workers Compensation officials said they are already reviewing the facts of the case. Texas Mutual officials have yet to respond.
Texas Mutual Insurance Company has already been accused of callously denying claims against injured workers, but allegations of falsifying records could be a first.
Questions about Texas Mutual's business practices were first raised in a News 8 Investigation four years ago.
Injured workers complained that the insurance carrier was randomly denying their claims and robbing them of much needed medicine and benefits.
In an attempt to deny the claims of injured worker Juan Narvaez of Dallas, Texas Mutual is suing him in civil court.
Only now, Texas Mutual is on the defensive.
District Judge Martin Hoffman issued a ruling declaring "Texas Mutual Insurance Company committed fraud on this court" by "falsifying a critical medical record."
The record was a doctor's report in which someone added letters that tend to support the insurance company's position in the case.
"This fraudulent conduct was committed knowingly by agents and representatives of Texas Mutual Insurance Company," Judge Hoffman said.
"I'm upset by it, certainly," said Peter Rogers, who represents the injured worked.
Rogers said his client, who hurt his back on the job four years ago, is tired of fighting Texas Mutual for his care.
The judge ordered Texas Mutual to pay $30,000 and publish the court's ruling on their home page on the Internet.
State Workers Compensation officials said they are already reviewing the facts of the case. Texas Mutual officials have yet to respond.
Friday, December 21, 2007
Texas Democrats set up disability study group - Craddick criticized for moving slowly on abuse at state facilities
By EMILY RAMSHAW - The Dallas Morning News - Thursday, December 20, 2007
AUSTIN – House Speaker Tom Craddick has yet to order an interim study on abuse and neglect in Texas' facilities for the mentally retarded – despite saying this summer that curbing the mistreatment was a top priority.
His staff says he's considering appointing a special committee early next year to address the problems, but House Democrats say they can't afford to wait for the state's Republican leadership.
They've convened a legislative study group of their own and begun touring Texas institutions – issuing their first report last week.
"These people are wards of the state, and we are not fulfilling our obligation to protect their safety," said Rep. Lon Burnam, a Fort Worth Democrat who lobbied for a House interim committee but said he couldn't get the support. "I think it's imperative that a study be done. And if the speaker's not going to do an investigation, individual members will."
Texas' care for the disabled came under fire repeatedly this year, with reports of abuse and neglect at state institutions and group homes rivaling conditions in the state's troubled juvenile justice system.
The scrutiny followed a scathing U.S. Justice Department report documenting civil rights violations and horrific living conditions at the Lubbock State School. In the months after that report, The Dallas Morning News documented widespread abuse and neglect at other state institutions for people with disabilities, and vile conditions and debilitating financial problems at dozens of midsize group homes in Dallas County.
Early this week, The News reported that the state's waiting lists for in-home, or non-institutional, care now exceeds 100,000 people – with some families waiting up to a decade for services.
Mr. Craddick first spoke out on the state care facilities in August, saying that improving conditions would be a top priority between legislative sessions. But when his list of interim charges came out this month, the services for the disabled didn't make the cut, leaving advocates to believe they'd been left in the lurch.
Craddick spokeswoman Alexis DeLee said Tuesday that while the speaker hasn't made an interim charge, he is considering appointing a select committee in early 2008 on the services provided to Texas' most profoundly disabled – whether they're in a state school, a private care facility or living in the family home.
House Democrats say they're not holding their breath.
In the meantime, Rep. Garnet Coleman said the legislative study group he chairs is scheduling hearings at state schools – including one next month at the state-operated institution in Denton. They've already released notes on a meeting at the Corpus Christi State School, he said, and plan to have a final report on long-term care for the disabled by November.
Read more in the Dallas Morning News
AUSTIN – House Speaker Tom Craddick has yet to order an interim study on abuse and neglect in Texas' facilities for the mentally retarded – despite saying this summer that curbing the mistreatment was a top priority.
His staff says he's considering appointing a special committee early next year to address the problems, but House Democrats say they can't afford to wait for the state's Republican leadership.
They've convened a legislative study group of their own and begun touring Texas institutions – issuing their first report last week.
"These people are wards of the state, and we are not fulfilling our obligation to protect their safety," said Rep. Lon Burnam, a Fort Worth Democrat who lobbied for a House interim committee but said he couldn't get the support. "I think it's imperative that a study be done. And if the speaker's not going to do an investigation, individual members will."
Texas' care for the disabled came under fire repeatedly this year, with reports of abuse and neglect at state institutions and group homes rivaling conditions in the state's troubled juvenile justice system.
The scrutiny followed a scathing U.S. Justice Department report documenting civil rights violations and horrific living conditions at the Lubbock State School. In the months after that report, The Dallas Morning News documented widespread abuse and neglect at other state institutions for people with disabilities, and vile conditions and debilitating financial problems at dozens of midsize group homes in Dallas County.
Early this week, The News reported that the state's waiting lists for in-home, or non-institutional, care now exceeds 100,000 people – with some families waiting up to a decade for services.
Mr. Craddick first spoke out on the state care facilities in August, saying that improving conditions would be a top priority between legislative sessions. But when his list of interim charges came out this month, the services for the disabled didn't make the cut, leaving advocates to believe they'd been left in the lurch.
Craddick spokeswoman Alexis DeLee said Tuesday that while the speaker hasn't made an interim charge, he is considering appointing a select committee in early 2008 on the services provided to Texas' most profoundly disabled – whether they're in a state school, a private care facility or living in the family home.
House Democrats say they're not holding their breath.
In the meantime, Rep. Garnet Coleman said the legislative study group he chairs is scheduling hearings at state schools – including one next month at the state-operated institution in Denton. They've already released notes on a meeting at the Corpus Christi State School, he said, and plan to have a final report on long-term care for the disabled by November.
Read more in the Dallas Morning News
Friday, December 7, 2007
Medicare drug benefit
By Waxahachie Daily Ligt - Friday, December 7, 2007
The calendar during November and December tends to get a little full. Between Thanksgiving, Christmas and all the festivities in between, often we have more to do than we have time. But one calendar item is essential for any Medicare-eligible senior age 65 and over, the open enrollment season for the Medicare Prescription Drug Benefit.
Running Nov. 15 through Dec. 31, open enrollment allows Medicare recipients to sign up for a prescription drug plan or change their current plan if they so desire. Like the Medicare Prescription Drug Benefit (also known as Medicare Part D), participating in open enrollment season is completely voluntary. Seniors who are happy with the drug coverage they receive from a private plan, or who aren’t interested in signing up for Medicare’s drug benefit by no means have to, and seniors who do have Medicare drug coverage and don’t want to change plans do not need to do anything to continue receiving their coverage.
The prescription drug benefit allows seniors to pick a program that fits their personal health and financial needs. Texas seniors can choose from one of 56 plans during the open enrollment period.
Picking a plan can seem daunting, which is why the Centers for Medicare and Medicaid Services has set up a Web site, www.medicare.gov, and hotline, 1-800-MEDICARE, to assist seniors in comparing plans and selecting the one that is right for them. When using these resources, it’s important to have a list of the medications the senior is taking handy, as it will help determine what plan is right for them. Additional assistance is also available to low-income seniors, so it’s important that these seniors understand the options available to them.
At the conclusion of last year’s open enrollment period, more than 1.4 million Americans had enrolled in the prescription drug benefit. If you or a loved one are eligible and don’t currently have prescription drug coverage or wish to change the coverage you currently have, mark your calendar: Dec. 31, is the last day of open-enrollment. And just like Christmas shopping, it’s best not to wait until the last minute.
The calendar during November and December tends to get a little full. Between Thanksgiving, Christmas and all the festivities in between, often we have more to do than we have time. But one calendar item is essential for any Medicare-eligible senior age 65 and over, the open enrollment season for the Medicare Prescription Drug Benefit.
Running Nov. 15 through Dec. 31, open enrollment allows Medicare recipients to sign up for a prescription drug plan or change their current plan if they so desire. Like the Medicare Prescription Drug Benefit (also known as Medicare Part D), participating in open enrollment season is completely voluntary. Seniors who are happy with the drug coverage they receive from a private plan, or who aren’t interested in signing up for Medicare’s drug benefit by no means have to, and seniors who do have Medicare drug coverage and don’t want to change plans do not need to do anything to continue receiving their coverage.
The prescription drug benefit allows seniors to pick a program that fits their personal health and financial needs. Texas seniors can choose from one of 56 plans during the open enrollment period.
Picking a plan can seem daunting, which is why the Centers for Medicare and Medicaid Services has set up a Web site, www.medicare.gov, and hotline, 1-800-MEDICARE, to assist seniors in comparing plans and selecting the one that is right for them. When using these resources, it’s important to have a list of the medications the senior is taking handy, as it will help determine what plan is right for them. Additional assistance is also available to low-income seniors, so it’s important that these seniors understand the options available to them.
At the conclusion of last year’s open enrollment period, more than 1.4 million Americans had enrolled in the prescription drug benefit. If you or a loved one are eligible and don’t currently have prescription drug coverage or wish to change the coverage you currently have, mark your calendar: Dec. 31, is the last day of open-enrollment. And just like Christmas shopping, it’s best not to wait until the last minute.
Thursday, December 6, 2007
Medicare to Cut Payment for Two Promising Cancer Drugs
By ALEX BERENSON - The New York Times - December 6, 2007
New Medicare rules for a small but promising class of cancer drugs may cause thousands of lymphoma patients to lose access to the treatment, which in some cases is the only therapy available to them.
The companies that make the drugs, and patient advocacy groups, say the changes will sharply cut reimbursement for the medicines next year, and they predict that many hospitals will stop offering the treatments. The Medicare changes come just as new data provide additional evidence that the medicines, called Bexxar and Zevalin, are effective.
The drugs are given to treat non-Hodgkins lymphoma, the fifth-most common cancer, and are usually prescribed for patients who have not responded to other therapies and who have few remaining treatment options. Clinical trial data show that they put the disease into remission for years in many of those patients.
Under the new rules, after Jan. 1, Medicare will reimburse hospitals about $16,000 for each treatment with the drugs, which a patient needs to receive only once. GlaxoSmithKline, which markets Bexxar, say it is priced at almost $30,000 per treatment, and Biogen Idec, which sells Zevalin, says it costs nearly as much. While high, such prices are not unusual for new cancer therapies, which can cost $50,000 or more for a year of treatment.
Senior Medicare officials say they are not trying to prevent hospitals from giving Bexxar and Zevalin. The $16,000 figure is a fair price and is based on the actual prices hospitals have paid for the medicines this year, they say.
Zevalin was introduced in 2002, and Bexxar in 2003. Until now, Medicare has reimbursed each hospital claim individually, without setting a single nationwide price for the drug. The practice has resulted in wildly varying reimbursement, Medicare says.
But the companies say Medicare’s data must be inaccurate and that no hospital will offer the drugs to Medicare patients if it is losing $10,000 or more per treatment. Hospitals typically do not disclose their reimbursement rates, or whether they make money on any given treatment.
Under federal rules, hospitals that do not offer a drug to Medicare patients are barred from offering it to other patients, even if their insurers fully cover the cost of treatment. Because Bexxar and Zevalin contain radioactive material, the drugs must be administered by specially licensed technicians and doctors. They are usually given in hospitals..
Sarah Alspach, a spokeswoman for Glaxo, said the company had voluntarily submitted its pricing data to Medicare to prove that that the hospital claims data is wrong. “Our feeling is there is a flaw in the methodology,” Ms. Alspach said.
Doctors, lymphoma patients, and advocacy groups say they do not understand Medicare’s decision. About 60,000 people are diagnosed with non-Hodgkins lymphoma every year, and 20,000 people die of the disease.
“The explanation that they’re giving is really flawed,” said Dr. Mark Kaminski, the co-director of leukemia and lymphoma transplant program at the University of Michigan. Dr. Kaminski helped discover Bexxar two decades ago and receives a small royalty when the drug is used.
Bexxar and Zevalin are part of a new class of drugs called radioimmunotherapies. They combine a radioactive particle with a biologically engineered molecule that attaches to cancerous white blood cells.
In clinical trials, they have proven as good as or better than standard treatments for non-Hodgkins lymphoma, a cancer of the immune system. In a trial of 414 patients scheduled to be discussed next Monday at a hematology conference, the combination of Zevalin and chemotherapy put lymphoma into remission for three years on average, compared with one year for chemotherapy alone.
Marion Swan, a spokeswoman for the Lymphoma Research Foundation, says the drugs are the only option for some patients. “Our number one concern is that patients have access to all viable treatment options,” she said, “and it looks like this might be denying access.”
The drugs have already faced hurdles because they can require private cancer doctors to transfer their patients to hospitals for the treatments, and the private doctors may view the hospitals as competitors. That problem, and doctors’ general unfamiliarity with the drugs, has left them as niche products used in fewer than 10 percent of patients who are candidates for them.
Advocates for the drugs had hoped that new clinical trial evidence, like the Zevalin data that will be presented next week, would convince more doctors to prescribe them. Now they worry that Medicare’s decision will end most use of the drugs and chill the development of other radioimmunotherapies.
“If you can’t get two products that basically hit home runs into the marketplace, there’s very little incentive for further development,” Dr. Kaminski said.
Herb B. Kuhn, deputy administrator of the Centers for Medicare and Medicaid Services, the agency overseeing Medicare, said that the agency recognized the value of the drugs. But Medicare does not want to overpay for the medicines and believes that hospital data is the most accurate way to set reimbursement, he said.
But most other drugs administered via injection in doctors’ offices or hospital outpatient clinics — as Bexxar and Zevalin are — are not reimbursed on the basis of what hospitals say they have paid. Instead, companies report the average price of their drugs to Medicare. Medicare then reimburses doctors and hospitals at that price, plus a 6 percent fee to cover handling costs.
GlaxoSmithKline said it had asked Medicare to switch to that system for Bexxar. So far, Medicare has refused.
Meanwhile, lymphoma patients are anxiously watching the fight between Medicare and the companies.
Lora Beckwith, 66, was first diagnosed with the disease in 2004. So far, her illness has progressed slowly, but last month, she was told that she would probably need treatment by February.
Because Ms. Beckwith, who lives in Ann Arbor, Mich., has Parkinson’s disease, she cannot receive standard chemotherapy for the disease, making Bexxar and Zevalin among her only alternatives. Now she fears she may not be able to get them.
“I’m not usually a vengeful or resentful person,” she said. “But I am feeling a bit resentful about having this taken away — if I can’t have access to a drug that would extend my life.”
Read more
New Medicare rules for a small but promising class of cancer drugs may cause thousands of lymphoma patients to lose access to the treatment, which in some cases is the only therapy available to them.
The companies that make the drugs, and patient advocacy groups, say the changes will sharply cut reimbursement for the medicines next year, and they predict that many hospitals will stop offering the treatments. The Medicare changes come just as new data provide additional evidence that the medicines, called Bexxar and Zevalin, are effective.
The drugs are given to treat non-Hodgkins lymphoma, the fifth-most common cancer, and are usually prescribed for patients who have not responded to other therapies and who have few remaining treatment options. Clinical trial data show that they put the disease into remission for years in many of those patients.
Under the new rules, after Jan. 1, Medicare will reimburse hospitals about $16,000 for each treatment with the drugs, which a patient needs to receive only once. GlaxoSmithKline, which markets Bexxar, say it is priced at almost $30,000 per treatment, and Biogen Idec, which sells Zevalin, says it costs nearly as much. While high, such prices are not unusual for new cancer therapies, which can cost $50,000 or more for a year of treatment.
Senior Medicare officials say they are not trying to prevent hospitals from giving Bexxar and Zevalin. The $16,000 figure is a fair price and is based on the actual prices hospitals have paid for the medicines this year, they say.
Zevalin was introduced in 2002, and Bexxar in 2003. Until now, Medicare has reimbursed each hospital claim individually, without setting a single nationwide price for the drug. The practice has resulted in wildly varying reimbursement, Medicare says.
But the companies say Medicare’s data must be inaccurate and that no hospital will offer the drugs to Medicare patients if it is losing $10,000 or more per treatment. Hospitals typically do not disclose their reimbursement rates, or whether they make money on any given treatment.
Under federal rules, hospitals that do not offer a drug to Medicare patients are barred from offering it to other patients, even if their insurers fully cover the cost of treatment. Because Bexxar and Zevalin contain radioactive material, the drugs must be administered by specially licensed technicians and doctors. They are usually given in hospitals..
Sarah Alspach, a spokeswoman for Glaxo, said the company had voluntarily submitted its pricing data to Medicare to prove that that the hospital claims data is wrong. “Our feeling is there is a flaw in the methodology,” Ms. Alspach said.
Doctors, lymphoma patients, and advocacy groups say they do not understand Medicare’s decision. About 60,000 people are diagnosed with non-Hodgkins lymphoma every year, and 20,000 people die of the disease.
“The explanation that they’re giving is really flawed,” said Dr. Mark Kaminski, the co-director of leukemia and lymphoma transplant program at the University of Michigan. Dr. Kaminski helped discover Bexxar two decades ago and receives a small royalty when the drug is used.
Bexxar and Zevalin are part of a new class of drugs called radioimmunotherapies. They combine a radioactive particle with a biologically engineered molecule that attaches to cancerous white blood cells.
In clinical trials, they have proven as good as or better than standard treatments for non-Hodgkins lymphoma, a cancer of the immune system. In a trial of 414 patients scheduled to be discussed next Monday at a hematology conference, the combination of Zevalin and chemotherapy put lymphoma into remission for three years on average, compared with one year for chemotherapy alone.
Marion Swan, a spokeswoman for the Lymphoma Research Foundation, says the drugs are the only option for some patients. “Our number one concern is that patients have access to all viable treatment options,” she said, “and it looks like this might be denying access.”
The drugs have already faced hurdles because they can require private cancer doctors to transfer their patients to hospitals for the treatments, and the private doctors may view the hospitals as competitors. That problem, and doctors’ general unfamiliarity with the drugs, has left them as niche products used in fewer than 10 percent of patients who are candidates for them.
Advocates for the drugs had hoped that new clinical trial evidence, like the Zevalin data that will be presented next week, would convince more doctors to prescribe them. Now they worry that Medicare’s decision will end most use of the drugs and chill the development of other radioimmunotherapies.
“If you can’t get two products that basically hit home runs into the marketplace, there’s very little incentive for further development,” Dr. Kaminski said.
Herb B. Kuhn, deputy administrator of the Centers for Medicare and Medicaid Services, the agency overseeing Medicare, said that the agency recognized the value of the drugs. But Medicare does not want to overpay for the medicines and believes that hospital data is the most accurate way to set reimbursement, he said.
But most other drugs administered via injection in doctors’ offices or hospital outpatient clinics — as Bexxar and Zevalin are — are not reimbursed on the basis of what hospitals say they have paid. Instead, companies report the average price of their drugs to Medicare. Medicare then reimburses doctors and hospitals at that price, plus a 6 percent fee to cover handling costs.
GlaxoSmithKline said it had asked Medicare to switch to that system for Bexxar. So far, Medicare has refused.
Meanwhile, lymphoma patients are anxiously watching the fight between Medicare and the companies.
Lora Beckwith, 66, was first diagnosed with the disease in 2004. So far, her illness has progressed slowly, but last month, she was told that she would probably need treatment by February.
Because Ms. Beckwith, who lives in Ann Arbor, Mich., has Parkinson’s disease, she cannot receive standard chemotherapy for the disease, making Bexxar and Zevalin among her only alternatives. Now she fears she may not be able to get them.
“I’m not usually a vengeful or resentful person,” she said. “But I am feeling a bit resentful about having this taken away — if I can’t have access to a drug that would extend my life.”
Read more
Medicare Reform Hits Snag as Administration Threatens Veto if Physician Pay Cut is Reduced
Health groups want Medicare physicians to use electronic prescribing or face financial penalties
By Kaiser Network - Dec. 6, 2007
The Medicare reform package be shaped in the Senate Finance Committee hit a snag yesterday and the Democratic chairman says he needs to consult with House Democrats before proceeding on the legislation. A major piece of the plan is to roll back the 10 percent pay cuts for doctors that Medicare is set to enforce for 2008. Republicans on the committee were fighting for a short-term roll back of the cut when a letter suddenly appeared from the Health and Human Services Secretary that threatened a Bush veto under certain conditions.
Senate Finance Committee Chair Baucus Cancels Medicare Bill Mark Up, Will Negotiate With House Dem
Senate Finance Committee Chair Max Baucus (D-Mont.) on Wednesday canceled plans for a mark up of Medicare legislation and instead will negotiate directly with House Democrats on the measure, CQ HealthBeat reports. The bill would block a 10% cut in Medicare physician fees.
According to CQ HealthBeat, Baucus has "struggled" with committee Republicans over whether to block the physician cuts for one year or two years, as well as on reductions to Medicare Advantage payments to help fund the physician fee fix. Baucus canceled a mark up one day after the Bush administration threatened to veto any bill that includes cuts to MA plans (CQ HealthBeat, 12/5).
HHS Secretary Mike Leavitt on Tuesday in a letter to the Finance Committee wrote that a veto would be recommended for any bill that "results in a loss of access to health care services, benefits or choices" in the MA program; "raises taxes ... to fund spending increases"; or alters Medicare's fiscal status by overturning administration regulatory decisions (Kaiser Daily Health Policy Report, 12/5). (Read text of Leavitt letter below this news story.)
Finance Committee ranking member Chuck Grassley (R-Iowa) on Wednesday said of the veto threat: "What they're really saying is, 'We don't care if the doctors take a 10% cut'" (CQ HealthBeat, 12/5).
E-Prescribing
A coalition of health care and consumer groups announced support for legislation that would require Medicare physicians by 2011 to use electronic prescribing or face financial penalties, CQ HealthBeat reports. The bill's sponsors include Sens. John Kerry (D-Mass.), Debbie Stabenow (D-Mich.) and John Ensign (R-Nev.), and Reps. Allyson Schwartz (D-Pa.) and Jon Porter (R-Nev.).
Bill Vaughan, senior policy analyst at Consumers Union, on Wednesday in a letter to the Senate wrote that the group wants Congress to implement e-prescribing in Medicare and Medicaid and called for the legislation to be included in the Medicare package. The e-prescribing measure would provide physicians with a bonus for each e-prescription written and provide funding for start-up costs associated with adopting the technology. It also would authorize the HHS secretary to provide physicians with one- or two-year hardship waivers if they have difficulty acquiring the technology.
The Bush administration has asked that health information technology adoption requirements be included in any Medicare legislation that would prevent a physician fee cut.
Kerry said, "E-prescribing will save money, save time, save doctors from piles of paperwork and, most importantly, save lives," adding, "Deaths and injuries from handwritten prescriptions could be nearly eliminated if e-prescriptions were adopted on a wide scale. We need to seize this bipartisan opportunity and make this common-sense reform a reality now" (Carey, CQ HealthBeat, 12/5).
Secretary Leavitt Letter to Senators on Medicare Physician Payment Legislation
Text of letter sent to Sen. Max Baucus, chairman, and Sen. Charles Grassley, ranking Republican, on Senate Finance Committee
Read Daily Reports on Kaiser Network.org
By Kaiser Network - Dec. 6, 2007
The Medicare reform package be shaped in the Senate Finance Committee hit a snag yesterday and the Democratic chairman says he needs to consult with House Democrats before proceeding on the legislation. A major piece of the plan is to roll back the 10 percent pay cuts for doctors that Medicare is set to enforce for 2008. Republicans on the committee were fighting for a short-term roll back of the cut when a letter suddenly appeared from the Health and Human Services Secretary that threatened a Bush veto under certain conditions.
Senate Finance Committee Chair Baucus Cancels Medicare Bill Mark Up, Will Negotiate With House Dem
Senate Finance Committee Chair Max Baucus (D-Mont.) on Wednesday canceled plans for a mark up of Medicare legislation and instead will negotiate directly with House Democrats on the measure, CQ HealthBeat reports. The bill would block a 10% cut in Medicare physician fees.
According to CQ HealthBeat, Baucus has "struggled" with committee Republicans over whether to block the physician cuts for one year or two years, as well as on reductions to Medicare Advantage payments to help fund the physician fee fix. Baucus canceled a mark up one day after the Bush administration threatened to veto any bill that includes cuts to MA plans (CQ HealthBeat, 12/5).
HHS Secretary Mike Leavitt on Tuesday in a letter to the Finance Committee wrote that a veto would be recommended for any bill that "results in a loss of access to health care services, benefits or choices" in the MA program; "raises taxes ... to fund spending increases"; or alters Medicare's fiscal status by overturning administration regulatory decisions (Kaiser Daily Health Policy Report, 12/5). (Read text of Leavitt letter below this news story.)
Finance Committee ranking member Chuck Grassley (R-Iowa) on Wednesday said of the veto threat: "What they're really saying is, 'We don't care if the doctors take a 10% cut'" (CQ HealthBeat, 12/5).
E-Prescribing
A coalition of health care and consumer groups announced support for legislation that would require Medicare physicians by 2011 to use electronic prescribing or face financial penalties, CQ HealthBeat reports. The bill's sponsors include Sens. John Kerry (D-Mass.), Debbie Stabenow (D-Mich.) and John Ensign (R-Nev.), and Reps. Allyson Schwartz (D-Pa.) and Jon Porter (R-Nev.).
Bill Vaughan, senior policy analyst at Consumers Union, on Wednesday in a letter to the Senate wrote that the group wants Congress to implement e-prescribing in Medicare and Medicaid and called for the legislation to be included in the Medicare package. The e-prescribing measure would provide physicians with a bonus for each e-prescription written and provide funding for start-up costs associated with adopting the technology. It also would authorize the HHS secretary to provide physicians with one- or two-year hardship waivers if they have difficulty acquiring the technology.
The Bush administration has asked that health information technology adoption requirements be included in any Medicare legislation that would prevent a physician fee cut.
Kerry said, "E-prescribing will save money, save time, save doctors from piles of paperwork and, most importantly, save lives," adding, "Deaths and injuries from handwritten prescriptions could be nearly eliminated if e-prescriptions were adopted on a wide scale. We need to seize this bipartisan opportunity and make this common-sense reform a reality now" (Carey, CQ HealthBeat, 12/5).
Secretary Leavitt Letter to Senators on Medicare Physician Payment Legislation
Text of letter sent to Sen. Max Baucus, chairman, and Sen. Charles Grassley, ranking Republican, on Senate Finance Committee
“We understand the Senate Finance Committee soon intends to consider draft legislation to block the upcoming statutorily mandated reduction in payments to physicians under the fee-for-service Medicare program. As you know, this 10 percent cut would otherwise occur on January 1, 2008. I write to reiterate the Administration's commitment to strengthen and improve Medicare, and to ensure our Nation's seniors continue to have access to, and choices among, high-quality benefits through this important program.
“The Administration looks forward to working with Congress on appropriately offsetting legislation to mitigate the cut to physician reimbursement rates under Medicare. To that end, we ask that Congress adhere to the following principles for an update to the physician fee schedule.
“Such a bill should:
● Pay for any adjustment to the physician fee schedule formula by responsibly adjusting payments to other providers in the fee-for-service Medicare program.
● Bear in mind the impact on beneficiary premiums of potential increases in Part B spending for physicians, when considering appropriate offsets.
● Condition receipt of a portion of any fee adjustment to adoption of certified electronic health information technology. Physicians who do not adopt appropriate, available technology should receive a lower payment than those who do.
● Implement payment policies to ensure patients receive high-quality care in the most medically appropriate and efficient setting without increasing costs for taxpayers or for Medicare and its beneficiaries.
“Conversely, the President's senior advisors would recommend a veto of any bill that:
● Raises taxes on the American people to fund spending increases.
● Results in the loss of access to health care services, benefits, or choices in the Medicare Advantage program, through which nearly 20 percent of seniors and Medicare beneficiaries with disabilities currently receive their benefits.
● Disturbs, undermines, or overturns the many successes of the new Medicare prescription drug benefit.
● Undermines efforts to promote fiscal solvency in the Medicare and Medicaid programs. For example, legislation should not repeal the Medicare funding warning or erode the programs' fiscal integrity by overturning regulatory policies developed by the Administration.
“We look forward to working with you to produce legislation that the President can sign into law. The Office of Management and Budget advises that from the standpoint of the Administration's program, there is no objection to the transmittal of this letter.”
Read Daily Reports on Kaiser Network.org
VIEWPOINT: Myths and Realities about Social Security and Privatization
By National Committee to Preserve Social Security and Medicare - Read More
Senior Advocates Petition Congress to Cut Subsidy to Private Medicare Plans
Medicare reforms being shaped in Senate Finance Committee
Dec. 5, 2007 – Two Medicare advocacy groups poured 48,000 petitions on Congress yesterday as part of their campaign to support Medicare reforms that will halt or reduce the subsidies paid to private Medicare providers. The senior citizens also waived two-dollar bills to symbolize the “extra money” they pay each month in Medicare premiums because of these industry subsidies.
The National Committee to Preserve Social Security and Medicare (NCPSSM) was joined by the Alliance for Retired Americans in delivering the petitions yesterday.
The Senate Finance Committee is considering legislation this week that could include cuts to billions of dollars in subsidies to private insurers. These overpayments will cost the federal government $149 billion dollars over the next decade and cut two years from Medicare's solvency, according to the NCPSSM.
The NCPSSM news release also said, “Seniors want Congress to reduce those subsidies to improve and strengthen Medicare for future generations. Contrary to what the insurance industry claims, cutting industry subsidies is not the same as cutting Medicare.”
"While the President chides Congress for 'wasteful Washington spending', at the same time he and his allies continue to defend providing billions of dollars in subsidies to the insurance industry,” says Max Richtman, NCPSSM Executive Vice President
“Taxpayers and seniors should not have to foot the bill for overpayments to an industry already seeing record profits thanks to the privatization of Medicare. The Medicare Advantage program is the textbook definition of 'wasteful Washington spending' and should be reformed.”
In explaining the $2 bills, Edward F. Coyle, Alliance for Retired Americans Executive Director, said, "While each $2 bill may seem minor on its own, the total cost is significant. And so is the total effect on seniors. Each month, private insurance companies keep getting more, while seniors keep getting less.”
Earlier this fall, National Committee members and supporters mailed 73,000 letters to Congress requesting Medicare improvements. Several other petition drives and member surveys on Medicare are currently underway for delivery to Congress later this year or early 2008, according to NCPSSM.
Editor’s Notes:
The National Committee says it is a nonprofit, nonpartisan organization that acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the Board of Directors and professional staff. The work of the National Committee is directed toward developing better-informed citizens and voters.
Medicare Package Taking Shape in Congress, HHS Secretary Makes Requests
Senate Finance Committee taking the lead on Medicare reform
Dec. 4, 2007 - HHS Secretary Mike Leavitt on Monday issued a statement to Congress requesting that Medicare legislation not include cuts to Medicare Advantage plans or changes to the Medicare prescription drug benefit, CQ Today reports. Leavitt in the statement said, "Both have proven to be highly popular with the American people and worthy of continued support from Congress."
A mark up of the Medicare package is tentatively scheduled for Wednesday, but the Senate Finance Committee might delay the mark up by at least one day, according to a spokesperson for committee ranking member Chuck Grassley (R-Iowa) (Armstrong, CQ Today, 12/3).
MA plan payments on average are 12% higher than traditional Medicare. The Senate Medicare bill is expected to reduce some additional payments to MA plans to generate revenue, while the House measure would make MA payments equal to traditional Medicare to generate $50 billion over five years.
The Bush administration last week during a meeting with Senate Finance Committee staffers said that it also opposes a provision of the Medicare legislation that would give states more power to penalize private MA plans that use questionable marketing tactics.
According to CongressDaily, "The White House's protest came as a surprise to negotiators, who inserted the new marketing language in response to reports that private [MA] plans were using misleading marketing tactics to get seniors to switch from traditional Medicare by enrolling in the private fee-for-service plans." The package, which could be released as early as Tuesday, would curb a scheduled 10% cut to physician reimbursements. It also is expected to have provisions that change the drug benefit and create rural and low-income subsidies.
Health IT
Leavitt also said that "any new bill should require physicians to implement health information technology that meets department standards in order to be eligible for higher payments from Medicare" (Johnson, CongressDaily, 12/4).
Leavitt said Congress should require physicians to adopt health IT that meets federal standards before it stops a scheduled 10% cut in Medicare physician fees. "Such a requirement would accelerate adoption of this technology considerably and help to drive improvements in health care quality as well as reductions in medical costs and errors," according to Leavitt.
He added, "I'm confident that many members of Congress are of a like mind of this issue, and I will actively work with them in the near future" (CQ HealthBeat, 12/3).
According to the AP/Philadelphia Inquirer, health care analysts have said widespread use of electronic health records will reduce medical errors and could help reduce health care costs. Currently, only 10% of small-group practices and solo physicians use EHRs, the AP/Inquirer reports. The systems can cost anywhere from $20,000 to $40,000 up front, according to the AP/Inquirer (Freking, AP/Philadelphia Inquirer, 12/3).
Sen. Edward Kennedy (D-Mass.) has sponsored a health IT bill (S 1693) that he is trying to get passed before the end of the session, but the Finance Committee has not discussed health IT as part of the Medicare package, CQ Today reports (CQ Today, 12/3).
E-Prescribing
Sens. John Kerry (D-Mass.) and Debbie Stabenow (D-Mich.) plan to introduce stand-alone legislation this week that would require handwritten prescriptions be replaced by electronic prescriptions, but the senators are working with Finance Committee Chair Max Baucus (D-Mont.) and Grassley to add the requirement to the Medicare package, aides said, CongressDaily reports.
The American Medical Association is "wary of an e-prescribing mandate," and its main priority is reversing the 10% physician payment cut, according to CongressDaily.
The Finance Committee package would include one-time payments for physicians to cover the start-up costs and small incentive payments to continue using the systems over three years. Switching to e-prescribing would cost about $2,500 plus losses in productivity during the transition, CongressDaily reports. After three years, physicians would be penalized for not using e-prescribing. Using the technology would save between $5 billion and $15 billion over 10 years, according to some estimates.
"Physicians are eager to adopt new technologies that have the potential to increase patient safety and quality of care, but hitting doctors with an unfunded e-prescribing mandate at the same time the government plans to cut Medicare physician payments 10% next year is untenable," AMA Board Chair Edward Langston said (Johnson [1], CongressDaily, 12/3).
Other Provisions
The Finance Committee has stalled negotiations on a provision of the package that would extend the length of time employers must cover kidney dialysis for employees after a business coalition ran advertisements in a Montana newspaper opposing increased responsibility for employers, according to an aide familiar with the negotiations, CongressDaily reports.
The ad ran in the Billings Gazette and was paid for by the Employers Coalition on Medicare. Under current law, employees with group insurance must receive 30 months of dialysis before Medicare coverage begins. The extension would increase the requirement to 42 months, which would save Medicare $1.2 billion over 10 years, according to the Congressional Budget Office.
Employers say that the change would cost them $3 billion to $4 billion over 10 years because they do not have the purchasing power Medicare has. Baucus was considering removing the requirement from the legislation, but he might be "less inclined to sympathize" with the coalition after the ads ran, according to CongressDaily (Johnson [2], CongressDaily, 12/3).
Read More
Dec. 5, 2007 – Two Medicare advocacy groups poured 48,000 petitions on Congress yesterday as part of their campaign to support Medicare reforms that will halt or reduce the subsidies paid to private Medicare providers. The senior citizens also waived two-dollar bills to symbolize the “extra money” they pay each month in Medicare premiums because of these industry subsidies.
The National Committee to Preserve Social Security and Medicare (NCPSSM) was joined by the Alliance for Retired Americans in delivering the petitions yesterday.
The Senate Finance Committee is considering legislation this week that could include cuts to billions of dollars in subsidies to private insurers. These overpayments will cost the federal government $149 billion dollars over the next decade and cut two years from Medicare's solvency, according to the NCPSSM.
The NCPSSM news release also said, “Seniors want Congress to reduce those subsidies to improve and strengthen Medicare for future generations. Contrary to what the insurance industry claims, cutting industry subsidies is not the same as cutting Medicare.”
"While the President chides Congress for 'wasteful Washington spending', at the same time he and his allies continue to defend providing billions of dollars in subsidies to the insurance industry,” says Max Richtman, NCPSSM Executive Vice President
“Taxpayers and seniors should not have to foot the bill for overpayments to an industry already seeing record profits thanks to the privatization of Medicare. The Medicare Advantage program is the textbook definition of 'wasteful Washington spending' and should be reformed.”
In explaining the $2 bills, Edward F. Coyle, Alliance for Retired Americans Executive Director, said, "While each $2 bill may seem minor on its own, the total cost is significant. And so is the total effect on seniors. Each month, private insurance companies keep getting more, while seniors keep getting less.”
Earlier this fall, National Committee members and supporters mailed 73,000 letters to Congress requesting Medicare improvements. Several other petition drives and member surveys on Medicare are currently underway for delivery to Congress later this year or early 2008, according to NCPSSM.
Editor’s Notes:
The National Committee says it is a nonprofit, nonpartisan organization that acts in the interests of its membership through advocacy, education, services, grassroots efforts and the leadership of the Board of Directors and professional staff. The work of the National Committee is directed toward developing better-informed citizens and voters.
Medicare Package Taking Shape in Congress, HHS Secretary Makes Requests
Senate Finance Committee taking the lead on Medicare reform
Dec. 4, 2007 - HHS Secretary Mike Leavitt on Monday issued a statement to Congress requesting that Medicare legislation not include cuts to Medicare Advantage plans or changes to the Medicare prescription drug benefit, CQ Today reports. Leavitt in the statement said, "Both have proven to be highly popular with the American people and worthy of continued support from Congress."
A mark up of the Medicare package is tentatively scheduled for Wednesday, but the Senate Finance Committee might delay the mark up by at least one day, according to a spokesperson for committee ranking member Chuck Grassley (R-Iowa) (Armstrong, CQ Today, 12/3).
MA plan payments on average are 12% higher than traditional Medicare. The Senate Medicare bill is expected to reduce some additional payments to MA plans to generate revenue, while the House measure would make MA payments equal to traditional Medicare to generate $50 billion over five years.
The Bush administration last week during a meeting with Senate Finance Committee staffers said that it also opposes a provision of the Medicare legislation that would give states more power to penalize private MA plans that use questionable marketing tactics.
According to CongressDaily, "The White House's protest came as a surprise to negotiators, who inserted the new marketing language in response to reports that private [MA] plans were using misleading marketing tactics to get seniors to switch from traditional Medicare by enrolling in the private fee-for-service plans." The package, which could be released as early as Tuesday, would curb a scheduled 10% cut to physician reimbursements. It also is expected to have provisions that change the drug benefit and create rural and low-income subsidies.
Health IT
Leavitt also said that "any new bill should require physicians to implement health information technology that meets department standards in order to be eligible for higher payments from Medicare" (Johnson, CongressDaily, 12/4).
Leavitt said Congress should require physicians to adopt health IT that meets federal standards before it stops a scheduled 10% cut in Medicare physician fees. "Such a requirement would accelerate adoption of this technology considerably and help to drive improvements in health care quality as well as reductions in medical costs and errors," according to Leavitt.
He added, "I'm confident that many members of Congress are of a like mind of this issue, and I will actively work with them in the near future" (CQ HealthBeat, 12/3).
According to the AP/Philadelphia Inquirer, health care analysts have said widespread use of electronic health records will reduce medical errors and could help reduce health care costs. Currently, only 10% of small-group practices and solo physicians use EHRs, the AP/Inquirer reports. The systems can cost anywhere from $20,000 to $40,000 up front, according to the AP/Inquirer (Freking, AP/Philadelphia Inquirer, 12/3).
Sen. Edward Kennedy (D-Mass.) has sponsored a health IT bill (S 1693) that he is trying to get passed before the end of the session, but the Finance Committee has not discussed health IT as part of the Medicare package, CQ Today reports (CQ Today, 12/3).
E-Prescribing
Sens. John Kerry (D-Mass.) and Debbie Stabenow (D-Mich.) plan to introduce stand-alone legislation this week that would require handwritten prescriptions be replaced by electronic prescriptions, but the senators are working with Finance Committee Chair Max Baucus (D-Mont.) and Grassley to add the requirement to the Medicare package, aides said, CongressDaily reports.
The American Medical Association is "wary of an e-prescribing mandate," and its main priority is reversing the 10% physician payment cut, according to CongressDaily.
The Finance Committee package would include one-time payments for physicians to cover the start-up costs and small incentive payments to continue using the systems over three years. Switching to e-prescribing would cost about $2,500 plus losses in productivity during the transition, CongressDaily reports. After three years, physicians would be penalized for not using e-prescribing. Using the technology would save between $5 billion and $15 billion over 10 years, according to some estimates.
"Physicians are eager to adopt new technologies that have the potential to increase patient safety and quality of care, but hitting doctors with an unfunded e-prescribing mandate at the same time the government plans to cut Medicare physician payments 10% next year is untenable," AMA Board Chair Edward Langston said (Johnson [1], CongressDaily, 12/3).
Other Provisions
The Finance Committee has stalled negotiations on a provision of the package that would extend the length of time employers must cover kidney dialysis for employees after a business coalition ran advertisements in a Montana newspaper opposing increased responsibility for employers, according to an aide familiar with the negotiations, CongressDaily reports.
The ad ran in the Billings Gazette and was paid for by the Employers Coalition on Medicare. Under current law, employees with group insurance must receive 30 months of dialysis before Medicare coverage begins. The extension would increase the requirement to 42 months, which would save Medicare $1.2 billion over 10 years, according to the Congressional Budget Office.
Employers say that the change would cost them $3 billion to $4 billion over 10 years because they do not have the purchasing power Medicare has. Baucus was considering removing the requirement from the legislation, but he might be "less inclined to sympathize" with the coalition after the ads ran, according to CongressDaily (Johnson [2], CongressDaily, 12/3).
Read More
Medicare Help on Part D sign-up
By THE WASHINGTON POST - Tuesday, December 4, 2007
Medicare beneficiaries signing up for prescription drug coverage (Medicare Part D) now through Dec. 31 have a new Web tool to help them compare plans and costs.
Called Plan Finder, the Medicare site lists premiums, co-pays and deductibles by state.
Under Medicare regulations, insurers can't change tier prices before 2009 but can move drugs from tier to tier.
But according to the Medicare Rights Center in New York, if you're on the drug before its tier changes, you can continue paying the cheaper price.
Hassles? Call Medicare (800-633-4227).
SOURCES OF HELP
Plan Finder: From Medicare's home page, www.medicare.gov, click on "Medicare Prescription Drug Plans -- 2008 Plan Data."
A comprehensive list of resources for Medicare Part D comes from the staff of Rep. Peter DeFazio, D-Ore.: www.defazio.house.gov.
Medicare: For tips and information, go to www.medicare.gov/medicarereform/drugbenefit.asp.
Medicare Access for Patients-Rx, a coalition of groups providing guidance to people with chronic diseases and disabilities: www.maprx.info.
AARP Medicare Interactive Counselor: www.aarp.org/health/medicare.
Families USA: www.familiesusa.org/issues/medicare/rx-drug-center/for-consumers.
A Kaiser Family Foundation tracker site lets you compare drug plans: www.kff.org/medicare/healthplantracker/index.jsp.
Read more
Medicare Rights Center: www.medicarerights.org. See "A guide through the Medicare maze."
Medicare beneficiaries signing up for prescription drug coverage (Medicare Part D) now through Dec. 31 have a new Web tool to help them compare plans and costs.
Called Plan Finder, the Medicare site lists premiums, co-pays and deductibles by state.
Under Medicare regulations, insurers can't change tier prices before 2009 but can move drugs from tier to tier.
But according to the Medicare Rights Center in New York, if you're on the drug before its tier changes, you can continue paying the cheaper price.
Hassles? Call Medicare (800-633-4227).
SOURCES OF HELP
Plan Finder: From Medicare's home page, www.medicare.gov, click on "Medicare Prescription Drug Plans -- 2008 Plan Data."
A comprehensive list of resources for Medicare Part D comes from the staff of Rep. Peter DeFazio, D-Ore.: www.defazio.house.gov.
Medicare: For tips and information, go to www.medicare.gov/medicarereform/drugbenefit.asp.
Medicare Access for Patients-Rx, a coalition of groups providing guidance to people with chronic diseases and disabilities: www.maprx.info.
AARP Medicare Interactive Counselor: www.aarp.org/health/medicare.
Families USA: www.familiesusa.org/issues/medicare/rx-drug-center/for-consumers.
A Kaiser Family Foundation tracker site lets you compare drug plans: www.kff.org/medicare/healthplantracker/index.jsp.
Read more
Medicare Rights Center: www.medicarerights.org. See "A guide through the Medicare maze."
Big Pharma Faces Grim Prognosis
Industry Fails to Find New Drugs to Replace Wonders Like Lipitor
By BARBARA MARTINEZ and JACOB GOLDSTEIN - The Wall Street Journal - December 6, 2007
Over the next few years, the pharmaceutical business will hit a wall.
Some of the top-selling drugs in industry history will become history as patent protections expire, allowing generics to rush in at much-lower prices. Generic competition is expected to wipe $67 billion from top companies' annual U.S. sales between 2007 and 2012 as more than three dozen drugs lose patent protection. That is roughly half of the companies' combined 2007 U.S. sales
At the same time, the industry's science engine has stalled. The century-old approach of finding chemicals to treat diseases is producing fewer and fewer drugs. Especially lacking are new blockbusters to replace old ones like Lipitor, Plavix and Zyprexa.
The coming sales decline may signal the end of a once-revered way of doing business. "I think the industry is doomed if we don't change," says Sidney Taurel, chairman of Eli Lilly & Co. Just yesterday, Bristol-Myers Squibb Co. announced plans to cut 10% of its work force, or about 4,300 jobs, and close or sell about half of its 27 manufacturing plants by 2010. (Please see related article.)
Between 2011 and 2012, annual industry revenue will decline, estimates Datamonitor, a research and consulting firm. That would be the first decline in at least four decades.
Patent expirations are a big problem. Drugs are granted 20 years of patent protection, although companies often fail to get a product to market before half of that period has elapsed. Once it hits the market, however, the patent-protected drug is highly profitable: Typical gross margins are 90% to 95%. When patents expire, generic makers offer the products at a price much closer to the cost of production.
Pfizer Inc. will be particularly hard-hit when the patent expires as early as 2010 on Lipitor, the cholesterol-lowering blockbuster that ranks as the most successful drug ever. Pharmacists and managed-care companies will aggressively fill prescriptions with generics, reducing annual Lipitor sales to a fraction of last year's $13 billion.
By 2012, Merck & Co. will face generic competition to its three top-selling drugs: the osteoporosis treatment Fosamax, Singulair for asthma and the blood-pressure drug Cozaar. Those three represent 44% of the company's current revenue. Following the loss last year of patent protection for Merck's cholesterol-lowering Zocor, sales this year are expected to fall 82% from $4.38 billion in 2005. A Merck spokeswoman said the company has several products in the pipeline that will offset its patent losses.
The rise of generics wouldn't matter so much if research labs were creating a stream of new hits. But that isn't happening. During the five years from 2002 through 2006, the industry brought to market 43% fewer new chemical-based drugs than in the last five years of the 1990s, despite more than doubling research-and-development spending.
In October, Moody's Investors Service, which rates about $90 billion in U.S. pharmaceutical-company debt, lowered its outlook for the U.S. drug industry to negative from stable. The industry was long considered among the most credit-worthy, but in recent years, Moody's has downgraded giants Schering-Plough Corp., Merck, Bristol-Myers, Pfizer and GlaxoSmithKline PLC. In explaining its diminished outlook, Moody's said that drugs currently in development don't have as much commercial potential as earlier pipelines.
Investors, once huge beneficiaries of drug-industry success, have moved to the sidelines. As the Dow Jones World Index rose 75% in the six years ended Nov. 29, the FTSE Global Pharmaceuticals Index fell 19.8%.
While many patients are benefiting from lower-cost generics, others are waiting in vain for relief of their suffering. "In anxiety disorder, the field has imploded in terms of drug development," said P. Murali Doraiswamy, chief of biological psychiatry at Duke University medical school. "Ten years ago, we had eight or nine different" anxiety-disorder drugs under development, but that has now "come to a halt."
At last month's big American Heart Association meeting in Orlando, Fla., there were just two high-profile studies of experimental drugs on the agenda. One, for Eli Lilly's anti-blood-clotting drug prasugrel, posted results that left some doctors and analysts questioning whether the drug would be a big seller. Lilly, however, says it is "very pleased with the trial's outcome."
The other study was a postmortem on Pfizer's torcetrapib, already known as one of the industry's most costly failures, with $800 million in budgeted research costs.
"There haven't been any new therapies that are proven to reduce death and disability for atherosclerosis since the introduction of the [cholesterol-lowering] statins" in the late 1980s, said Richard C. Pasternak, vice president of Cardiovascular Clinical Research at Merck. Atherosclerosis, a buildup of arterial plaque, is a major cause of heart disease.
As patent expirations loom, pharmaceutical companies are reorganizing. In five years, many may look very different. They will be in new businesses. Their cost structures may be slimmer and more flexible. Some familiar names may disappear in mergers. Companies are installing new leaders, including outsiders like Pfizer Chairman and CEO Jeffrey Kindler, who in 2002 joined the company as general counsel from McDonald's Corp.
"The era that created the modern pharmaceutical industry is in fact over," said Richard Evans, a former Wall Street analyst and now a pharmaceutical consultant.
To be sure, the pharmaceutical industry is still highly profitable. Sales will continue to benefit from the Medicare drug benefit for the elderly and from growth in overseas markets. The industry will continue to produce new drugs, though at too slow a rate to sustain its size and cost structure, analysts assess. Some players, such as Merck, may fare better because of a more productive R&D operation, according to Sanford C. Bernstein & Co. research analyst Timothy Anderson.
It has never been easy to take a drug from the lab, through animal testing and into human trials. The industry estimates only one out of every 5,000 to 10,000 candidates makes it to human trials. And many drugs that work beautifully in animals fail miserably in people.
But those odds seem to have worsened in recent years, prompting debate about whether the cause is government regulation, corporate structure or an excessive scientific reliance on chemicals rather than biology.
Many drug-company executives blame the FDA for pulling back on approvals. "Very few products are being approved today," said Bernard Poussot, incoming chief executive of Wyeth. The heightened scrutiny contributed to delays of two Wyeth products this past summer, the company has said.
Would-be blockbusters such as Novartis AG's diabetes drug Galvus and Sanofi-Aventis's weight-loss drug rimonabant have recently been delayed by the FDA over safety concerns.
Safety concerns have also prompted the agency to require larger studies of new drugs. Novartis CEO Daniel Vasella says this trend has done more than any other to drive up the industry's R&D costs. He cites Novartis's blood-pressure drug Tekturna, approved earlier this year, which had more than 6,000 patients in its late-stage trial. A decade ago, a similar study might have had fewer than 1,000 patients, according to Dr. Vasella.
Christopher DiFrancesco, a spokesman for the FDA, said, "The number of approvals have declined because companies are submitting fewer drugs to the FDA for approval. The threshold for what we consider to be a safe, effective drug hasn't changed."
Some say the industry's ballooning research budgets may be working against productivity. Most companies use a centralized system to allocate research money, and the growing budgets have left the decision making to too few people who are too far removed from the research, suggests Mr. Evans, who worked at Roche's U.S. subsidiary until 1998, spent several years as a Wall Street analyst and is now a consultant at a health-care-consulting firm. He calls the system "a nightmare of complexity."
As evidence of this problem, some in the industry point to Pfizer, with an annual research budget that has grown to $7 billion, highest in the industry. Yet only a handful of drugs discovered in its internal research labs have come to market in the past decade. And late last year, the company lost its most promising hope when the cholesterol drug torcetrapib failed in late-stage trials.
In a statement, Pfizer said it has the largest pipeline of midstage drugs in company history and plans to triple the number of late-stage drugs in its portfolio by 2009.
A few companies, notably GlaxoSmithKline, have begun breaking R&D into smaller groups, though it is too early to gauge results.
Some believe the industry, which grew out of the European chemical business of the late 1800s, has remained too reliant on that foundation. "For all our amazing advances in the last 50 years, we are still working with the tools of the first pharmaceutical revolution...using advanced chemistry to treat disease symptoms," Mr. Taurel of Lilly said in a 2003 speech.
The future, many believe, lies in biotechnology. Unlike traditional, chemistry-based drug development, biotechnology uses biological tools to create entire proteins, often similar to those that occur in the human body. This approach has yielded successful drugs to treat diseases such as anemia, cancer and rheumatoid arthritis.
Biotech drugs are especially appealing because they face no competition from generics: No regulatory pathway yet exists in the U.S. for bringing to market generic biotech drugs. So until Congress creates such a pathway, no generic threat will exist to the $4,400 a month that Genentech Inc. charges for its cancer drug Avastin, or the $200,000 a year that Genzyme Corp. gets for Cerezyme to treat Gaucher disease. And biotechnology products tend to target specialized areas of medicine that don't require mass advertising or armies of salespeople.
So big pharmaceutical companies have spent nearly $76 billion since 2005 to buy biotech companies, according to Health Care M&A Information Service, a unit of Irving Levin Associates Inc., a Norwalk, Conn., research company. While in 2005 there were 33 deals amounting to $16.5 billion, in the first nine months of this year there were 49 deals totaling $28.7 billion, including AstraZeneca PLC's $15.6 billion acquisition of MedImmune, which followed a bidding war against Eli Lilly, among others.
Meanwhile, Novartis and Pfizer recently announced the formation of in-house biotech units.
The dearth of new products has led the industry to invest heavily in marketing and legal tactics that squeeze as much revenue as possible out of existing products. Companies have raised prices; the average price per pill has risen 63% since 2002, according to Michael Krensavage, Raymond James analyst. Companies raised advertising spending to $5.3 billion in 2006 from $2.5 billion in 2001 and since 1995 have nearly tripled the number of industry sales representatives to 100,000.
The industry spent $155 million on lobbying from January 2005 to June 2006, according to the Center for Public Integrity, on "a variety of issues ranging from protecting lucrative drug patents to keeping lower-priced Canadian drugs from being imported." The industry also successfully lobbied against allowing the federal government to negotiate Medicare drug prices, the center said. The lobbying has drawn fire from politicians, doctors and payers, and damaged the industry's public image.
Aware that seven of the top 10 drug launches of 2006 were generics, pharmaceutical giants are pushing more deeply into that business. In first nine months of this year, Novartis's generics unit, Sandoz, grew roughly three times as fast as its branded-drugs business and accounted for nearly 20% of overall revenue. "The balance is changing," says Novartis CEO Dr. Vasella. In the coming quarters, "we will continue to see a faster growth opportunity" in generics.
After Pfizer's antidepressant Zoloft went off-patent last year, the company's own generics unit, Greenstone, launched a generic version of the drug.
Johnson & Johnson has its own generics unit. Other companies cut deals with generics manufacturers, licensing them the right to sell "authorized generics" that are identical to a branded drug that has gone off-patent.
Diversification is another hope. Roche Holding AG is pursuing a $3 billion hostile takeover of Ventana Medical Systems Inc., a diagnostics company that makes the test used to determine whether women with breast cancer should receive Herceptin, a targeted biotechnology drug that Roche sells in some markets.
The bid is part of a broad push further into diagnostics by the company, which said in July that Severin Schwan, who runs the company's diagnostics unit, will take over next year as CEO.
Yet none of these moves are forestalling cost slashing. Pfizer is cutting 20% of its sales force, AstraZeneca is cutting 10% of its employees and Johnson & Johnson is shrinking its staff by 4%, according to Bernstein Research. As many as 50,000 industry positions will be displaced over the next 10 years, according to wealth-management company RegentAtlantic Capital, Chatham, N.J.
AstraZeneca, GlaxoSmithKline and Bristol-Myers Squibb have also recently suggested they will outsource at least some of their manufacturing. "There are lots of people in India, China and Eastern Europe who can make products of the same quality as ours but at significantly less cost," says Bristol-Myers Squibb CEO James Cornelius.
The outsourcing is expected to extend to research. "We don't do any basic research yet in the lower-cost countries, but over the next few years, to be successful you'll have a constant emphasis on looking for that," Mr. Cornelius says.
The coming difficulty is threatening every industry tradition. "I'm talking to you from the 44th floor of an office on Park Avenue," Mr. Cornelius says. "A year from now, I won't be talking to you from the 44th floor because we're going to move downstairs out of these very expensive offices."
--Sarah Rubenstein and Ron Winslow contributed to this article.
Read more
See Sortable Chart for drugs going off patent.
By BARBARA MARTINEZ and JACOB GOLDSTEIN - The Wall Street Journal - December 6, 2007
Over the next few years, the pharmaceutical business will hit a wall.
Some of the top-selling drugs in industry history will become history as patent protections expire, allowing generics to rush in at much-lower prices. Generic competition is expected to wipe $67 billion from top companies' annual U.S. sales between 2007 and 2012 as more than three dozen drugs lose patent protection. That is roughly half of the companies' combined 2007 U.S. sales
At the same time, the industry's science engine has stalled. The century-old approach of finding chemicals to treat diseases is producing fewer and fewer drugs. Especially lacking are new blockbusters to replace old ones like Lipitor, Plavix and Zyprexa.
The coming sales decline may signal the end of a once-revered way of doing business. "I think the industry is doomed if we don't change," says Sidney Taurel, chairman of Eli Lilly & Co. Just yesterday, Bristol-Myers Squibb Co. announced plans to cut 10% of its work force, or about 4,300 jobs, and close or sell about half of its 27 manufacturing plants by 2010. (Please see related article.)
Between 2011 and 2012, annual industry revenue will decline, estimates Datamonitor, a research and consulting firm. That would be the first decline in at least four decades.
Patent expirations are a big problem. Drugs are granted 20 years of patent protection, although companies often fail to get a product to market before half of that period has elapsed. Once it hits the market, however, the patent-protected drug is highly profitable: Typical gross margins are 90% to 95%. When patents expire, generic makers offer the products at a price much closer to the cost of production.
Pfizer Inc. will be particularly hard-hit when the patent expires as early as 2010 on Lipitor, the cholesterol-lowering blockbuster that ranks as the most successful drug ever. Pharmacists and managed-care companies will aggressively fill prescriptions with generics, reducing annual Lipitor sales to a fraction of last year's $13 billion.
By 2012, Merck & Co. will face generic competition to its three top-selling drugs: the osteoporosis treatment Fosamax, Singulair for asthma and the blood-pressure drug Cozaar. Those three represent 44% of the company's current revenue. Following the loss last year of patent protection for Merck's cholesterol-lowering Zocor, sales this year are expected to fall 82% from $4.38 billion in 2005. A Merck spokeswoman said the company has several products in the pipeline that will offset its patent losses.
The rise of generics wouldn't matter so much if research labs were creating a stream of new hits. But that isn't happening. During the five years from 2002 through 2006, the industry brought to market 43% fewer new chemical-based drugs than in the last five years of the 1990s, despite more than doubling research-and-development spending.
In October, Moody's Investors Service, which rates about $90 billion in U.S. pharmaceutical-company debt, lowered its outlook for the U.S. drug industry to negative from stable. The industry was long considered among the most credit-worthy, but in recent years, Moody's has downgraded giants Schering-Plough Corp., Merck, Bristol-Myers, Pfizer and GlaxoSmithKline PLC. In explaining its diminished outlook, Moody's said that drugs currently in development don't have as much commercial potential as earlier pipelines.
Investors, once huge beneficiaries of drug-industry success, have moved to the sidelines. As the Dow Jones World Index rose 75% in the six years ended Nov. 29, the FTSE Global Pharmaceuticals Index fell 19.8%.
While many patients are benefiting from lower-cost generics, others are waiting in vain for relief of their suffering. "In anxiety disorder, the field has imploded in terms of drug development," said P. Murali Doraiswamy, chief of biological psychiatry at Duke University medical school. "Ten years ago, we had eight or nine different" anxiety-disorder drugs under development, but that has now "come to a halt."
At last month's big American Heart Association meeting in Orlando, Fla., there were just two high-profile studies of experimental drugs on the agenda. One, for Eli Lilly's anti-blood-clotting drug prasugrel, posted results that left some doctors and analysts questioning whether the drug would be a big seller. Lilly, however, says it is "very pleased with the trial's outcome."
The other study was a postmortem on Pfizer's torcetrapib, already known as one of the industry's most costly failures, with $800 million in budgeted research costs.
"There haven't been any new therapies that are proven to reduce death and disability for atherosclerosis since the introduction of the [cholesterol-lowering] statins" in the late 1980s, said Richard C. Pasternak, vice president of Cardiovascular Clinical Research at Merck. Atherosclerosis, a buildup of arterial plaque, is a major cause of heart disease.
As patent expirations loom, pharmaceutical companies are reorganizing. In five years, many may look very different. They will be in new businesses. Their cost structures may be slimmer and more flexible. Some familiar names may disappear in mergers. Companies are installing new leaders, including outsiders like Pfizer Chairman and CEO Jeffrey Kindler, who in 2002 joined the company as general counsel from McDonald's Corp.
"The era that created the modern pharmaceutical industry is in fact over," said Richard Evans, a former Wall Street analyst and now a pharmaceutical consultant.
To be sure, the pharmaceutical industry is still highly profitable. Sales will continue to benefit from the Medicare drug benefit for the elderly and from growth in overseas markets. The industry will continue to produce new drugs, though at too slow a rate to sustain its size and cost structure, analysts assess. Some players, such as Merck, may fare better because of a more productive R&D operation, according to Sanford C. Bernstein & Co. research analyst Timothy Anderson.
It has never been easy to take a drug from the lab, through animal testing and into human trials. The industry estimates only one out of every 5,000 to 10,000 candidates makes it to human trials. And many drugs that work beautifully in animals fail miserably in people.
But those odds seem to have worsened in recent years, prompting debate about whether the cause is government regulation, corporate structure or an excessive scientific reliance on chemicals rather than biology.
Many drug-company executives blame the FDA for pulling back on approvals. "Very few products are being approved today," said Bernard Poussot, incoming chief executive of Wyeth. The heightened scrutiny contributed to delays of two Wyeth products this past summer, the company has said.
Would-be blockbusters such as Novartis AG's diabetes drug Galvus and Sanofi-Aventis's weight-loss drug rimonabant have recently been delayed by the FDA over safety concerns.
Safety concerns have also prompted the agency to require larger studies of new drugs. Novartis CEO Daniel Vasella says this trend has done more than any other to drive up the industry's R&D costs. He cites Novartis's blood-pressure drug Tekturna, approved earlier this year, which had more than 6,000 patients in its late-stage trial. A decade ago, a similar study might have had fewer than 1,000 patients, according to Dr. Vasella.
Christopher DiFrancesco, a spokesman for the FDA, said, "The number of approvals have declined because companies are submitting fewer drugs to the FDA for approval. The threshold for what we consider to be a safe, effective drug hasn't changed."
Some say the industry's ballooning research budgets may be working against productivity. Most companies use a centralized system to allocate research money, and the growing budgets have left the decision making to too few people who are too far removed from the research, suggests Mr. Evans, who worked at Roche's U.S. subsidiary until 1998, spent several years as a Wall Street analyst and is now a consultant at a health-care-consulting firm. He calls the system "a nightmare of complexity."
As evidence of this problem, some in the industry point to Pfizer, with an annual research budget that has grown to $7 billion, highest in the industry. Yet only a handful of drugs discovered in its internal research labs have come to market in the past decade. And late last year, the company lost its most promising hope when the cholesterol drug torcetrapib failed in late-stage trials.
In a statement, Pfizer said it has the largest pipeline of midstage drugs in company history and plans to triple the number of late-stage drugs in its portfolio by 2009.
A few companies, notably GlaxoSmithKline, have begun breaking R&D into smaller groups, though it is too early to gauge results.
Some believe the industry, which grew out of the European chemical business of the late 1800s, has remained too reliant on that foundation. "For all our amazing advances in the last 50 years, we are still working with the tools of the first pharmaceutical revolution...using advanced chemistry to treat disease symptoms," Mr. Taurel of Lilly said in a 2003 speech.
The future, many believe, lies in biotechnology. Unlike traditional, chemistry-based drug development, biotechnology uses biological tools to create entire proteins, often similar to those that occur in the human body. This approach has yielded successful drugs to treat diseases such as anemia, cancer and rheumatoid arthritis.
Biotech drugs are especially appealing because they face no competition from generics: No regulatory pathway yet exists in the U.S. for bringing to market generic biotech drugs. So until Congress creates such a pathway, no generic threat will exist to the $4,400 a month that Genentech Inc. charges for its cancer drug Avastin, or the $200,000 a year that Genzyme Corp. gets for Cerezyme to treat Gaucher disease. And biotechnology products tend to target specialized areas of medicine that don't require mass advertising or armies of salespeople.
So big pharmaceutical companies have spent nearly $76 billion since 2005 to buy biotech companies, according to Health Care M&A Information Service, a unit of Irving Levin Associates Inc., a Norwalk, Conn., research company. While in 2005 there were 33 deals amounting to $16.5 billion, in the first nine months of this year there were 49 deals totaling $28.7 billion, including AstraZeneca PLC's $15.6 billion acquisition of MedImmune, which followed a bidding war against Eli Lilly, among others.
Meanwhile, Novartis and Pfizer recently announced the formation of in-house biotech units.
The dearth of new products has led the industry to invest heavily in marketing and legal tactics that squeeze as much revenue as possible out of existing products. Companies have raised prices; the average price per pill has risen 63% since 2002, according to Michael Krensavage, Raymond James analyst. Companies raised advertising spending to $5.3 billion in 2006 from $2.5 billion in 2001 and since 1995 have nearly tripled the number of industry sales representatives to 100,000.
The industry spent $155 million on lobbying from January 2005 to June 2006, according to the Center for Public Integrity, on "a variety of issues ranging from protecting lucrative drug patents to keeping lower-priced Canadian drugs from being imported." The industry also successfully lobbied against allowing the federal government to negotiate Medicare drug prices, the center said. The lobbying has drawn fire from politicians, doctors and payers, and damaged the industry's public image.
Aware that seven of the top 10 drug launches of 2006 were generics, pharmaceutical giants are pushing more deeply into that business. In first nine months of this year, Novartis's generics unit, Sandoz, grew roughly three times as fast as its branded-drugs business and accounted for nearly 20% of overall revenue. "The balance is changing," says Novartis CEO Dr. Vasella. In the coming quarters, "we will continue to see a faster growth opportunity" in generics.
After Pfizer's antidepressant Zoloft went off-patent last year, the company's own generics unit, Greenstone, launched a generic version of the drug.
Johnson & Johnson has its own generics unit. Other companies cut deals with generics manufacturers, licensing them the right to sell "authorized generics" that are identical to a branded drug that has gone off-patent.
Diversification is another hope. Roche Holding AG is pursuing a $3 billion hostile takeover of Ventana Medical Systems Inc., a diagnostics company that makes the test used to determine whether women with breast cancer should receive Herceptin, a targeted biotechnology drug that Roche sells in some markets.
The bid is part of a broad push further into diagnostics by the company, which said in July that Severin Schwan, who runs the company's diagnostics unit, will take over next year as CEO.
Yet none of these moves are forestalling cost slashing. Pfizer is cutting 20% of its sales force, AstraZeneca is cutting 10% of its employees and Johnson & Johnson is shrinking its staff by 4%, according to Bernstein Research. As many as 50,000 industry positions will be displaced over the next 10 years, according to wealth-management company RegentAtlantic Capital, Chatham, N.J.
AstraZeneca, GlaxoSmithKline and Bristol-Myers Squibb have also recently suggested they will outsource at least some of their manufacturing. "There are lots of people in India, China and Eastern Europe who can make products of the same quality as ours but at significantly less cost," says Bristol-Myers Squibb CEO James Cornelius.
The outsourcing is expected to extend to research. "We don't do any basic research yet in the lower-cost countries, but over the next few years, to be successful you'll have a constant emphasis on looking for that," Mr. Cornelius says.
The coming difficulty is threatening every industry tradition. "I'm talking to you from the 44th floor of an office on Park Avenue," Mr. Cornelius says. "A year from now, I won't be talking to you from the 44th floor because we're going to move downstairs out of these very expensive offices."
--Sarah Rubenstein and Ron Winslow contributed to this article.
Read more
See Sortable Chart for drugs going off patent.
Monday, November 5, 2007
Changes ahead for Medicare drug program
By KEVIN FREKING, Associated Press Writer - Sat Nov 3, 2007
WASHINGTON - Nearly 2 million low-income Medicare participants could be switched to different insurance plans for their prescription drug coverage next year.
Millions more will have to shop around if they want to avoid double-digit increases in their monthly premiums.
The reassignment of the poorest beneficiaries and the higher premiums for many others are just two reasons why seniors and the disabled may want to look into other plans as the Medicare drug benefit enters its third year.
The shopping season officially begins Nov. 15 — the first day of an open enrollment period that continues through Dec. 31.
Advocacy groups warn the benefit's 24.5 million participants to take nothing for granted even if they're happy with their current coverage.
"Everybody needs to shop around every year," said Patricia Nemore, senior policy attorney at the Center for Medicare Advocacy. "Just because you like your plan this year doesn't mean that plan will work the same next year."
Under the drug benefit, Medicare subsidizes insurance plans that cover an enrollee's prescription drug buys. The government pays insurers extra for covering the very poor.
The plans adjust their coverage to reflect the changing marketplace. They change which drugs they will cover for safety and financial reasons. They also make adjustments to the monthly premiums they charge customers, trying to maximize demand for their product and profitability.
On average, Medicare Part D plans will charge a monthly premium of $28 in 2008, but the premiums vary widely across the nearly 1,800 plans around the country. The premiums range from $9.80 for a basic benefit to $107.50 for enhanced coverage.
About a quarter of the poorest beneficiaries don't pay any monthly premium. They will still be entitled to that extra benefit next year, but they will have to get their coverage though other plans meeting Medicare's requirements for offering coverage to low-income beneficiaries. Medicare officials sent letters this past week to nearly 2 million people to inform them that they will be moved to a new plan.
Kerry Weems, administrator for the Centers for Medicare and Medicaid Services, said those beneficiaries can opt to stay with their current coverage if they like, but would have to start paying. He anticipates that the government will make changes to the drug benefit in future years to reduce the number of people "pingponging" from insurer to insurer with each new year of coverage.
"It's not good for them," Weems said. "There's some things we could have done this year to avoid that, but it would have meant changing the business rules after companies had bid. That didn't seem like the right thing to do."
Most of the low-income beneficiaries being reassigned participate in plans offered through UnitedHealthcare and Humana, according to an analysis from Avalere Health, a consulting firm based in Washington. Two companies, Silverscript and Medco, should pick up many of the reassignments.
The poorest participants can switch their drug plans at any time, so if they get a reassignment notice from the government, they should make sure their new plan covers all their medicine, Nemore said. They can do that by consulting 1-800-Medicare, or by contacting the State Health Insurance Assistance Program, which has counselors in every state.
But it's not only the poor facing major changes, officials note. Enrollment in the drug benefit is highly concentrated, and some of the most popular plans will charge considerably higher monthly premiums next year.
For example, the most popular plan, the AARP Medicare RX Preferred Plan, will increase its monthly premium by 16 percent. Humana Inc. will increase the premium for its standard plan by 71 percent. And the AARP Medicare RX Save Plan will jump 65 percent, according to Avalere Health.
Silverscript, the ninth largest plan, lowered its monthly premium by 24 percent.
Weems said he had not seen Avalere's analysis, but he pointed out that beneficiaries have a wide array of choices and more than 90 percent of participants can move into a plan with a lower premium than they are currently paying. They just need to shop around, Weems said.
The open enrollment season lasts until Dec. 31, but officials warn beneficiaries that it's safer to make a decision sooner rather than later, if they want to be sure their new coverage is in effect when they pick up their first prescriptions in January.
While the drug benefit affects people differently depending upon their incomes, their health and where they live, the standard benefit looks like this: Participants pay the first $275 in drug costs. Then, the plan pays 75 percent of the tab until total drug costs reach $2,510. That's when beneficiaries hit the so-called doughnut hole, where they pick up all cost until they've paid $4,050 out of pocket. After that point, they only have to pay 5 percent of the tab for their medicine.
About a quarter of the plans offering the drug benefit do cover generic drugs when customers hit the doughnut hole.
___
WASHINGTON - Nearly 2 million low-income Medicare participants could be switched to different insurance plans for their prescription drug coverage next year.
Millions more will have to shop around if they want to avoid double-digit increases in their monthly premiums.
The reassignment of the poorest beneficiaries and the higher premiums for many others are just two reasons why seniors and the disabled may want to look into other plans as the Medicare drug benefit enters its third year.
The shopping season officially begins Nov. 15 — the first day of an open enrollment period that continues through Dec. 31.
Advocacy groups warn the benefit's 24.5 million participants to take nothing for granted even if they're happy with their current coverage.
"Everybody needs to shop around every year," said Patricia Nemore, senior policy attorney at the Center for Medicare Advocacy. "Just because you like your plan this year doesn't mean that plan will work the same next year."
Under the drug benefit, Medicare subsidizes insurance plans that cover an enrollee's prescription drug buys. The government pays insurers extra for covering the very poor.
The plans adjust their coverage to reflect the changing marketplace. They change which drugs they will cover for safety and financial reasons. They also make adjustments to the monthly premiums they charge customers, trying to maximize demand for their product and profitability.
On average, Medicare Part D plans will charge a monthly premium of $28 in 2008, but the premiums vary widely across the nearly 1,800 plans around the country. The premiums range from $9.80 for a basic benefit to $107.50 for enhanced coverage.
About a quarter of the poorest beneficiaries don't pay any monthly premium. They will still be entitled to that extra benefit next year, but they will have to get their coverage though other plans meeting Medicare's requirements for offering coverage to low-income beneficiaries. Medicare officials sent letters this past week to nearly 2 million people to inform them that they will be moved to a new plan.
Kerry Weems, administrator for the Centers for Medicare and Medicaid Services, said those beneficiaries can opt to stay with their current coverage if they like, but would have to start paying. He anticipates that the government will make changes to the drug benefit in future years to reduce the number of people "pingponging" from insurer to insurer with each new year of coverage.
"It's not good for them," Weems said. "There's some things we could have done this year to avoid that, but it would have meant changing the business rules after companies had bid. That didn't seem like the right thing to do."
Most of the low-income beneficiaries being reassigned participate in plans offered through UnitedHealthcare and Humana, according to an analysis from Avalere Health, a consulting firm based in Washington. Two companies, Silverscript and Medco, should pick up many of the reassignments.
The poorest participants can switch their drug plans at any time, so if they get a reassignment notice from the government, they should make sure their new plan covers all their medicine, Nemore said. They can do that by consulting 1-800-Medicare, or by contacting the State Health Insurance Assistance Program, which has counselors in every state.
But it's not only the poor facing major changes, officials note. Enrollment in the drug benefit is highly concentrated, and some of the most popular plans will charge considerably higher monthly premiums next year.
For example, the most popular plan, the AARP Medicare RX Preferred Plan, will increase its monthly premium by 16 percent. Humana Inc. will increase the premium for its standard plan by 71 percent. And the AARP Medicare RX Save Plan will jump 65 percent, according to Avalere Health.
Silverscript, the ninth largest plan, lowered its monthly premium by 24 percent.
Weems said he had not seen Avalere's analysis, but he pointed out that beneficiaries have a wide array of choices and more than 90 percent of participants can move into a plan with a lower premium than they are currently paying. They just need to shop around, Weems said.
The open enrollment season lasts until Dec. 31, but officials warn beneficiaries that it's safer to make a decision sooner rather than later, if they want to be sure their new coverage is in effect when they pick up their first prescriptions in January.
While the drug benefit affects people differently depending upon their incomes, their health and where they live, the standard benefit looks like this: Participants pay the first $275 in drug costs. Then, the plan pays 75 percent of the tab until total drug costs reach $2,510. That's when beneficiaries hit the so-called doughnut hole, where they pick up all cost until they've paid $4,050 out of pocket. After that point, they only have to pay 5 percent of the tab for their medicine.
About a quarter of the plans offering the drug benefit do cover generic drugs when customers hit the doughnut hole.
___
Saturday, November 3, 2007
CAPITAL HIGHLIGHTS: Community college health coverage restored
By Ed Sterling - Wilson County News - Oct. 31, 2007
AUSTIN — Back in June, Gov. Rick Perry used the line-item veto to kill funding passed by the Texas House and Senate that would have continued paying for health benefits of most people who work at community colleges. Perry’s veto prompted criticism from community college employees, state lawmakers, students, and students’ families who faced tuition and fee increases to make up for the loss in funding.
On Oct. 23, Perry, Lt. Gov. David Dewhurst, and Speaker Tom Craddick announced an agreement to allocate $99 million for the state’s share of health benefits, a one-time $55 million transitional payment for fiscal year 2009, and the development of an incentive funding program for community colleges.
As part of the agreement, the governor’s office said, community colleges are asked to rescind tuition, fee, or tax increases adopted for fiscal year 2008 and any tuition, fee, or tax increases under consideration for fiscal year 2009 meant to offset the original veto.
Capitol tape case
Closed-circuit security cameras record human activity in the halls of the state Capitol. Texas’ 3rd Court of Appeals heard arguments in the Texas Observer’s attempt to get access to videotape recordings of activity in the back hallway outside the House Chamber on May 23, 2005.
The Texas Observer, a biweekly investigative journal based in Austin, filed a request with the Texas Department of Public Safety (DPS) to view the tapes under the Texas Public Information Act, a law that makes most government documents available to all citizens. The Texas Observer argues that it would be in the public’s interest to release the tapes, but the DPS has consistently refused, saying that releasing them would compromise Capitol security.
What makes May 23, 2005, so interesting? It is the day Republican activist and campaign donor James Leininger of San Antonio allegedly met with lawmakers in the hallway when a vote on legislation to allow a pilot school voucher program was up for a vote. The Texas Observer wants to see if the tapes reveal interaction between Leininger and lawmakers.
Now, after many months in the legal process, the matter may take the 3rd Court of Appeals’ three-judge panel days, weeks, or months to rule on the matter.
Early voting
Registered voters can take advantage of early voting through Nov. 2.
Computer users can easily determine polling locations and hours, by going to the Secretary of State’s Web site. www.sos.state.tx.us.
Read more in the Wilson County News
AUSTIN — Back in June, Gov. Rick Perry used the line-item veto to kill funding passed by the Texas House and Senate that would have continued paying for health benefits of most people who work at community colleges. Perry’s veto prompted criticism from community college employees, state lawmakers, students, and students’ families who faced tuition and fee increases to make up for the loss in funding.
On Oct. 23, Perry, Lt. Gov. David Dewhurst, and Speaker Tom Craddick announced an agreement to allocate $99 million for the state’s share of health benefits, a one-time $55 million transitional payment for fiscal year 2009, and the development of an incentive funding program for community colleges.
As part of the agreement, the governor’s office said, community colleges are asked to rescind tuition, fee, or tax increases adopted for fiscal year 2008 and any tuition, fee, or tax increases under consideration for fiscal year 2009 meant to offset the original veto.
Capitol tape case
Closed-circuit security cameras record human activity in the halls of the state Capitol. Texas’ 3rd Court of Appeals heard arguments in the Texas Observer’s attempt to get access to videotape recordings of activity in the back hallway outside the House Chamber on May 23, 2005.
The Texas Observer, a biweekly investigative journal based in Austin, filed a request with the Texas Department of Public Safety (DPS) to view the tapes under the Texas Public Information Act, a law that makes most government documents available to all citizens. The Texas Observer argues that it would be in the public’s interest to release the tapes, but the DPS has consistently refused, saying that releasing them would compromise Capitol security.
What makes May 23, 2005, so interesting? It is the day Republican activist and campaign donor James Leininger of San Antonio allegedly met with lawmakers in the hallway when a vote on legislation to allow a pilot school voucher program was up for a vote. The Texas Observer wants to see if the tapes reveal interaction between Leininger and lawmakers.
Now, after many months in the legal process, the matter may take the 3rd Court of Appeals’ three-judge panel days, weeks, or months to rule on the matter.
Early voting
Registered voters can take advantage of early voting through Nov. 2.
Computer users can easily determine polling locations and hours, by going to the Secretary of State’s Web site. www.sos.state.tx.us.
Read more in the Wilson County News
Thursday, October 25, 2007
PPPHI's Nominee for Dumbest Move of Day: Pa. bans hormone note on milk labels
By Harold Brubaker - Philadelphia Inquirer Staff Writer - Oct. 25, 2007
The Pennsylvania Department of Agriculture is putting the kibosh on the increasingly popular milk labels that say dairy cows were not treated with artificial growth hormones.
The move surprised Wawa Inc., which just last week joined the rush of retailers and milk processors that say their milk will not be produced with the aid of artificial growth hormones, which are used to boost production.
"Early on, we've had some positive feedback," Wawa spokeswoman Lori Bruce said yesterday. "We think that consumers want to know."
Wawa's label says that the farmers it buys raw milk from have pledged not to use rBST, or recombinant bovine somatotropin. The label includes notice that the U.S. Food and Drug Administration has found no significant difference between milk from treated and untreated cows.
The state change in labeling guidelines, which blindsided many in the industry, is part of a broader effort by the Pennsylvania agriculture department to crack down on labels that highlight what is not in a product, such as "antibiotic-free" and "pesticide-free."
The department said yesterday that it had examined labels from 140 companies and notified 16 companies that they would have to correct their labels by Jan. 1. Those labels contain variations on the claim that cows were not injected with synthetic growth hormones. Three also include a "no antibiotics" claim.
Agriculture Secretary Dennis Wolff said in a news release that "antibiotic-free" and "pesticide-free" are misleading because all processed milk sold in the state is tested a minimum of 10 times for such substances, which are not permitted in milk.
The problem with the claim that cows are not treated with synthetic hormones is that there is no way to distinguish between the natural growth hormone in milk and the artificial version, Wolff said.
Advocates for sustainable agriculture favor the label regarding artificial growth hormones, especially if a more stringent verification process can be established.
"The consumer needs to be able to make a choice and needs to have the information to make a decision," said Leslie Zuck, executive director of Pennsylvania Certified Organic, a nonprofit in Centre Hall, Pa., that certifies organic farmers.
Read more in the Philadelphia Inquirer
The Pennsylvania Department of Agriculture is putting the kibosh on the increasingly popular milk labels that say dairy cows were not treated with artificial growth hormones.
The move surprised Wawa Inc., which just last week joined the rush of retailers and milk processors that say their milk will not be produced with the aid of artificial growth hormones, which are used to boost production.
"Early on, we've had some positive feedback," Wawa spokeswoman Lori Bruce said yesterday. "We think that consumers want to know."
Wawa's label says that the farmers it buys raw milk from have pledged not to use rBST, or recombinant bovine somatotropin. The label includes notice that the U.S. Food and Drug Administration has found no significant difference between milk from treated and untreated cows.
The state change in labeling guidelines, which blindsided many in the industry, is part of a broader effort by the Pennsylvania agriculture department to crack down on labels that highlight what is not in a product, such as "antibiotic-free" and "pesticide-free."
The department said yesterday that it had examined labels from 140 companies and notified 16 companies that they would have to correct their labels by Jan. 1. Those labels contain variations on the claim that cows were not injected with synthetic growth hormones. Three also include a "no antibiotics" claim.
Agriculture Secretary Dennis Wolff said in a news release that "antibiotic-free" and "pesticide-free" are misleading because all processed milk sold in the state is tested a minimum of 10 times for such substances, which are not permitted in milk.
The problem with the claim that cows are not treated with synthetic hormones is that there is no way to distinguish between the natural growth hormone in milk and the artificial version, Wolff said.
Advocates for sustainable agriculture favor the label regarding artificial growth hormones, especially if a more stringent verification process can be established.
"The consumer needs to be able to make a choice and needs to have the information to make a decision," said Leslie Zuck, executive director of Pennsylvania Certified Organic, a nonprofit in Centre Hall, Pa., that certifies organic farmers.
Read more in the Philadelphia Inquirer
Allstate profit under fire - Regulators also call reinsurance into question in debating refunds
By PURVA PATEL - Copyright 2007 Houston Chronicle - Oct. 25, 2007
Allstate Texas Lloyds factored in excessive profits and costs into its latest rate increase imposed on Texas homeowners, regulators allege in an order demanding refunds.
Those are just two on a list of concerns the Texas Department of Insurance has with the way the company justifies its rates.
But for the state's insurance consumer advocate, they are the two most significant — the company's targeted profit and cost of reinsurance, or the coverage it buys to help pay for claims after a catastrophe.
In August, Allstate implemented a flat 5.9 percent increase statewide and an additional average 2.1 percent bump for homeowners in some coastal and near-coastal counties upon renewal.
Regulators then issued an order halting the hike, but Allstate obtained a judge's ruling blocking the state from preventing the increase.
Allstate is preparing to fight the refund order at an administrative law judge hearing scheduled for Dec. 3 in Austin.
"We are confident in the number, and we believe it puts us in a good place and a responsible place for our customers," said Bill Mellander, a spokesman for the insurer. "We would not have implemented these rates if we didn't believe them to be justified, competitive and strong from a consumer perspective."
A spokesman for the department declined to comment on the refund order's specifics.
"We look forward to debating the merits of the rates themselves," said Jerry Hagins, a spokesman for the department.
Various costs
The Insurance Department examines how a company factors various costs and potential profits into its rates to determine if the rates are justified.
One of the more significant factors mentioned in the refund order is Allstate's profit provision, or how much of its collected premiums the company hopes to have left over after paying out losses and expenses, said Rod Bordelon, head of the Office of Public Insurance Counsel, who represents consumers at rate hearings.
The company has a target of 10.4 percent.
"In our view it's grossly too high," Bordelon said.
His office hasn't determined exactly what it should be, he said, but will after it gets more information from the company. He says it's the highest profit provision he's ever seen a Texas home insurer use.
Bordelon notes that profit targets are subjective and companies that take on more risk may expect more of a profit.
"Homeowners is fairly risky, but it doesn't result in huge differences among companies," he said, adding that Allstate has some exposure to risky parts of Texas but is also spread out all over the state and has cut back coverage in some areas, which mitigates some of the riskiness in their business.
Mellander said 10.4 percent is not unusual. He declined to say if this is the first time Allstate has used a profit provision of more than 10 percent for homeowners insurance in Texas.
"Define reasonable," he said. "It's frustrating to see anyone out there making these blanket statements. Well, what's a reasonable profit and what qualifies them to say it's reasonable?"
He also said that if Allstate hadn't pulled back on some of the coverage it offers in Texas, its rates would potentially be even higher.
Balancing act
Insurance companies, especially those that are public, have to play a delicate balancing act, said Craig Weber, a senior analyst with consulting company Celent. Allstate Texas Lloyds is subsidiary of its parent, Allstate Corp.
"I'm sure if I'm an Allstate shareholder, I'm anxious for them to be profitable and keep the stock price healthy," Weber said. "As an Allstate customer, I would want them to keep the rates affordable. They serve many masters."
Allstate Texas Lloyds has about 600,000 home policyholders in Texas and collected $719 million in premiums in 2006.
Reinsurance questioned
Regulators also claim Allstate's estimate of its net cost of reinsurance is too high. The net cost is the actual cost of the coverage, $82.4 million, minus the amount it expects to recover from a reinsurer after a catastrophe, $38.4 million, according to the company's filing.
That cost is usually passed on to consumers as part of their insurance rates.
In the refund order, regulators also note concerns raised by Bordelon's office, such as whether Allstate needs reinsurance, or so much, since the company has reduced its exposure and whether consumers should have to bear the costs for the reinsurance at all.
Allstate stopped writing new homeowners business in some Texas coastal areas in March 2006 and later stopped renewing windstorm coverage for policyholders along the coast.
Allstate says its estimate net cost of reinsurance of $44 million is accurate and that it doesn't pass on all the costs of the coverage to consumers. Mellander declined to say what percent of the cost the company retains.
Without reinsurance, the company's rates could be higher, he said.
"It allows us to assume a little more risk, take on a little more coverage, and it allows us to manage the costs passed on to consumers," he said.
Allstate Texas Lloyds factored in excessive profits and costs into its latest rate increase imposed on Texas homeowners, regulators allege in an order demanding refunds.
Those are just two on a list of concerns the Texas Department of Insurance has with the way the company justifies its rates.
But for the state's insurance consumer advocate, they are the two most significant — the company's targeted profit and cost of reinsurance, or the coverage it buys to help pay for claims after a catastrophe.
In August, Allstate implemented a flat 5.9 percent increase statewide and an additional average 2.1 percent bump for homeowners in some coastal and near-coastal counties upon renewal.
Regulators then issued an order halting the hike, but Allstate obtained a judge's ruling blocking the state from preventing the increase.
Allstate is preparing to fight the refund order at an administrative law judge hearing scheduled for Dec. 3 in Austin.
"We are confident in the number, and we believe it puts us in a good place and a responsible place for our customers," said Bill Mellander, a spokesman for the insurer. "We would not have implemented these rates if we didn't believe them to be justified, competitive and strong from a consumer perspective."
A spokesman for the department declined to comment on the refund order's specifics.
"We look forward to debating the merits of the rates themselves," said Jerry Hagins, a spokesman for the department.
Various costs
The Insurance Department examines how a company factors various costs and potential profits into its rates to determine if the rates are justified.
One of the more significant factors mentioned in the refund order is Allstate's profit provision, or how much of its collected premiums the company hopes to have left over after paying out losses and expenses, said Rod Bordelon, head of the Office of Public Insurance Counsel, who represents consumers at rate hearings.
The company has a target of 10.4 percent.
"In our view it's grossly too high," Bordelon said.
His office hasn't determined exactly what it should be, he said, but will after it gets more information from the company. He says it's the highest profit provision he's ever seen a Texas home insurer use.
Bordelon notes that profit targets are subjective and companies that take on more risk may expect more of a profit.
"Homeowners is fairly risky, but it doesn't result in huge differences among companies," he said, adding that Allstate has some exposure to risky parts of Texas but is also spread out all over the state and has cut back coverage in some areas, which mitigates some of the riskiness in their business.
Mellander said 10.4 percent is not unusual. He declined to say if this is the first time Allstate has used a profit provision of more than 10 percent for homeowners insurance in Texas.
"Define reasonable," he said. "It's frustrating to see anyone out there making these blanket statements. Well, what's a reasonable profit and what qualifies them to say it's reasonable?"
He also said that if Allstate hadn't pulled back on some of the coverage it offers in Texas, its rates would potentially be even higher.
Balancing act
Insurance companies, especially those that are public, have to play a delicate balancing act, said Craig Weber, a senior analyst with consulting company Celent. Allstate Texas Lloyds is subsidiary of its parent, Allstate Corp.
"I'm sure if I'm an Allstate shareholder, I'm anxious for them to be profitable and keep the stock price healthy," Weber said. "As an Allstate customer, I would want them to keep the rates affordable. They serve many masters."
Allstate Texas Lloyds has about 600,000 home policyholders in Texas and collected $719 million in premiums in 2006.
Reinsurance questioned
Regulators also claim Allstate's estimate of its net cost of reinsurance is too high. The net cost is the actual cost of the coverage, $82.4 million, minus the amount it expects to recover from a reinsurer after a catastrophe, $38.4 million, according to the company's filing.
That cost is usually passed on to consumers as part of their insurance rates.
In the refund order, regulators also note concerns raised by Bordelon's office, such as whether Allstate needs reinsurance, or so much, since the company has reduced its exposure and whether consumers should have to bear the costs for the reinsurance at all.
Allstate stopped writing new homeowners business in some Texas coastal areas in March 2006 and later stopped renewing windstorm coverage for policyholders along the coast.
Allstate says its estimate net cost of reinsurance of $44 million is accurate and that it doesn't pass on all the costs of the coverage to consumers. Mellander declined to say what percent of the cost the company retains.
Without reinsurance, the company's rates could be higher, he said.
"It allows us to assume a little more risk, take on a little more coverage, and it allows us to manage the costs passed on to consumers," he said.
Wednesday, October 24, 2007
Court upholds Allstate homeowner insurance increase - State's attempt to roll back 5.9% rate hike is rejected
By Texas Watch - Oct. 18,2007
State's attempt to roll back 5.9% rate hike is rejected Court upholds Allstate homeowner insurance increase
By CHRISTY HOPPE - The Dallas Morning News - Oct. 18, 2007
AUSTIN – Allstate Insurance can continue to charge a 5.9 percent rate increase that it imposed on homeowner policies in August after a court threw out the state's attempt to roll back the increase.
Allstate maintained that its rate increase followed state law and that the Texas Department of Insurance acted improperly in trying to nullify it. A state district judge in Travis County agreed and issued an order Monday evening.
Bill Mellander, a spokesman for Allstate, said the insurer had been certain the judge would affirm that the increase was implemented correctly.
"We are equally as confident that the rate itself is competitive, justified and, more importantly, that it is attractive and good for the consumer," Mr. Mellander said.
Insurance Department spokesman Jerry Hagins said the agency is disappointed in the judge's ruling but stands by its decision that the new rate is excessive. The agency will continue to pursue an order requiring Allstate to roll back its rates and give refunds to customers.
At issue is the state's "file and use" law, which largely has unregulated insurance rates. As envisioned by lawmakers, insurance companies can file notice of new rates with the state insurance agency but don't have to wait for the regulatory process before using the new charges.
If the state found the new rates to be excessive, the insurance agency could order them rolled back and the insurer would reimburse its policyholders.
In Allstate's case, the company already is in court over a 2004 rate hike, fighting the state's contention that it overcharged its policyholders $56 million and owes them a refund.
When it filed the rate hike in August, the charges took effect immediately, but the state fought the increase, saying it disapproved of the new amount. The judge said Allstate followed the law.
"This says that the file-and-use system is broken," said Alex Winslow, executive director of Texas Watch, a consumer-advocacy group.
He said that if history is a guide, the state will again find new rates excessive and Allstate will go to court and fight any refunds.
"I don't think Allstate policyholders should be holding their breath," Mr. Winslow said.
The state's largest home insurer, State Farm, has been fighting a customer refund in the courts since 2003.
With the rate hikes effective immediately, the state has to play catch-up to determine whether the rate is unjustified.
"The bottom line is that Allstate is driving a huge truck through a loophole in the law, and I have no doubt that other insurance companies are cranking up their engines as we speak," Mr. Winslow said.
Staff writer Karen Brooks contributed to this report.
Read more in the Dallas Morning News
Travis County District Judge Margaret Cooper has ruled that a loophole in state law allows Allstate to continue charging its policyholders a rate that the insurance department deems excessive. Texas Watch points to this as an example of how Texas's current system of insurance industry oversight is broken and is calling on lawmakers to give the insurance commissioner the authority to approve rates before - not after - they are imposed on Texas homeowners.
State's attempt to roll back 5.9% rate hike is rejected Court upholds Allstate homeowner insurance increase
By CHRISTY HOPPE - The Dallas Morning News - Oct. 18, 2007
AUSTIN – Allstate Insurance can continue to charge a 5.9 percent rate increase that it imposed on homeowner policies in August after a court threw out the state's attempt to roll back the increase.
Allstate maintained that its rate increase followed state law and that the Texas Department of Insurance acted improperly in trying to nullify it. A state district judge in Travis County agreed and issued an order Monday evening.
Bill Mellander, a spokesman for Allstate, said the insurer had been certain the judge would affirm that the increase was implemented correctly.
"We are equally as confident that the rate itself is competitive, justified and, more importantly, that it is attractive and good for the consumer," Mr. Mellander said.
Insurance Department spokesman Jerry Hagins said the agency is disappointed in the judge's ruling but stands by its decision that the new rate is excessive. The agency will continue to pursue an order requiring Allstate to roll back its rates and give refunds to customers.
At issue is the state's "file and use" law, which largely has unregulated insurance rates. As envisioned by lawmakers, insurance companies can file notice of new rates with the state insurance agency but don't have to wait for the regulatory process before using the new charges.
If the state found the new rates to be excessive, the insurance agency could order them rolled back and the insurer would reimburse its policyholders.
In Allstate's case, the company already is in court over a 2004 rate hike, fighting the state's contention that it overcharged its policyholders $56 million and owes them a refund.
When it filed the rate hike in August, the charges took effect immediately, but the state fought the increase, saying it disapproved of the new amount. The judge said Allstate followed the law.
"This says that the file-and-use system is broken," said Alex Winslow, executive director of Texas Watch, a consumer-advocacy group.
He said that if history is a guide, the state will again find new rates excessive and Allstate will go to court and fight any refunds.
"I don't think Allstate policyholders should be holding their breath," Mr. Winslow said.
The state's largest home insurer, State Farm, has been fighting a customer refund in the courts since 2003.
With the rate hikes effective immediately, the state has to play catch-up to determine whether the rate is unjustified.
"The bottom line is that Allstate is driving a huge truck through a loophole in the law, and I have no doubt that other insurance companies are cranking up their engines as we speak," Mr. Winslow said.
Staff writer Karen Brooks contributed to this report.
Read more in the Dallas Morning News
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