Senate Majority Leader Harry Reid (D-NV) is pushing to repeal health insurance and medical malpractice insurance companies' antitrust exemption, which is part of the McCarran-Ferguson Act.
As a co-sponsor of a bill (S. 1681) to repeal the 1945 law, Reid appeared as a witness at a hearing on the legislation before the Senate Judiciary Committee Wednesday.
"There is no reason why insurance companies should be allowed to form monopolies and dictate health choices," Reid told the panel chaired by Sen. Patrick Leahy (D-VT), who is the author of the bill. "[Insurers] should be subject to the same federal oversight as every other industry. Their price setting and information sharing practices should not be permitted to take place out of public view, but should be brought out into the light of day." he added.
Reid angrily veered from his prepared testimony at times to sharply criticize recent health insurance industry activities. In particular, he cited the "barrage of advertisements" being run by insurers this week in half a dozen states criticizing cuts in Medicare Advantage plans that is proposed in the Senate Finance Committee healthcare reform bill.
The ads were an attempt by the industry to "prevent a healthcare bill from passing," he said. "They really are desirous of continuing their monopoly in America today. There isn't anything we could do to satisfy them in the reform bill. Nothing. They are so anti-competitive . . . they make more money than any other business in America."
Reid took no questions from his fellow senators. However, his response to the issue revealed how he was reacting to recent actions this week--such as an America's Health Insurance Plans (AHIP) study that said health reform legislation would raise healthcare costs far higher than predicted.
Sen. Charles Schumer (D-NY), a member of both the Senate Finance and Judiciary committees, followed the tone of Reid in a statement--calling the health insurance's antitrust exemption "one of the worst accidents of American history." Schumer implied that he might include an amendment to the Senate reform bill that would call for revoking the industry's antitrust exemption as well.
Christine Varney, the assistant attorney general in the Justice Department's Antitrust Division, said at the hearing that Justice "generally supports the idea of repealing antitrust exemptions."
"However, we take no position as to how and when Congress should address this issue," she said. In conjunction with the Obama Administration's efforts "to strengthen insurance regulation and states' role in setting and enforcing policies," the Department supports efforts "to bring more competition to the health insurance marketplace that lower costs, expand choice, and improve quality for families, businesses, and government."
Varney said that years ago, a view existed that "you had to share risk and loss data over time to come up with future projections." However, "I don't think the reasons that were in existence in 1945 are still very viable to justify this existence [today]."
Senate Judiciary Committee member Orrin Hatch (R-UT) disagreed about overturning McCarran-Ferguson at the current time. "I remain open to considering any reform measures that promote competition in the insurance sector." However, he said he has seen little evidence "to justify a complete repeal" of insurance antitrust exemptions.
He added that for small insurers and independent agents, being able to share data was critical for their businesses' existence. In addition, limited collaboration among larger insurers could mean "lower prices for consumers."
The Senate bill has a companion bill (HR 3596) in the House that was introduced by Rep. John Conyers (D-MI), chairman of the House Judiciary Committee.
AHIP President and CEO Karen Ignagni had written earlier to the House committee that McCarran Ferguson "does not preclude regulation of insurers, but, instead recognizes that the states play a central role in conducting oversight of health and other insurers." In the real scheme of things, "health insurance is one of the most significantly regulated areas of the economy," Ignagni said.
California Gov. Arnold Schwarzenegger is illegally exacerbating an "imminent crisis in healthcare" because forced worker furloughs are delaying the state Medical Board's approval of applications from 7,200 new doctors, says a lawsuit filed by the California Medical Association.
Most of the doctors are fresh out of residency training and ready to go.
"By raiding the special fund that supports the Medical Board, and by imposing debilitating furloughs on its staff, the state is obstructing the Medical Board from ensuring that more duly licensed physicians can deliver health care to Californians," according to the CMA lawsuit. The documents were filed Wednesday in San Francisco Superior Court. The applications, the lawsuit claims, are "mired in the backlog."
"This policy is ultimately harming the public and exacerbating the shortage of physicians in California," says Long Do, CMA's director of litigation. "Now, a review of a doctor who wants to practice takes 5.5 months—three times longer than required by law," he says.
Additionally, CMA officials are concerned that the furloughs are delaying malpractice investigations, which is keeping the board from "discharging its mandate to protect the public through its investigatory and disciplinary responsibilities." Since only 17% of disciplinary investigations result in an public accusation, the cloud over the remaining 83% of the accused physicians' practices is allowed to unnecessarily persist, Do says.
Until the malpractice issue is resolved, doctors under investigation must disclose the issues to their medical groups, hospitals, and health plans—and may even lose privileges at a practice or hospital in the interim.
Schwarzenegger spokeswoman Rachel Arrezola says the governor is doing everything possible "to deal with California's $60 billion deficit over the last year." She says he disagrees with the legal challenge to his authority to order furloughs of fee-based agencies, adding he's entitled to do it "when there's a fiscal crisis."
"It's important to keep in mind that in this tough economy, just as every family and business is forced to cut back, the governor believes state government ought to do the same," says Arrezola.
Although furloughs have been ordered for nearly all state workers, the CMA thinks it has a great case. That's because the Medical Board's 263-person staff is entirely funded not from the state general fund, but by license fees of about $800, which the state's 125,000 doctors are required to pay every two years. Other agencies funded exclusively by license fees are also on forced furlough, and there has been discussion among some that they too should be excluded.
With furloughs of three days a month, money that would have paid Medical Board staff salaries for about 5,100 hours a month, is instead covering state operating costs.
Though the furloughs have the intent of saving state money, it is not the state's money to save, the CMA says. The law "unequivocally" prohibits the state from raiding Medical Board funds, according to the lawsuit.
In effect, Do says, the state is forcefully borrowing money the doctors paid to certify them to practice and weed out bad apples. Now those 7,200 doctors wait in limbo. And bad doctors continue to practice.
Laura Howard, MD, is one new physician eager to launch her medical career. An ophthalmologist who completed her residency at the University of Arizona in June, she filed her paperwork with the Medical Board a month earlier, and now waits to start work with Kings Eye Center in Hanford, an underserved rural farm community with a severe shortage of doctors in the Central Valley.
The area also has high numbers of diabetes patients who need retinopathy care, and where patients wait three months to see an eye doctor.
"The Medical Board's continuing delay in processing my license application is having an impact on my ability to practice medicine in California," she says. "Had my application been approved, I would not only be practicing already but also generating income."
This is not the first time the state has borrowed money from Medical Board licensing fees. Last year, the governor approved a budget transfer that moved $6 million from the board's contingent fund to the state's general fund.
That transfer deprived the board of funds that were collected under the Medical Practice Act and which are statutorily dedicated for use by the board to carry out its duties, according to the lawsuit. Although labeled "a loan," Do says, that $6 million has not been repaid.
New guidance from the federal Centers for Disease Control and Prevention that all healthcare workers who come in contact with patients suspected of having H1N1 wear N95 respirators is being met with dismay by providers who specialize in infection control.
"Our position was and continues to be that N95s are neither necessary nor practical in protecting healthcare workers and patients against H1N1," says Mark Rupp, MD, president of the Society for Healthcare Epidemiology of America (SHEA).
Not only are the masks ill-suited for this virus, Rupp says, they are in short supply. And if they are used for every provider's contact with a suspected H1N1patient, "they won't be available when they are really needed."
That would be on those occasions when a provider must perform a bronchoscopy, open suction of an airway, CPR, resuscitation or other activities "where there is a much higher risk of aerosol spread."
"It is, quite frankly, a policy that is too broad, too impractical and unnecessary, and will potentially have untoward consequences," he predicts.
What he expects will happen now is that "understandably, some healthcare workers might circumvent the policy by wearing the masks improperly or not at all. Or they might avoid situations where they care for people with H1N1 illness or they may abbreviate their care. The masks are not easy or comfortable to wear for very long periods of time."
Rupp says the policy was influenced by "some folks who are poorly informed or motivated. And some people who are putting pressure through the political system for the CDC to make this decision feel that N95 masks will genuinely offer greater protection. But that doesn't seem to be the case."
Clinical data, Rupp says, shows "no difference between N95 respirators and surgical masks in normal clinical situations."
He says, "Some of the groups that are the most vocal in demanding the use of N95 are the same ones that are vociferously opposed to vaccination. It doesn't add up."
Rupp, of the University of Nebraska Medical Center, emphasizes that health policymakers should focus less on N95 masks and much more on "robust programs that get people who do have symptoms out of the emergency department waiting rooms, get them away from where they can contaminate others."
"We need to be putting in place programs that emphasize the importance of respiratory etiquette, 'Cover Your Cough.' And we need to ask patients who do cough to put on masks to contain secretions, and put policies in place to exclude sick workers and visitors from the hospital."
Unfortunately, he says, "The debate over respirators versus surgical masks has distracted hospitals and clinics from investing in efforts that we know will pay off."
In a settlement announced Wednesday, the Federal Trade Commission (FTC) said it has resolved its ongoing investigation of Pfizer's proposed $68 billion acquisition of Wyeth and concluded that the transaction does not raise anticompetitive concerns in any human health product markets.
However, to "preserve competition in multiple American markets" for animal pharmaceuticals and vaccines, "significant divestitures" need to take place, the FTC said.
Currently, Pfizer is the largest prescription pharmaceutical company in both the United States and the world, with $48.4 billion in worldwide revenues for 2008. Pfizer also researches and develops new pharmaceutical products. At the end of 2008, Pfizer had 114 products in various stages of clinical development, according to an FTC statement.
Wyeth's worldwide annual revenue totaled about $22.2 billion in 2008—$16.8 billion of which was from pharmaceutical and biological sales, according to the FTC.
In its investigation, the FTC stated that they evaluated numerous potential overlaps where the companies could compete against each other, "either now or in the future." In particular, the investigation included analysis of four markets—treatments for renal cell carcinoma, Methicillin resistant Staphylococcus aureus (MRSA) infections, osteoporosis, and Alzheimer's disease. The FTC said the evidence demonstrates that it will not "undermine competition" in those markets.
Also, the FTC staff evaluated whether the acquisition could change the negotiating power between Pfizer and its customers. At issue was whether consumers could be harmed through "unlawful tying, bundling, or exclusive dealing" by Pfizer. "After careful investigation, though, we conclude that the transaction is not likely to affect competition in this market" and that the companies' products "are unlikely to be close competitors," FTC said.
Prescription pharmaceutical customers, such as insurance companies, set up bid processes for purchasing pharmaceutical products on a product by product—or category by category—basis. They have generally resisted efforts by larger pharmaceutical companies to bundle their products across categories, unless the bundle is in the customer's "best interest." The FTC said it found no evidence that customers' ability to prevent anticompetitive bundling were undermined.
Healthways, Inc., the Nashville-based population health management company, announced Wednesday that it has purchased HealthHonors, a behavioral economic company based in Braintree, MA, for $14.7 million.
"Just as Healthways has led the industry in applying behavior change science, now we will lead the market in offering scientifically based incentive programs," says Ben R. Leedle, Jr., Healthways' CEO. "Integration of HealthHonors' innovative incentive strategy will boost our overall engagement and adherence to clinical and behavioral regimens."
The purchase price includes an upfront cash payment of $14.7 million and a multi-year earn-out arrangement. Although the financial impact of the acquisition is expected to be a net cost of $0.02 per diluted share in Healthways' fourth quarter of 2009, the company's previously provided full-year earnings guidance remains unchanged, according to Healthways.
In a media release, Healthways said the acquisition was spurred by its interest in HealthHonors' so-called Dynamic Intermittent Reinforcement proprietary software that determines the lowest economic reinforcement necessary for an individual, based on behavioral patterns, to maintain healthy behavior. HealthHonors has been able to show, in trial and commercial environments, a range of 33% to 56% increase in sustained adherence to targeted behaviors, while decreasing incentive budgets.
"HealthHonors' technology was developed by physician-scientists to help people achieve their best health," says John Sheehan, president/CEO of HealthHonors. "By integrating our strong science, knowledge, and technology infrastructure with Healthways' solutions, we will be able to scale to millions of people."
Sheehan says HealthHonors will continue to sell, service, and expand its business with drug makers and others to improve medication adherence and compliance.
As the White House and Congressional leaders turned to working out big differences in the five healthcare bills, perhaps no issue loomed as a greater obstacle than whether to establish a government-run competitor to the insurance industry, the New York Times reports. One day after the Senate Finance Committee approved a measure without a public option, the question on Capitol Hill was how President Obama could reconcile the deep divisions within his party on the issue.
A delegation of senior White House officials met at the Capitol with the Senate majority leader and the chairmen of the Finance and health committees as Democrats turned their full attention to merging competing versions of the comprehensive healthcare legislation. The Democrats must negotiate sharp disagreements between the liberal and centrist members of their party while also trying to hold the support of Senator Olympia J. Snowe of Maine, the one Republican so far to support the legislation.
Republican Sen. Susan Collins signaled a willingness to work with Democrats on healthcare legislation, adding momentum to President Barack Obama's push for a bill despite a move by Republican leaders to slow down the debate. Collins's fellow senator from Maine, Olympia Snowe, became the first Republican lawmaker to back a Democrat-led health bill with a "yes" vote in the Finance Committee. Collins said she would "work with members on both sides of the aisle" to craft bipartisan legislation.
Days after the insurance lobby began an aggressive campaign against a Senate plan to overhaul the nation's healthcare system, senior Democrats threatened to revoke the industry's long-standing antitrust exemption. Health insurance is one of only a few industries exempted from certain federal antitrust regulations, and Sen. Charles E. Schumer (D-NY) said the exemption was "one of the worst accidents of American history. It deserves a lot of the blame for the huge rise in premiums that has made health insurance so unaffordable."
Seniors across the country revel in the free perks that private insurance companies bundle with legally mandated benefits to entice people 65 and older to forgo traditional Medicare and sign up for private Medicare Advantage policies. But the extra benefits are not exactly free; they are subsidized by the government. And some of the plans pass their costs on to seniors, who pay higher co-pays and additional fees to get care, reports the Washington Post.
