Clip file / Local news from the states Each month, this page features selected short items about state health-care policy digested from newspapers around the country. California legislators say Healthy Families contract creates conflict-of-interest for administrator SACRAMENTO, CA—California’s contract with Wellpoint Health Networks, Inc. for administering its new Healthy Families program creates "an unacceptable conflict of interest," according to four California congressmen. Two of the congressmen, Bob Matsui, (D-Sacramento), and Rep. Pete Stark (D-Hayward), recently asked the Health Care Financing Administration (HCFA) to block the contract. Wellpoint’s dual role as an administrator of the program and a provider "could lead to some self-dealing," Rep. Matsui said. "All parties may start to act in good faith, but the real problem is you can’t control employee behavior. There obviously will be some cases where bias will be shown." Cynthia Coulter, a spokeswoman for Wellpoint, said the contract contains several provisions to ensure that the company does not benefit from its dual role. These include an independent audit and the monitoring of telephone calls with potential customers. She added that Wellpoint has played both roles in other state contracts. Rep. Matsui said if HCFA does not reject the contract, he is prepared to file a lawsuit to invalidate it. Sacramento Bee, March 5, 1998 Pharmacy retailers drop pharmaceutical mailings after outcry over confidentiality concerns BOSTON—CVS Corp. and Giant Food Inc. of Landover, Md. promised to suspend mailings of pharmaceutical literature to their customers after the Washington Post published a report about the practice and the companies received a flood of complaints. While the two retailers did not supply customer information to pharmaceutical companies, they did give customer data to a Massachusetts firm called Elensys, Inc. which sends out mailings in order to improve drug compliance or to introduce customers to new drug products. Giant and CVS officials defended their programs, saying customers benefit from the reminders to refill prescriptions and the information from drug manufacturers. However, pharmacy regulators say the practice may violate confidentiality rules governing the release of medical information. CVS signed on with Elensys in September to track customers who take a heart medication called Posicore. Giant was using the company to send customers information about hay fever. The mailings are part of a move by drug manufacturers and pharmacies to make greater use of medical information, new technology and sophisticated marketing to sell more drugs. Rather than promoting medications to doctors, companies are increasingly going directly to patients. One Virginia legislator has introduced a bill that would strengthen rules prohibiting pharmacists from releasing prescription data. James M. Jeffords (R-VT) also delayed introduction of a final version of legislation on medical privacy protections, citing the report about CVS and Giant Food. Rep. Jeffords said he wanted to make sure the bill addressed the selling of medical information. Washington Post, Feb, 15, 1998 and Boston Globe, Feb. 19, 1998 Massachusetts will use number identifiers rather than names in HIV reporting system BOSTON—For the first time, Massachusetts health care providers will soon have to report all cases of HIV infection to the state. But Massachusetts, unlike most other states with HIV reporting systems, will use identifier numbers rather than names. Maryland and Texas are the only other states using identifier numbers rather than names. California and New York, states with some of the biggest numbers of HIV and AIDS cases, are in the midst of a name vs. number debate. Massachusetts’ policy would go into effect after the state develops a reporting system, perhaps using a combination of several digits from a person’s Social Security number, date of birth, and some other coded demographic information. Some AIDS activists have long objected to HIV reporting, either by name or number. The importance of taking new drug treatments early in the infection has led many of them to change their minds. Other activists, particularly from minority communities, support HIV reporting so that public health officials can respond more quickly to the epidemic. Boston Globe, Feb. 24, 1998 New York could use surplus to reduce premiums for individual policyholders facing big hikes ALBANY, NY—New York plans to use the surplus from two pools funded by the insurance industry to keep insurance premiums from skyrocketing for individual policyholders. Empire Blue Cross and Blue Shield and Oxford Health Plans, which cover many individual policyholders, have requested a 46% increase and a 69% increase in their rates, respectively. Eighteen health maintenance organizations recently requested and were granted permission to increase the rates they charge so-called "direct-pay" customers. On a one-time basis, Gov. George Pataki has proposed using nearly $100 million to help bring down anticipated increases. Empire claims to have lost $300 million on individual policies from 1988 to 1997 and Oxford lost $17 million in 1997. Empire’s president, Dr. Michael Stocker, said individual policyholders require hospitalizations twice as often as members of commercial plans. The governor said he would work toward finding a long-term solution for the rapidly escalating cost of individual policies. The Record, Hackensack, NJ, Feb. 17, 1998, New York Times, Feb. 16, 1998 and Times Union, Albany, NY, Feb. 18, 1998 Two behavioral health contractors owe $40 million to five Tennessee mental health institutes NASHVILLE—Tennessee’s five state-operated regional mental health institutes are owed back claims of $40 million by the two behavioral health contractors managing the state’s mental health program. A special report by the Comptroller’s Office and the Department of Commerce and Insurance found that one of the contractors, Tennessee Behavioral Health (TBH), has refused to process any claims from the state’s mental health institutes since last July. The report also verified the complaints of private mental health providers who say they’re often paid late or not at all. While acknowledging that the state’s billing system is flawed, acting Mental Health Commissioner Ben Dishman said TBH is "in violation of the contract big-time." The special report, which reviewed TBH billing and claims processes, showed that the company has wrongly denied 28% of its claims from mental health providers. The state pays the two contractors $27 million a month minus a 10% penalty for their violations of the contract. Because Premier Behavioral Systems has about 60% of the enrollees, the money is split 60-40 between the two companies. The Commercial Appeal, Memphis, TN, Feb. 12, Feb. 15, 1998 Minnesota plans cover tobacco cessation treatment ST. PAUL, MN—Blue Cross Blue Shield of Minnesota is the third insurer in the Twin Cities to announce in the last few months that it will now cover prescription smoking cessation treatments. Medica was the first to announce in December that it will pay for the treatments and HealthPartners plans to begin offering the coverage this summer. This means that three health insurers covering 80% of Minnesota residents will offer nicotine patches, gum and the anti-depressant Zyban. The insurers’ cost estimates for providing the new benefit vary widely. Blue Cross, which is suing tobacco companies along with the state to recover medical costs attributable to smoking, projects its annual costs for the benefit will be $11.2 million annually. Medica said it expects to spend about $500,000 for the 120,000 to 140,000 members likely to take advantage of it. Minnesota’s Veterans’ Administration says it spent $152,000 in 1997 on nicotine patches and gums to treat a small percentage of its patients who smoke. The VA said about 18% of its 45,000 outpatients smoke. St. Paul Pioneer Press, Feb. 19, 1998 OxfordHealth leaving some Medicaid programs NORWALK, CONN—Oxford Health Plans, Inc. has told New Jersey and Connecticut state officials it will no longer participate in their Medicaid programs. The company said it hasn’t decided whether it will stay in the New York program. Oxford will stay with Pennsylvania’s state Medicaid program. However, it will hand over management of the operation to another firm, Minneapolis-based Health Risk Management Inc. The company’s stock has plunged as a result of rising medical costs and highly publicized problems with paying its bills. In December, Oxford said it was thinking about quitting government health programs for the poor and focusing on more profitable lines of business. Getting out of Medicaid programs "is something you can do easily" to improve the financial situation, said Robert Hoehn, an analyst at Furman Selz LLC. Oxford has 40,000 members in New Jersey’s Medicaid program and 33,000 members in Connecticut’s program. The company has 67,500 members in Pennsylvania’s Medicaid program and 42,000 in New York’s program. Chicago Tribune, Feb. 28. 1998 FL lawyers sue over compensation for tobacco suit TALLAHASSEE, FL—Lawyers who helped Florida sue tobacco companies and win an $11.3 billion settlement are now suing the state over the fees they will collect. Under the settlement between the state and the tobacco companies, the lawyers are to be paid "reasonable" fees to be determined by an arbitration panel, instead of the 25% contingent that had been agreed to previously. Bob Montgomery, the lawyer filing the suit on behalf of the state’s so-called Dream Team, claims the state and tobacco companies conspired to keep the lawyers’ fees down . Attorney General Bob Butterworth said lawyers would be better off under the settlement than under the contingency fee because that was only supposed to apply to a small portion of the settlement, about $1.3 billion. The contingency fee only applies to Medicaid reimbursements because that’s what the lawyers were hired to pursue. Sun Sentinel, Fort Lauderdale, FL, Feb. 18, 1998 Arizona PHO folds after seven years in operation PHOENIX—After struggling for nine months to put the 600-member St. Joseph’s Physician Hospital Organization (PHO) back on track, the board of the seven-year-old organization announced the PHO will officially close in May. The PHO will only be able to pay claims from medical providers at a rate of 50 cents on the dollar after Feb. 1. About a dozen or so managed care companies will have to make other arrangements for the care of 23,000 plan members who are being treated by the St. Joseph network. Physician members and owners of the PHO also must negotiate new contracts with insurers, either individually or through newly formed independent practice associations. St. Joseph’s PHO was organized in 1992 so that local providers could more effectively negotiate with managed care companies. As managed care plans became a bigger force in the health care industry, the PHO was forced to negotiate lower and lower rates for its services. With more seniors moving into managed care from traditional Medicare, the PHO had to provide more complex care for the same fees. To try to stem the PHO’s losses, the board hired a new medical director and a third-party administrator in June. The St. Joseph’s physicians group is not the only physicians’ health organization in the Phoenix area that has had problems. Late last year the 330-member Arrowhead Physicians Alliance at Baptist Hospitals and Health Systems’ Arrowhead Community Hospital disbanded. About the same time, the 220-member PHO at Chandler Regional Hospital scrapped its internal management and affiliated with Medpartners of Birmingham, Ala., the largest publicly held practice management firm. Arizona Republic, Feb. 19, 1998