SZD Health Law Scan : Health Care Lawyers & Attorneys : Schottenstein Zox & Dunn Law Firm : Strategic Planning, Managed Care, Insurance : Columbus, Cleveland, Cincinnati, Central Ohio

On September 16, 2009, Senate Finance Committee Chairman Max Baucus released the Chairman's Mark for the committee's health care reform legislation, entitled America's Healthy Future Act.

The Chairman's Mark differs from the legislation passed by the Senate Committee on Health, Education, Labor and Pensions (the "HELP Committee") on July 15, 2009, in a number of ways such as:

1. Does not include a public insurance plan option. Rather, The Chairman's Mark proposes a Consumer Operated and Oriented Plan (CO-OP) program to create non-profit, member-run health insurance companies. These companies will be limited to competing in the individual and small group insurance markets.
2. Does not include an employer mandate. However, the Chairman's Mark provides for a fee capped at $400 per employee for certain employers who do not provide health insurance.
3. Expands Medicaid to non-elderly, non-pregnant (childless adults) with incomes up to 133% of the federal poverty line. The HELP Committee's bill expands Medicaid to such individuals up to 150% of the federal poverty line.
4. Provides tax credits (on a sliding scale basis) for individuals and families with incomes between 134-300% of the federal poverty line to offset the cost of private health insurance premiums. The HELP Committee's bill provides such credits for individuals and families up to 400% of the federal poverty line.

The Chairman's Mark is scheduled for markup at the committee's open executive session on September 22, 2009.
 

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CGI Technologies and Solutions, Inc. is the RAC contractor for Region B, which includes Ohio.  Provider outreach started in September and, according to CGI's website, will be done by the end of September.  CGI is already operational in Indiana, Michigan, and Minnesota, so expect RAC audits to start in Ohio before the end of the year.  CGI's RAC website is located at racb.cgi.com/Default.aspx

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Senate Finance Committee Chairman Max Baucus has been reported as circulating to members of the committee a document entitled "Framework for Comprehensive Health Reform."

The Framework represents "many of the policies" discussed by the committee but is "not a final product . . . and does not include everything that might be in the [Chairman's Mark]." It most notably does not include a public insurance option. Rather, it proposes a Consumer Operated and Orientated Plan (CO-OP) program to create nonprofit, member-run health insurance companies that service individuals in one or more states.

Also, it does not propose an employer mandate. However, as discussed below, while there is no employer mandate, certain employers may be fined for not providing health insurance coverage.

Some other highlights of the document include:

• Penalizing US citizens and legal residents who fail to obtain health insurance coverage up to $3,800 per year.
• Fining employers with more than 50 full-time employees (30 hours and above) that do not offer health insurance coverage to their employees up to $400 annually for each employee who receives a tax credit for health insurance through an exchange.
• Establishing state-based exchanges to assist individuals and small groups to more easily compare health insurance plan benefits and premium costs for four benefit options that would be available.
• Permitting health insurance premiums to vary based on only four factors: tobacco use, age, family composition and geographic differences.
• Prohibiting health insurance plans in the individual market from excluding coverage for pre-existing health conditions or rescinding health coverage.
• Levying an excise tax of 35% on insurance companies and insurance administrators for any health insurance plan that is above $8,000 for singles and $21,000 for family plans.
• Assessing fees that would be generally allocated by market share on pharmaceutical manufacturing companies ($2.3 billion), medical device manufacturers ($4 billion), health insurance providers ($6 billion), and clinical laboratories ($750 million).
• Permitting states to form "health care choice compacts" between two or more states to allow the purchase of non-group health insurance across state lines.
• Expanding Medicaid coverage to include individuals who are not currently eligible (e.g., non-elderly individuals (childless adults) at or below 133% of poverty).
• Reducing a state's allotment for Medicaid Disproportionate Share Hospital Payments by 50% once the number of uninsured individuals in the state is reduced by 50%.

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The Settlement Agreement and Corporate Integrity Agreement ("CIA") between the government and Pfizer are available.

The Settlement Agreement is available at http://op.bna.com/hl.nsf/r?Open=jthn-7vhqr9 .

The CIA is available at http://www.oig.hhs.gov/fraud/cia/agreements/pfizer_inc.pdf.

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In a combination of civil and criminal settlements, Pfizer, Inc. and its subsidiary Pharmacia & Upjohn Company, Inc. (collectively “Pfizer”) agreed to pay $2.3 billion, the largest health care fraud settlement in the history of the Department of Justice (“DOJ”). The settlement with Pfizer arises out of civil and criminal allegations relating to Pfizer’s allegedly illegal promotion of certain drugs, most notably Bextra.

Pharmacia & Upjohn Company, Inc. agreed to plead guilty to a felony violation of the Food, Drug, and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. Bextra is an anti-inflammatory drug that Pfizer pulled from the market in 2005. Under the provisions of the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses – i.e., any use not specified in an application and approved by FDA. Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns. The company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States for any matter according to DOJ.

In addition, Pfizer agreed to pay $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs – Bextra; Geodon, an anti-psychotic drug, Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug – and caused false claims to be submitted to government health care programs for uses that were not medically accepted indications and therefore not covered by those programs. The civil settlement also resolves allegations that Pfizer paid kickbacks to health care providers to induce them to prescribe these, as well as, other drugs. 

Pfizer also agree to enter into an expansive corporate integrity agreement with the Office of Inspector General and the Department of Health & Human Services.

The DOJ press release is here: www.usdoj.gov/opa/pr/2009/September/09-aag-900.html

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The Settlement Agreement between the Department of Justice and Covenant Medical Center of Waterloo, Iowa is now available. On August 25, 2009, DOJ announced Covenant agreed to pay the United States $4.5 million to resolve allegations that it violated the False Claims Act. The government accused Covenant of submitting false claims to Medicare by having financial relationships with five physicians that violated the Stark Law. The government alleged that Covenant violated the Stark Law by paying commercially unreasonable compensation, far above market value, to five employed physicians. According to the government, these physicians were among the highest paid hospital-employed physicians not just in Iowa, but in the entire United States.

In the Settlement Agreement, the government claimed Covenant paid compensation to five physician employees that exceeded the fair market value of the services provided by those physicians.  Covenant denied the allegations of wrongful conduct and claimed the compensation paid was consistent with the fair market value of the services provided by the physicians.  The Settlement Agreement did not have any other details concerning the compensation. 

The Settlement Agreement is here www.szdhealthlawscan.com/uploads/file/Settlement Agreement (H1627730).PDF

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