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This column features selected short items about state health care policy.
SACRAMENTO, CA—Gov. Gray Davis announced that hospitals in California have settled a 10-year-old lawsuit against the state over Medi-Cal payment rates for outpatient care, leading to the first broad increase in rates in 15 years.
Under terms of the agreement, the state Department of Health Services will also pay California hospitals $350 million, a lump sum that will be divided among hospitals using a formula that has yet to be determined. That sum is designed to compensate hospitals for a decade in which Medi-Cal reimbursement rates were too low, as determined by a federal appellate court in 1997.
The rate increase, a hike of 30% or $78 million, will take effect July 1 and will stand for one year. For each of the following three years, rates will be increased 3.3% annually. After that, a new mechanism for determining fair rates will be established.
"This settlement is critical to the survival of some of California’s busiest hospitals and will help keep emergency rooms open," Davis said in a statement. "Hospitals that rely on Medi-Cal reimbursement rates are key links in our health system safety net. The increase in reimbursements will ensure that hospitals in our state will have the resources to provide care to all Californians."
—Los Angeles Times, Dec. 6, 2000
COLUMBUS, OH—Gov. Bob Taft signed a bill that will allow Ohio’s organ, eye, and tissue banks to seize the gift of life over the objections of surviving relatives if an individual has designated intent to be a donor on a driver’s license or state identification card. The new law, which included an emergency clause, took effect immediately.
Lawmakers said they were passing the legislation both to honor donors’ wishes and to help offset a daunting national trend faced by recovery agencies. Although more than 73,000 people are waiting to receive an organ, fewer than 22,000 transplants were performed last year, with the number of recovered organs remaining flat in most regions or increasing only slightly. The new law makes designation of an intent to donate legally binding, going so far as to authorize procurement organizations to sue survivors in Common Pleas Court to enforce the donation.
The law also creates an organ-donor registry to be operated by the Bureau of Motor Vehicles and disbands the Second Chance Trust Fund Board in favor of an advisory committee answerable to J. Nick Baird, Ohio’s health commissioner.
Sniping between organ banks and eye and tissue banks in central and southern Ohio nearly derailed the bill. Just moments before the Ohio Senate was to vote on the measure in September, a power play by organ bank lobbyists to disproportionately increase the representation of organ bank members on the advisory committee stalled the bill until after the election. The organ banks eventually withdrew their demand.
—The Plain Dealer, Cleveland, Dec. 14, 2000
Baton Rouge, LA—Louisiana’s health insurance program for state workers is looking into whether to include the abortion pill on its list of covered prescription drugs. The State Employees Group Benefits Program board of trustees briefly debated the idea of banning coverage of RU-486, known as the abortion pill, but delayed any decision until its benefits committee can review the issue.
Board member Russell Culotta, who represents state retirees, said he doesn’t want group benefits to pay for any abortion-inducing drugs or any medical consultations that would result in prescribing the drug. Culotta said he is pro-life, but that is not his motivation for trying to exclude coverage of RU-486.
—The Advocate, Baton Rouge, LA
MONTPELIER, VT—The pharmaceutical industry has sued the federal government in a bid to block Vermont from offering cut-rate prescriptions to a broader range of people through Medicaid.
Vermont was scheduled to begin signing people up for the new program on Jan. 1, but the industry asked a federal judge in Washington, DC, to suspend it while the lawsuit is pending. Pharmaceutical Research and Manufacturers of America (PhRMA), a trade group representing the industry, has opposed the program since its conception but was unsuccessful in persuading Health and Human Services Secretary Donna Shalala from approving it.
Now PhRMA has taken the same arguments made to Shalala’s staff to U.S. District Court. "The cost and financing of prescription drugs for lower income individuals is an issue of national importance and has been the subject of extensive debate in the legislative and executive branches of the federal government and many state governments," PhRMA’s lawsuit states. "While the debate continues, however, the secretary of the Department of Health and Human Services and the state of Vermont have, in effect, made an end run’ around existing federal law by creating a new government’ program with no government cost, but paid for solely by private manufacturers."
Vermont’s program relies on Medicaid to help reduce prescription drug prices for thousands of people who otherwise wouldn’t qualify for Medicaid coverage. State officials asked the federal government for a waiver of existing rules so as many as 70,000 more people could qualify for the discounted prescriptions that the state gets, through rebates granted by the industry, for traditional Medicaid beneficiaries.
—Rutland Herald, Rutland, VT, Dec. 14, 2000
SAN FRANCISCO—Some 8,000 people have died of smoking-related heart disease in California as a result of the state’s weakened anti-smoking campaign, according to a new study. Medical researchers from the University of California, San Francisco (UCSF) found that anti-smoking campaigns prevented about 33,300 deaths from 1989 to 1997, but that number could have included another 8,300 people if the state’s voter-approved program had continued the fervor it began with in 1988.
"The state needs to start again working aggressively," said Stan Glantz, author of the study and a professor of medicine at UCSF. "In the mid-90s, the former governor was closely allied with Philip Morris . . . and as a result, people died."
The initial campaign focused on older smokers, while today’s program mainly targets children, Glantz said. His study, published in the Dec. 14, 2000, issue of The New England Journal of Medicine, found that the smoking-related deaths correlated to cutbacks in the state’s 1992 campaign. But government health administrators disagree, saying California’s anti-tobacco campaign is on the mark. According to another recent study, the state’s lung cancer rate has dropped 14% in the past decade.
INDIANAPOLIS—Indiana’s cost of providing health care for the needy is soaring and threatening to squeeze out other budget needs. Prescription drug costs, an increase in recipients, and a commitment to providing more in-home care to the disabled all have contributed to a jump in Medicaid costs over the past two years that has exceeded the amount budgeted for the program.
State Medicaid officials told a budget-writing committee recently that they need a $71.2 million state appropriation to make up the shortfall in this year’s budget and at least $446 million more in the next two-year budget just to offer the same level of care. "It is eye-popping," said Kathleen Gifford, state Medicaid director.
But State Budget Committee Chairman Rep. B. Patrick Bauer (D-South Bend), urged Gov. Frank O’Bannon’s administration to go back and "mold and shape" the program so costs and benefits are slashed before higher spending jeopardizes other programs and the state’s bank account.
In addition to Gifford’s report to the committee, officials in the state’s Family and Social Services Administration laid out their spending plans. They were the latest state bureaucrats to deliver pitches to the panel.
Mr. Bauer issued a note of caution. "I don’t think reality has set in here — not only in this room, but across the state," he said.
Indiana is one of at least 11 states where tax revenue collections have fallen behind expectations. So far this budget year, which ends June 30, the state has collected $123.2 million less than forecasters expected, which could cut into its projected surplus of $1.2 billion.
—Indianapolis Star, Dec. 14, 2000
FRANKFORT, KY—Kentucky faces a projected budget shortfall of at least $12 million in its Medicaid program that could result in reduced health care benefits to the needy or a cut in reimbursements to medical providers.
Crit Luallen, cabinet Secretary, said the state is still trying to determine the total shortfall in its estimated $3 billion Medicaid program. Kentucky provides about 30% of its Medicaid budget from state funds, then gets the rest from a federal government match.
Mr. Luallen said the shortfall is in state funds. Early estimates of it range from $12 million to $14 million in 2001, and $50 million to $70 million in 2002.
But not having the state money means losing out on federal dollars, threatening services even more. If the state estimate holds true, Kentucky’s total Medicaid loss could be $40 million to $47 million in 2001, and $167 million to $233 million in 2002. Officials said the problem arose because they underestimated growth in the Medicaid program and the impact from soaring medical costs and prescription drugs. But so have other states, according to a report released by the National Governors’ Association and the National Association of State Budget Officers.
The budget survey of states, released twice a year, found that other states will face tough choices over the next two years. Of 29 states, about half estimate that Medicaid spending will go over budget.
—Lexington Herald Leader, Dec. 19, 2000
Northeastern states trying to lower prescription drug costs met for the fifth time recently and expressed hope that their efforts will pressure Congress to act too. "The states are really carrying a tremendous burden," said Jane Kitchel, the secretary of the Agency of Human Services in Vermont. She said pharmacy costs are increasing by 18% while the economy is growing at only 4%, making it difficult for states to help people with their health care costs.
"We’re going to be cannibalizing a lot of state governments," she said, something not lost on federal lawmakers. "I think in the upcoming (congressional) session, health care is going to be right at the forefront of legislation," she told about 28 lawmakers from eight northeastern states.
Others weren’t so sure. State Sen. Mark Montigny of Massachusetts helped pass a bill designed to lower costs in his state, but it has never been put into effect because of opposition by pharmaceutical companies, he said. He sees the same opposition lobbying in Washington, where pharmaceutical companies contribute millions of dollars to election campaigns.
"Perhaps some day something will be done on a federal level," he said, then added, "I doubt it."
—Associated Press, Dec. 13, 2000