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In an Aug. 26 letter to Cindy Mann, the director of the CMS Center for Medicaid and State Operations, OIG states that CMS did not fully disclose or document information about the accuracy of data collected by the Medicaid Statistical Information System. Timely, accurate and comprehensive data can be used to help interagency efforts in combating health care fraud, the report notes.

States must submit claims files to CMS within 45 days after the end of each quarter. The system is designed to serve as an accurate database pertaining to standardized enrollment, eligibility and paid claims of Medicaid beneficiaries.

In a review of MSIS files, OIG determined that data took an average of more than 1½ years after the initial state submission before being relayed by CMS to the public. This time frame included an average of six months that states took to submit MSIS files in a CMS-acceptable format and averages of four months and nine months for CMS to validate the data and release the files.

CMS also could not explain why it approved more than 1,500 exceptions to a process designed to identify claims errors. The MSIS program produces reports that show the numbers and types of errors identified. But CMS periodically adjusted individual state error tolerances to allow particular files or sets of files to pass data validation tests.

"These undocumented error tolerance adjustments allowed the affected state MSIS files to clear quality review with an unknown number of errors," OIG reported.

Also, MSIS does not capture a number of data elements that can assist in fraud, waste and abuse detection, OIG wrote. The system, for example, does not capture the referring physician's identification number. Without it, fraud analysts cannot use MSIS to assess whether a qualified physician submitted the order as required for a beneficiary to receive certain medical benefits.

The report was issued directly to CMS in final form with no specific recommendations. It did not include a CMS response.

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The Parental Notice of Abortion Act of 1995 was blocked from taking effect for more than a decade until the high court in 2006 finally issued mandated rules allowing young women to ask a court to bypass the notice requirement. It would be up to the court to decide if a waiver is in the minor's best interest. After additional litigation, the 7th U.S. Circuit Court of Appeals in July upheld the law's constitutionality in Zbaraz v. Madigan and dissolved a long-standing injunction preventing its implementation. The statute took effect Aug. 4.

But concerns from the medical community about compliance prompted the state medical board to delay enforcement of the law by three months. Under the act, any doctor who does not act in good faith to obey the law would face a misdemeanor charge as well as disciplinary action by the medical board.

In an Aug. 5 announcement, the agency said it wanted to give physicians more time to institute new protocols "to ensure both compliance with the act and protection of patients' medical care" and "to effectively counsel their minor patients about all of their options."

But Chicago's Thomas More Society, a faith-based law firm, and a group of parents that oppose abortion say doctors have had plenty of time to get up to speed. They allege that the medical board lacked the legal authority to change the rules, according to a petition filed Aug. 31 with the Illinois Supreme Court.

The Dept. of Financial and Professional Regulation, Illinois' medical board, is reviewing the case, said spokeswoman Susan Hofer. She declined to comment further. The Illinois State Medical Society has not taken a position on the matter.

Illinois is among 35 states that have abortion parental consent or notice laws, according to the Guttmacher Institute, a nonprofit organization that supports worldwide advances in reproductive health and tracks related policy.

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The federal statute for the first time gives the FDA the power to regulate the sale and distribution of tobacco products. While the law does not allow the agency to ban tobacco sales, it does give the FDA the authority to reduce nicotine levels, require new warning labels and bar certain marketing tactics, especially those aimed at children.

The lawsuit -- filed Aug. 31 by two of the nation's largest cigarette makers, R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co., and several smaller manufacturers and retailers -- does not challenge the congressional decision to give the FDA oversight of the industry. Rather, the companies charge that certain marketing and advertising restrictions in the law violate their constitutional rights to free speech, according to the complaint filed against the FDA in the U.S. District Court for the Western District of Kentucky.

Legal experts expect the case to reach the U.S. Supreme Court. It's not the first time tobacco companies have asserted such legal arguments, having fought numerous state tobacco-related restrictions in court with mixed outcomes. The Litigation Center of the American Medical Association and State Medical Societies has participated in several of those cases in support of stricter tobacco regulation.

"This law is a public health victory for the American people -- protecting against aggressive tobacco advertising that leads to smoking-related illnesses and deaths," AMA Board Chair Rebecca J. Patchin, MD, said in a statement. "It is truly shameful that Big Tobacco continues to protect its profits, even at the expense of American lives, through this lawsuit." The AMA is not involved in the most recent case, Commonwealth Brands Inc. v. U.S.

American Public Health Assn. Executive Director Georges C. Benjamin, MD, said that because the federal law has yet to be fully implemented, the FDA must continue "full speed ahead" on its regulation effort rather than await the outcome of the lawsuit. "Tobacco is the leading preventable cause of death in the country, so millions of people will die if we don't have the authority to regulate it."

The FDA declined to comment, citing the pending litigation.

First Amendment challenge

The plaintiff tobacco companies said they don't dispute the federal government's right to prevent minors' access to tobacco. But other limitations in the law restrict the firms' rights to communicate with adult consumers about their products, including less harmful, or modified-risk, products, said Floyd Abrams, a First Amendment lawyer representing Lorillard.

Tobacco products "remain lawful to be sold, and Congress has gone so far in limiting the manner in which they may be sold to adults -- who have a right to purchase them -- that it violates the First Amendment," he said. "Even if it's true that [some] products are less dangerous, those statements cannot be made unless the FDA determines it will serve the public as a whole."

The companies specifically contest provisions in the statute that:

• Limit print tobacco advertising to black-and-white ads.
• Require larger warning labels on packaging.
• Prohibit the sale of modified-risk tobacco products without prior FDA approval.
• Ban outdoor advertising and event sponsorship or other promotions.

"The obvious purpose of this is to force plaintiffs to stigmatize their own products through their own packaging," the complaint states.

R.J. Reynolds Senior Vice President and General Counsel Martin L. Holton III said in a statement that the provisions "severely restrict the few remaining channels we have to communicate with adult tobacco consumers" and "chill our ability to participate in the broader public policy dialogue over the future of tobacco products."

But the tobacco companies said they plan to work with the FDA on the remaining, undisputed provisions in the law.

Road to the high court?

Legal experts say the case likely will turn on a 2001 U.S. Supreme Court precedent established in Lorillard v. Reilly, which struck down certain Massachusetts regulations barring tobacco advertising near public playgrounds and schools. The high court concluded that some of the provisions violated tobacco companies' free speech rights, but justices upheld other provisions.

The ban at question in that case, however, went well beyond the new FDA regulations, said Richard A. Daynard. He is president of the Public Health Advocacy Institute, a legal research center in Boston that focuses on tobacco liability and other public health issues. The Lorillard decision also centered on the Massachusetts attorney general's lack of authority to regulate tobacco.

"But because Congress, by a substantial majority and many years of consideration, has adopted this [federal law] and indicated in its findings of fact that these provisions were necessary to save hundreds of thousands of lives a year, the Supreme Court is not likely to view it that way and can easily distinguish these findings" from prior rulings, said Daynard, a law professor at Northeastern University School of Law.

He also noted that other federal laws have banned cigarette advertising on television and radio for more than 40 years without legal threat.

Daynard suggested it was no accident that the latest case was filed in Kentucky, which has the nation's highest smoking rate. While the move could help the plaintiffs delay the FDA regulations early in the litigation, he predicted a long legal fight leading to the U.S. Supreme Court, where the law ultimately would stand.

Federal lawmakers appear to have crafted the new law with such constitutional challenges in mind. Language in the statute calls for FDA regulations in accordance with First Amendment case law and the Lorillard decision.

Absent from the lawsuit is Altria Group, the parent company of the nation's largest cigarette maker, Philip Morris USA. The company supported the statute's passage. An Altria spokesman said the company was reviewing the lawsuit but declined to comment further.

R.J. Reynolds and Lorillard -- the country's second- and third-largest tobacco manufacturers -- opposed the bill and said in the lawsuit that the advertising limitations would threaten their market shares.

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Pharmacists' trade associations celebrated in 2007 and 2008, when first a federal court and then Congress blocked the implementation of a Center for Medicare & Medicaid Services rule lowering federal Medicaid payment limits for generic drugs.

The rule -- required by the Deficit Reduction Act of 2005 -- would have lowered the pay for many generic Medicaid drugs to less than what the drugs cost pharmacists, according to a 2006 Government Accountability Office report. CMS disagreed with that conclusion, saying the GAO report did not account for other provisions in the act that would mitigate the rule's impact.

The CMS rule was a response to findings that federal upper payment limits were overly generous. For example, a 2007 report by the Dept. of Health and Human Services Office of Inspector General found that federal payment limits were at least twice as high as pharmacists' acquisition costs for 23 of the 25 drugs Medicaid spent the most on in 2005. The Congressional Budget Office estimated that the rule would have reduced Medicaid spending on drugs by $3.6 billion over five years.

But National Community Pharmacists Assn. spokesman John Norton said the CMS rule was an overcorrection and would force certain pharmacies to stop dispensing generic Medicaid drugs or to close entirely. For some pharmacies, especially in medically underserved areas, Medicaid provides the majority of their business, Norton said.

The U.S. District Court for the District of Columbia found the CMS rule to be inconsistent with Medicaid law and issued an injunction against the rule in December 2007. Congress issued a moratorium against the rule in July 2008. The moratorium expires Oct. 1.

But pharmacists may be able to breathe easier under the Obama administration. A CMS spokesman said the legal injunction against the rule is still in effect. Stephen Giroux, RPh, immediate past NCPA president and owner of eight pharmacies in upstate New York, said lawmakers and the administration are listening to NCPA's concerns.

NCPA had been hoping for quick adoption of the House health system reform bill. It includes a provision rewriting the Medicaid drug payment formula to more favorable terms, Norton said. The bill also would extend the moratorium until Dec. 31 while the HHS secretary drafts the new formula.

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The reform bill pending before the House does not contain explicit provisions preventing immigrants from purchasing coverage under its proposed health insurance exchange, according to a new report commissioned by Congress and released Aug. 25. The Congressional Research Service, an arm of the Library of Congress that conducts studies for lawmakers, examined the treatment of both legal and illegal immigrants in America's Affordable Health Choices Act.

While illegal immigrants are banned from receiving government affordability credits designed to help low-income people buy coverage, they could still put up their own money to participate in the exchange. The exchange would begin operation in 2013 and include choices of private plans along with a government-sponsored, national public plan option.

The finding has given ammunition to organizations that oppose the current bill on the contention that it would force taxpayers to foot the health bill for people who are illegally in the U.S. The Pew Hispanic Center estimated in an April report that nearly 15% of the nation's 47 million uninsured are illegal immigrants. Of the nearly 12 million illegal immigrants living in the U.S. in 2008, roughly 7 million, or 59%, were uninsured.

"Case closed. Illegal aliens will be eligible to participate in the health care program offered by the House bill unless Congress acts to amend the bill," said Dan Stein, president of the Federation for American Immigration Reform. "The loopholes and omissions in the House bill are not there by accident."

The question of who would qualify as a legal resident is also a point of contention. CRS said that without a provision in the bill specifying a verification procedure, a mechanism for determining coverage eligibility based on immigration status would be left to the health choices commissioner -- a new federal post that would be filled by presidential nomination if the bill becomes law.

Rep. Dean Heller (R, Nev.) offered an amendment to the legislation during the House Ways and Means Committee markup that would have required the use of existing citizenship verification tools to determine eligibility for taxpayer-funded health care benefits, but it was voted down.

"If the majority party insists on moving forward with [a] government-run health care plan, Congress should do everything in its power to curb abuse," Heller said. "Requiring citizenship verification for enrollment would ensure only citizens and legal residents receive taxpayer-funded health care."

But committee Democrats who voted against the amendment insisted that no taxpayer funds would go toward illegal immigrant coverage under the bill.

The CRS report "clarified the point that undocumented immigrants could participate in the exchange, but only to buy insurance, thus [they] are not eligible for any taxpayer-funded benefits," said Rep. Xavier Becerra (D, Calif.). Although the public plan would be government-sponsored, Democrats have said it will be sustained solely through beneficiary premiums, not federal tax revenues.

The dispute about coverage spilled over into President Obama's Sept. 9 health care address to Congress. After the president said that "the reforms I'm proposing would not apply to those who are here illegally," Rep. Joe Wilson (R, S.C.) shouted, "You lie!"

Wilson later apologized for his outburst. The White House did not specify whether Obama was referring to the issue of illegal immigrants receiving any government-sponsored insurance or just the affordability credits.

Some pro-immigration organizations said the concerns about who will receive subsidized insurance coverage are overblown.

"To fear-monger on the basis of a bill that hasn't even passed is silly," said Tamar Jacoby, president of ImmigrationWorks USA, based in Washington, D.C. "Honestly, I find it very unlikely that Congress or American voters are going to want to provide government-paid health care for illegal immigrants."

The health coverage issue for those lawfully in the U.S. is also complex. CRS concluded in its report that the House bill would require certain categories of legal residents to purchase insurance but would make them ineligible for federal assistance, regardless of income.

CRS noted that most "nonimmigrants," such as migrant workers or others who are in the U.S. for a specific purpose and time, could not receive federal affordability credits. Examples of nonimmigrants who could obtain credits include victims of human trafficking or other crimes, fiancé(e)s of U.S. citizens, and those who have had applications for legal permanent residence status pending for three years.

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