August 18, 2003

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MMA's "Prompt Payment" Campaign Contributes to Anthem Settlement
Superintendent of Insurance Alessandro Iuppa levies record fines against and orders restitution by Anthem companies for failure to pay interest in accordance with Maine's "prompt pay" law.
According to a consent agreement released by the Bureau of Insurance last week, Anthem Blue Cross and Blue Shield of Maine and Maine Partners Health Plan will pay fines of $250,000 and $100,000 respectively for failure to pay interest to subscribers and providers on claims paid more than 30 days beyond the date of submission.  The failure constitutes a violation of Maine's "prompt pay" statute, 24-A M.R.S.A. sec. 2436. 

During the last several legislative sessions, the MMA has worked with the Maine Hospital Association to clarify the application of this statute to health insurance carriers and HMOs, to adopt a definition of "undisputed claim" in the statute, and to advocate for more aggressive enforcement of the statute by the Superintendent. 

The Bureau staff conducted a targeted market conduct examination of the Anthem companies, testing claims paid during the 2nd quarter of 2002, and issued an Examination Report dated January 11, 2003.  Anthem staff cooperated with the investigation.

The Bureau discovered that Anthem did not implement a system to automatically calculate and pay interest on overdue claims until April 1, 2002 and prior to that date paid interest only when receiving an inquiry requesting interest.  The Anthem companies paid no interest in 1999 and 2000, but paid $23.00 in 2001 and $15,699.99 in the 1st quarter of 2002.

Anthem has identified approximately 387,000 claims from September 19, 1999 through March 31, 2002 that were paid after 30 days from the date of receipt and may be due interest.  An estimated $858,000 in interest may be payable during this period, excluding claims paid to Maine hospitals.  An additional $370,000 of interest may be payable to Maine hospitals.

Anthem will pay interest on all subscriber claims during the period of the examination with the assumption that they were "overdue" within the meaning of 24-A M.R.S.A. sec. 2436.  Anthem will review the 3 largest provider claims during the examination period to verify whether or not they are "overdue," but will pay interest on all other provider claims during the examination period based upon the same assumption.  Anthem has committed to pay the interest within 90 days of the Consent Agreement.

The Bureau's examination also revealed violations of the registration provisions of the Preferred Provider Arrangement Act, failure to pay benefits at the "in-network" rate when no participating providers were available within the Rule Chapter 850 access requirements, and the charging of improper rate differentials for individual health insurance plans with similar benefits in violation of Rule Chapter 940.

The MMA's "Prompt Payment" campaign of the last several years was supported by the American Medical Association's Private Sector Advocacy team and many of you!  Whether it was responding to the MMA's survey, communicating with your legislators, or filing a complaint with the Bureau staff, your advocacy has produced results!

The Bureau staff will conduct similar examinations of Aetna and CIGNA in the coming months.

West Nile Virus in Maine
On August 8th, the Maine Health and Environmental Testing Laboratory reported the first positive 2003 West Nile Virus (WNV) test results on dead birds submitted through the Bureau of Health WNV surveillance program.  The four birds (two crows and two bluejays) were found in Brunswick, Lewiston, Stonington, and York between July 31st and August 4th.

The positive findings were not unexpected, as 38 other states have already reported 2003 WNV activity in birds and/or mosquitoes, including all northeastern states other than Rhode Island.  Seventeen states- none of them in the northeast - have also reported human cases of WNV infection this year.

The positive bird findings in multiple areas suggest that WNV activity can be assumed to be occurring statewide, and serve as a reminder that residents and visitors should take basic, practical measures to reduce their exposure to mosquito bites.  This is particularly true for elderly and immunocompromised persons. 

Maine physicians should include WNV infection in the differential diagnosis of all persons with encephalitis and all persons over 15 years of age with aseptic meningitis.

The Maine Health and Enviormental Testing Laboratory is providing diagnostic testing of cerebrospinal fluid (CSF) and serum specimens from patients with these diagnoses.  This testing is provided free of charge.  Physicians who wish to submit specimens should call 1-800-821-5821 to report suspected cases and arrange for testing.

Detailed technical specimen requirements can be obtained by calling the above number and are summarized at:

Links to detailed clinical updates on West Nile Virus infection can also be found at the website listed above. [return to top]

Medical Staff Legal Victory in San Buenaventura Hospital Case
On Wednesday, August 13th, the Ventura County Superior Court handed a significant legal victory to the medical staff of San Buenaventura Hospital, ruling that it had standing to sue as an unincorporated association under California law.  The judge declared that the New Hampshire Supreme Court case of Exeter Medical Staff v. Board of Trustees, where the medical staff was deemed to be a mere department of the hospital with no separate legal existence, is not persuasive law in California. 

In this case, which is being carefully watched by health lawyers across the country, the governing body of this non-profit, community hospital, adopted new policies preventing any physician who has a financial stake in an entity that competes with the hospital from holding a medical staff leadership position.  The policy also prevents the physician from voting as a staff member.  The hospital also is alleged to have unilaterally amended the medical staff bylaws so they wouldn't conflict with new corporate bylaws and took control of the medical staff dues account.

When the staff elected John Hill, M.D. as medical staff president, the hospital refused to recognize him as he holds a small interest in a competing facility ( less than a 2% interest).

The hospital claims that it has the right to protect financial information from competitors and that it has no choice but to appoint  interim medical staff leaders after the elected ones did not meet the new rules.

The decision of the Superior Court is almost certain to be appealed to the California Supreme Court.  The California Medical Association and the American Medical Association have contributed financial support to assist the medical staff.  More information about the case is available from CMA's online Magazine, California Physician, at http://calphy/html/bb320.asp.  [return to top]

MMA Co-Hosts Portland Reception for Congressman Tom Allen, 8/26/03
Physicians and guests are invited to attend a reception with Maine's First District Congressman Tom Allen from 6:30 - 8:30 a.m. on Tuesday, August 26, 2003 at the Portland Regency Hotel.  The MMA is co-hosting this event with the Maine Hospital Association and the American Hospital Association.

Contributions in any amount would be welcome by the Allen for Congress Campaign.  Don't miss this opportunity to talk with Congressman Allen about the key health care issues in Washington - - Medicare drug benefit, Medicare reimbursement rates, and medical liability reform!

For more information, please contact Gordon Smith (, Andrew MacLean (, or Anna Bragdon ( by email or at 622-3374. [return to top]

The AMA's Top 12 Fictions & Facts About Medical Liability Reform: #2
Fiction #2:  Caps on Non-economic Damages Deny Patients Full Redress for Losses Incurred Due to Negligence.

Fact:  Plaintiffs' lawyers try to muddy the debate by alleging that proponents of caps on non-economic damages would deprive plaintiffs of being fully reimbursed for losses suffered due to medical negligence.  To the contrary, economic damages such as medical costs and lost income (present and future) are recoverable with no limit.  It is non-economic damages that juries sometimes award in an inconsistent manner.  Non-economic damages are inherently unquantifiable, because they award for damages such as "pain and suffering."  Non-economic damages are not intended to punish defendants for their actions (those are punitive damages, which if awarded are done so separate from non-economic damages).  Nevertheless, juries and judges vary a great deal from region to region, court to court, in terms of what level of non-economic damages they will award for similar injuries.  The result is a civil justice system lottery that awards randomly and makes insuring against those losses an unpredictable business.  It also skews the incentives for settling claims to avoid the expensive and time-consuming trial process because of the potential for hitting the "lottery."  Capping non-economic damages at a reasonable level provides more consistent results and a more stable insurance environment. [return to top]

Proposed 2004 Medicare Physician Payment Rule Published
The 2004 Medicare physician payment schedule proposed rule was published in the August 15th Federal Register and will be open for public comment through Oct. 7th.  Key provisions of the rule follow:

Payment Update:  In March, CMS projected a negative 4.2% update for 2004.  Although steeper cuts are possible, the proposed rule did not provide any new projection but noted only that the estimated update is "highly likely" to change before it is finalized this year.  CMS is not required to publish an update projection in the proposed rule but it made an exception last year.

Medicare Economic Index (MEI):  CMS is proposing to re-weight the cost components of the MEI based on more current data.  The revision only increases the projected 2004 MEI from 2.4% to 2.5%, however, and CMS's calculation of the projected 2004 MEI includes only a 6.6% increase in professional liability insurance (PLI) costs compared to an 11.3% increase last year.  The final rule will incorporate more current data, which could further change the MEI.

Geographic Adjustments:  The geographic practice cost indexes (GPCIs) which measure alleged regional variations in work (physician earnings), PLI and practice expense all were scheduled for revision in 2004.  In order to incorporate new data from the 2000 Census, however, CMS has decided to wait until 2005 to update the work and practice expense GPCIs.  This is in marked contrast to the PLI GPCI where CMS not only will make revisions in 2004 but is making a significant effort to include the most recent information possible.  Data collection has delayed completion of the revisions, however, and the new PLI GPCIs will not be published until the final rule.

Relative Value Unit Adjustments;  Changes in the MEI weights are also  reflected in the calculation of work, practice expense and PLI relative values.  As a result, the share of total RVUs allocated to PLI will increase by 21.7% but this increase will be offset by reductions in the RVUs going to work and practice expense.  CMS also praises the work of the RUC's Practice Expense Advisory Committee and updates the prices for medical supplies.  Practice expense changes for oncology will be discussed in a separate rule on Medicare payment for drugs that has not yet been released.

Other;  The proposed rule also would modify the monthly physician payments for end stage renal disease treatment and would reduce the administration burden associated with the diabetes education benefit.

MMA will provide members with further talking points on the rule prior to the Oct. 7th comment deadline and will continue to work with the AMA and National Medical Specialty Societies in advocating for a positive payment update through Congressional action.  Instead of the cut, a positive payment update of at least 1.5% for the next two years is included in the House version of the Medicare prescription drug bill, H.R. 1, which passed in June.  The Senate also passed a sense-of-the-Senate resolution expressing the need to address the physician payment cuts.  Although Congress has adjourned for August recess, a House-Senate Conference Committee is working to reconcile the differences between the two bills. [return to top]

Anthem Loses Bid to Acquire Kansas BlueCross
The Kansas Supreme Court has ruled against the bid by Anthem Inc. to acquire BlueCross BlueShield of Kansas.  The ruling reversed an earlier district court decision and upheld a ruling by the Kansas Insurance Commissioner, who had concluded that the purchase would raise health insurance premiums more than if BCBS-KS remained independent.

In a prepared statement, Anthem said it was "disappointed by the ruling but it would not impact the company's earning for this year or affect its long-term growth strategy."

Anthem Inc. is the owner of Anthem Blue Cross Blue Shield of Maine. [return to top]

CIGNA Officers Awarded Stock
Less than a week after CIGNA Corp. reported a second-quarter loss and announced it might sell its retirement and investment services business, the health insurer awarded approximately $22 million of unrestricted stock to officers to keep them "on Board and motivate them."  Industry observers noted that obviously the insurer's pay package is not tied to performance of the stock. [return to top]

Most National Health Insurers Report Decreased Medical Costs for First and Second Quarters
In the first quarter of 2003, most national health insurers reported increased revenues and decreased medical costs.  Analysts thought the trend was a fluke.  However, with health insurers now reporting continued increased revenues and decreased medical costs for the second quarter of 2003, many observers say that the trend could be here for awhile. (From AIS Health - Business News of the Week, August 5, 2003) [return to top]

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