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Mixed results for legislation linked to medical care, fraud

Neon Tommy/Flickr Gov. Jerry Brown 

In the week following Gov. Jerry Brown's deadline for passing or vetoing hundreds of bills, those affected are examining successes and defeats that touch on cancer care, emergency rooms, prescribing, elder care and compensation to victims of corporate fraud.

Those celebrating include a group of elder advocates who sought more autonomy for the state’s elder care ombudsman. Another group of patients was disappointed, though, seeing Brown veto a bill that would have lowered the price of pills that fight cancer, bringing them in line with the cost of IV infusion treatments.

One of the bills that Brown vetoed would have changed payments related to emergency room care. The bill stemmed from a Feb. 24 legislative hearing that focused on emergency room and billing practices of Prime Healthcare. Critics have claimed the hospital chain is inflating costs through its emergency room and billing practices.

Two health care providers, Kaiser and Heritage Provider Network, have accused Prime of "trapping" their patients in Prime hospitals to charge more for treating patients from outside their health care networks. Both groups are involved in ongoing lawsuits with Prime over the matter.

The bill, carried by state Sen. Ed Hernandez, D-West Covina, would have only affected hospitals where, during the course of a year, half or more of the privately insured patients admitted through the emergency room are outside their care network. Once a hospital reaches that threshold, new rules would have ensured that the hospital would be paid Medicare rates or a "good faith and reasonable" estimate of costs.

In his veto message, Brown noted that he shares the goal of reining in “excessive hospital charges for out-of-network emergency care." But he wrote that he was not convinced "that the rate-setting formula in this bill has it right."

Brown also said that if problems are “as widespread and as excessive as some claim, such practices will invite an appropriate regulatory response."

Dr. Prem Reddy, board chairman and chief executive of Prime, sent a letter to “friends and colleagues” Monday applauding the veto. Prime spokesman Edward Barrera provided the letter to California Watch. 

“In speaking with Governor Brown about this bill on behalf of all hospitals in California, I learned that Governor Brown was concerned about the rising costs of healthcare but also agreed that SB 359 was not the proper vehicle to address these concerns,” Reddy wrote.

The California Hospital Association, which lobbies on behalf of hospitals, took a neutral stance on the bill.

Brown also took his veto pen to a bill that would have aligned the prices of pills to combat cancer with often less-costly infusion treatments.

Assemblyman Henry T. Perea, D-Fresno, introduced the bill after spending time with his mother while she received infusion treatments for lung cancer.

Perea said in June that many patients spent hours in the large, open room at the treatment center, attached to IV drips. Many could not afford their share of costs required under their health insurers’ pharmacy benefit for cancer pills taken at home. In contrast, the cost of IV treatment was low for them – typically the cost of an office co-pay.

In a veto message signed Sept. 30, Brown said he supports Perea’s efforts to make oral chemotherapy treatments more affordable, but said the bill does not distinguish between insurers who price the drugs reasonably and those who don’t.

The message says Brown will ask the state Department of Managed Health Care to work on “alternative approaches to solve this problem.” Perea’s office said he plans to reintroduce the bill next year.

Brown also vetoed a bill that would have prevented health insurers from putting patients on “fail first” protocols, meaning they have to take inexpensive, older drugs before trying newer formulas.

California Watch reported on one supporter of the bill who presented herself as a patient advocate while she urged lawmakers to approve the proposed legislation. Records disclosing drug firm marketing expenditures showed, though, that she received funding from several drug and device firms that stood to profit from her advocacy. 

Brown’s veto on that bill notes that he’s “not convinced that this bill strikes the right balance between physician discretion and health plan or insurer oversight.”

Hundreds of bills were signed into law. Among them, Brown signed a bill carried by Sen. Roderick Wright, D-Los Angeles, that will expedite the process of compensating people found to be victims of corporate fraud. The Victims of Corporate Fraud Compensation Fund is comprised of a portion of fees that corporations pay when filing official documents. It is meant to provide restitution to people who can prove that they were victims of corporate fraud.

In April 2011, California Watch found that the fund had paid out less than 1 percent of its holdings, even as hundreds of seniors seeking compensation over an alleged financial counseling scam awaited rulings on claims.

In May, an attorney representing about 500 of the seniors sued Secretary of State Debra Bowen, saying she unfairly denied them compensation.

Attorney Mark Redmond, who represents the seniors, applauded the bill’s signing but said it only affects those who apply for compensation in the future, not his clients. “The litigation goes on,” he said.

Brown also signed a bill meant to strengthen the office of the state Long-Term Care Ombudsman, an effort that has been under way for two years. The bill brings state law in line with a federal law that calls on the ombudsman to be an outspoken advocate on behalf of elders.

In the past, the ombudsman has been prevented from speaking on seniors’ behalf, to avoid clashing with other departments in the state’s Health and Human Services Agency, said Sylvia Taylor-Stein, chairwoman of the Committee for an Independent State Ombudsman Office, the bill’s sponsor.

“The watchdog has the ability now to really bark,” she said.

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