September 19, 2006

HEADLINE

Medicare Physician Update

The physician community continues to put pressure on Congress to pass legislation to stop the 5.1 percent cut in Medicare physician payments scheduled on January 1, 2007.  This week, 265 Representatives signed a letter to the House leadership requesting legislative action to fix this problem before the November elections.  In the Senate, over 80 Senators have signed a similar letter urging the Senate leadership to act quickly on this issue.

Despite the full court press by the medical community and the broad Congressional support demonstrated by the sign on letters, key Congressional staff appear resigned to addressing the Medicare physician payment fix after the November elections in a “lame duck” session of Congress.

PHYSICIAN PRACTICE

OXYGEN

OIG Report – Medicare Still Paying Too Much for Home Oxygen Concentrators

Last week, the Office of Inspector General (OIG) at the Department of Health and Human Services, released a report recommending the Centers for Medicare and Medicaid Services (CMS) – which administers the Medicare program – work with Congress to further reduce Medicare payments for oxygen concentrators.  The report states that even after Congress cut home oxygen reimbursement by 30 percent in the 1990s and full implementation of the 36-month capped rental payments that began in 2006, Medicare will still pay 12 times the purchase cost of the typical oxygen concentrator. 

The OIG also found that oxygen concentrators and portable oxygen systems required minimal serving and maintenance.  In addition to recommending that Congress further capped the rental payments for home oxygen concentrators, the OIG report recommend CMS determine the frequency and necessity of non-routine maintenance for oxygen concentrators and determine if a new payment methodology is appropriate for portable oxygen systems.

In light of the OIG report findings, it is likely that Congress will likely consider legislation that will further reduce payment for oxygen concentrators. 

TOBACCO

ATS Joins Amicus Brief in Tobacco Punitive Damages Case

The ATS joined several other health groups in an amicus brief filling in support of the Williams estate in the Supreme Court case Philip Morris USA, Inc. v. Williams.  The case surrounds whether the $79.5 million in punitive damages to the Williams estate is an excessive award and therefore violates Philip Morris’ due process rights.  

Mr. Jessie Williams was smoker who died of lung cancer.  The Williams estate sued Philip Morris for compensatory damages and punitive damages.  An Oregoncourt awarded the Williams estate $821,000 in compensatory damages and $79.5 million in punitive damages.  Philip Morris is asking the Supreme Court to overturn the $79.5 million in punitive damages awarded, stating the amount of the award is excessive and violates due process.       

In general, the UScourts have held that whether a punitive damage award is so excessive as to be unconstitutional depends, in part, upon the degree of reprehensibility of the defendant's misconduct.  In previous cases, the Supreme Court affirmed that "reprehensibility" is the most important factor, but also stated that "in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages, to a significant degree, will satisfy due process."

The position of the ATS and the health community is that the award is justified because Philip Morris engaged in uniquely egregious wrongful behavior and caused an extraordinary amount of harm.  The ATS amicus brief will attempt to track for the Court the history of Philip Morris' wrongful behavior and the extraordinary harm to public health that has occurred as a result, to therefore demonstrate the reprehensibility of their actions justify the $79.5 million punitive damages.

Points of Contact