Resident programs exempt?
An 11th-hour addition to the Pension Funding Equity Act could end a 2-year-old antitrust challenge of the National Resident Matching Program, Modern Healthcare has learned. President Bush is expected to sign the bill into law this week. A provision added while the bill was in conference committee exempts residency matching programs and sponsors from antitrust law. The exemption applies except in the case of price-fixing, said attorney Sherman Marek of Chicago, who represents plaintiffs in the antitrust case. The matching program places graduating medical students in residency programs around the country. Marek said he expects the antitrust challenge to continue because of the exemption for price-fixing claims. However, the matching program's attorney, Thomas Campbell of the Chicago office of Gardner, Carton & Douglas, said, "This will be a deathblow to the plaintiffs' antitrust case." The lawsuit, filed in U.S. District Court in Washington, alleges that hospitals in the matching program depress and standardize wages "below competitive levels" by exchanging salary information and other employment terms.
FTC investigates N.M. hospital
The Federal Trade Commission is investigating at least one New Mexico hospital-149-bed Eastern New Mexico Medical Center in Roswell-and an independent practice association for alleged antitrust violations, Modern Healthcare has learned. The FTC has not filed formal complaints against either organization. The FTC is looking into allegations that the hospital tried to exclusively contract with local payers to shut out competing hospitals and has attempted to purchase local primary-care practices to control patient referrals, said Lauri Rose, administrator of the Center for Ambulatory Surgery & Endoscopy of Southeastern New Mexico, also in Roswell, which received a subpoena. Rose said the surgery center owners-eight physicians and a California management company-are planning to break ground later this year on a 26-bed acute-care hospital in Roswell that would compete with Eastern New Mexico. Richard Robinson, chief executive officer of Eastern New Mexico, said he has not received notice of an FTC investigation. Lonnie Ray, vice president of the IPA, called Southeastern New Mexico Physicians IPA, refused to comment. FTC sources and Community Health Systems, which owns the hospital, did not return calls for comment by deadline. The FTC served investigative subpoenas to health plans, physicians and local competitors of the hospital, sources said.
Nemzoff files against Baptist
Consultant Joshua Nemzoff has filed a $4 million breach-of-contract and defamation lawsuit against 10-hospital Baptist Health System, Birmingham, Ala., and its chief executive officer, Beth O'Brien. The lawsuit, filed in U.S. District Court in Philadelphia, alleges that O'Brien told her board that Nemzoff was not competent to assist in a restructuring effort and led a push to oust him. The suit also names Mercer Delta Consulting, a firm hired by O'Brien. According to the complaint, Baptist Health essentially ordered Nemzoff to stop working as its consultant in early March, about five months before his contract was set to end. Nemzoff, based in New Hope, Pa., declined to elaborate. Baptist Health spokeswoman Molly Cate declined to comment on specific allegations but said the system considers the lawsuit "frivolous" and is in the process of responding.
Quality registration ends May 1
An American Hospital Association advisory said hospitals should contact the Medicare quality improvement organization in their state before May 1 to register for a national quality-of-care reporting initiative, the first step in qualifying for a full-inflation Medicare update in fiscal 2005, which begins Oct. 1. Hospitals already participating in the program have met most of the registration requirements, the AHA said. Hospitals must submit data on 10 quality measures by Aug. 1 to qualify for the full-inflation update under provisions of the recent Medicare reform law. Facilities not meeting the deadline will receive Medicare updates of 0.4 percentage points below inflation. Hospitals must be registered by June 1 with a Web-based service for transmitting data to a central repository used by all quality improvement organizations. The instructions for qualifying were part of a status report on the initiative that also summarized the timetable for adding 12 new quality measures by summer 2005. The new measures are not linked to the payment reform requirement.
Medicare HMOs cost more
A new report by the federal Medicare Payment Advisory Commission found that Medicare HMOs cost more than traditional fee-for-service Medicare, casting doubt on the Bush administration's rationale for steering seniors toward private plans. After the reimbursement rate increases included in the Medicare reform law passed last December, the government is now paying Medicare HMOs an average of 7% more than it would cost to treat the same patients under traditional Medicare, according to the report. Medicare HMOs contend that they often provide broader benefits than traditional Medicare.
Judge to rule on HealthSouth debt
A federal judge is expected to rule this week on whether a group of HealthSouth Corp.'s bondholders has the right to force accelerated payments of the company's debt, which could raise the specter of bankruptcy for the embattled rehabilitation chain. Judge Allwin Horn indicated late last month in Jefferson County Circuit Court in Birmingham, Ala., that he would decide this week-when a temporary restraining order against the bondholders expires-on whether to grant a new preliminary injunction barring the bondholder group from demanding $2.7 billion in payments. At deadline, a hearing was also in progress in U.S. District Court in Birmingham to consider a request by federal prosecutors for a gag order restricting attorneys for HealthSouth founder and former chief executive officer, Richard Scrushy, from making comments outside of court that could sway a trial. Scrushy's legal team also recently submitted a motion to the district court asking for dismissal of 78 of the 85 criminal counts against him in connection with a $2.7 billion accounting fraud. His trial is set to begin Aug. 23.