Archives for February 2012

From the News Desk

Happy Leap Day!

Federal officials announced this week that they arrested a physician charged with the largest ever single-physician scam, who collected $375 million in fraudulent payments for home-health care claims. Also this week:


Romney Reiterates Importance of Premium Support Model for Medicare in Tax Proposal

Former Massachusetts Governor Mitt Romney reiterated his support for reforming the Medicare program by changing it into one that is a premium support model in a press release issued on Wednesday February 22, 2012.  That press release mainly discussed Romney’s proposal to lower taxes, but in the proposal he stressed that his Medicare reform proposal is part of his pledge to reduce federal spending to 20 percent of Gross Domestic Product (GDP) by 2016.  The tax reform and the reform to government spending are both part of Gov. Romney’s larger economic growth proposal.

Romney proposes to take the current amount that is spent on Medicare and give it to beneficiaries so they can go out and purchase health insurance in the private market instead of making payment to providers.  “Instead of paying providers directly for medical services, the government’s role will be to help future seniors pay for an insurance option that provides coverage at least as good as today’s Medicare,” according a Romney statement on Medicare.  The proposal would provide support for the paying the premium of a health insurance whether it be a private plan or traditional fee-for-service Medicare.

The amount of the premium support would vary depending upon income. The premium support for lower income individuals would be larger to ensure that they can afford coverage.  Wealthier individuals would receive less support.

Beneficiaries could purchase the existing fee-for-service Medicare, but they would have to pay for it with the amount they would be granted or receive in a voucher.  The Romney proposal cautions though that if the existing fee-for-service Medicare coverage is more expensive than the premium support voucher, beneficiaries would have to pay the difference.

Under his proposal, all insurance plans would have to offer coverage at least comparable to what Medicare provides today.  If individuals choose more expensive plans, they would have to pay the difference between the premium support and the price of the insurance coverage.  If individuals choose less expensive plans, they could use any leftover amount to pay for other medical expenses including any co-pays or deductibles.

In December  2011, Congressman Paul Ryan and Senator Ron Wyden announced a new proposal that almost precisely mirrors the Romney proposal.  Those proposals are different from the original proposal introduced by Congressman Ryan earlier in 2011.

According to Romney, “with insurers competing against each other to provide the best value to customers, efficiency and quality will improve and cost will decline.”  In addition, “seniors would be allowed to keep the savings from less expensive options or choose to pay for more costlier plans,” Romney continued.

As election season continues to heat up this is an important topic to follow and see how it unfolds.

Misleading Claims on Fruit and Vegetable Beverages and Products

Providing accurate and easy to understand nutrition and ingredient labeling on processed food products is essential to addressing the growing problem of adult and child obesity in America.  One popular group of food products are the plethora of fruit and vegetable juice beverages and juice-containing snacks on the market. These so-called fruit and vegetable products often contain pictures of fruit and vegetables on the front and statements such as “made with real fruit” or “contains real fruit juice.”  Do these pictures and statements mislead consumers into thinking that the product contains more fruit and vegetables than is actually the case? Probably. And if so, why doesn’t the Food and Drug Administration (FDA) do something?  Because, although the FDA has the power to stop deceptive fruit and vegetable product labeling claims, it has apparently declined to do so – except for fruit and vegetable beverages. Let’s consider the existing FDA authority.

General FDA Food Labeling Authority

 FDA regulations (at 21 C.F.R. §102.5) require manufacturers to “include the percentage(s) of any characterizing ingredient(s) or component(s) when the proportion of such ingredient(s) or component(s) in the food has a material bearing on price or consumer acceptance or when the labeling or the appearance of the food may otherwise create an erroneous impression that such ingredient(s) or component(s) is present in an amount greater than is actually the case.” This regulation certainly seems to give the FDA the generalized authority to stop misleading advertising and labeling on all food products.

 Specific FDA Fruit and Vegetable Beverage Requirements

 In addition to the general food authority, specific FDA requirements (at 21 C.F.R. §101.30) also govern any food that claims to be a beverage containing fruit or vegetable juice. These specific requirements apply when “the product’s advertising, label, or labeling bears the name of, or variation on the name of, or makes any direct or indirect representation with respect to any fruit or vegetable juice, or the label bears any depiction of a fruit or vegetable or other pictorial representation of any fruit or vegetable, or the product contains color and flavor that gives the beverage the appearance and taste of fruit or vegetable juice.” The specific FDA-required juice percentage declarations are as follows:

  • If the beverage contains fruit or vegetable juice, the percentage must be declared by the words “contains 50 percent [or other applicable percentage] fruit juice”.
  • If the beverage contains less than 1 percent juice, it must state “less than 1 percent juice”.
  • If the beverage contains 100 percent juice and also non-juice ingredients, it must state “100 percent juice with added [insert the name of the non-juice ingredient]”.

 Exemption for Beverages with “Minor” Amounts of Juice for “Flavoring”

However, if the beverage only contains minor amounts of juice for flavoring and is labeled with a flavor description using terms such as “flavor”, “flavored”, or “flavoring” with a fruit or vegetable name (e.g., “apple” or “tomato”) and does not bear: (1) the term “juice” on the label other than in the ingredient statement; or (2) an explicit vignette depicting the fruit or vegetable from which the flavor derives, such as juice exuding from a fruit or vegetable; or (3) specific physical resemblance to a juice or distinctive juice characteristic such as pulp then total percentage juice declaration is not required.

What if the Beverage Contains No Juice at All?

In addition, when the beverage does not meet the criteria for exemption from the total juice declaration and contains no fruit or vegetable juice at all, but the labeling or color and flavor of the beverage represents, suggests, or implies that fruit or vegetable juice may be present (e.g., the product advertising or labeling bears the name, a variation of the name, or a pictorial representation of any fruit or vegetable, or the product contains color and flavor that give the beverage the appearance and taste of containing a fruit or vegetable juice), then the label must specifically declare “contains 0 percent juice”.  

Where Must These Juice Beverage Declarations Appear?

If the beverage is sold in a package with an information panel (located on the right side of the package), the juice percentage declaration must be prominently displayed on this information panel and on the principal display panel (front of the package).  However, if the beverage is sold in a package that does not bear an information panel (this is usually the case on small single-serving size packages), the juice percentage declaration must be placed on the principal display panel near the name of the food.

Advice for Consumers

The bottom line for fruit and vegetable juice beverage shoppers is to read the label.  The specific percentage information should be on the principal display panel (front), on the information panel (right side), or on both.  If it isn’t, move on. 

For non-beverage products that claim to be “made with real fruit or vegetables” or to “contain real fruit or vegetable juice”, check the information panel on the side of the package to see if the manufacturer has voluntarily provided the specific percentage information.  If it hasn’t, again, consider moving on.  Remember, the FDA only requires specific fruit and vegetable juice percentage declaration requirements for fruit and vegetable beverages – not for the amount of juice and vegetable content in non-beverage products.

Another suggestion would be to simply head to the produce department of your supermarket and carefully examine the items you find there.  That  is what “real” fruit and vegetables look like.  Try those instead! 





Where Does the Supreme Court’s Ruling Leave Medicaid Rate Reductions?

To follow up on our “Breaking News” post, today we’ll look at the Supreme Court’s decision in more detail and consider what the views of the majority and the dissent might tell us about the possibilities for later rulings. The decision was split; the four conservative justices would have ruled that neither the providers nor the beneficiaries could sue under the Supremacy Clause. If the minority had prevailed, the possibility of future rate challenges based on the Supremacy Clause would have been foreclosed.

The majority opinion states that CMS’ approval of the challenged rate reductions changes the posture of the case and may also change the answer to the question whether the rate reductions violated the Social Security Act. The court stated that the availability of review of CMS’ approvals under the Administrative Procedure Act (APA) might render any challenge under the Supremacy Clause redundant and unnecessary. APA review might change the outcome because the court usually must defer to an agency’s interpretation of a statute it administers.

Actually, the CMS approval letter, which was attached to correspondence directed to the Supreme Court, did not reverse the agency’s original position. Rather, it approved some of the proposed amendments based on additional information that the state provided in 2011, and the approval was limited to specified dates during which the state had implemented the cuts. The state officials agreed to withdraw some of the pending requests and not to seek reimbursement from providers because of the likely effect on beneficiaries’ current access to services.

California Medicaid officials submitted the following for state fiscal years 2008, 2009 and 2010:

  • the total number of providers by type and location;
  • the number of providers participating in Medi-Cal, the state’s Medicaid program, by type and geographic area;
  • utilization of services by beneficiary type over a period of time; and
  • benchmark utilization data, to the extent available.

CMS then studied the changes in access and utilization, comparing utilization during the periods that the cuts were in effect to the periods when they were not. In addition to the data submitted, CMS based its approval on the state’s agreement to a plan to monitor access to each of the services services that were at issue in the disputed amendments.

Because the state passed rate-cutting legislation again in 2011, some of the providers and beneficiaries had filed another lawsuit by the time the Supreme Court reached its decision. CMS approved this amendment on the same date as the others, so the providers and beneficiaries sued both the director of the California agency and the HHS Secretary. On January 31, 2012, a federal court granted another preliminary injunction barring the state from implementing the cuts.

The district court found that the director’s submission and CMS’ approval of the proposed amendment both were arbitrary and capricious. Although the state had submitted some data to show that the rate cuts would not impair beneficiaries’ access to care, the court found it insufficient. The agency counted every doctor who had submitted even one Medicaid claim in the last year to be available to new Medicaid patients. The agency also failed to consider an established problem with beneficiaries’ access to some services and measured access using geographic “peer groups” from different regions of the state.

CMS’ approval of these latest amendments also was based, in part, on the state agency’s monitoring plan discussed above. In granting the injunction, the district court found that the monitoring plan did not render the flawed amendments acceptable. The court reasoned that the plan addressed the action to be taken after an access problem has been identified; it does not prevent the problem from arising.

In judicial review of a determination under the APA, a court also would consider whether CMS’ action was arbitrary and capricious. Although another court might possibly reach a different conclusion, nothing in the Supreme Court’s ruling would affect its findings.

The district court also considered whether it must defer to CMS’ interpretation of Section 1902(a)(30)(A) of the Social Security Act. The court found it unnecessary either to defer or give “serious respect” to CMS’ position that cost studies were not required. First, the position was not developed in a process involving review or consideration of opposing views, such as an administrative hearing or notice-and-comment rule making. Second, the agency had taken the opposite position in the past. In a previous proceeding before the Ninth Circuit Court of Appeals, HHS had argued that it could not find that rates were consistent with efficiency, economy and quality of care while ignoring the providers’ costs.

In addition, the letter approving the state plan amendment did not include any explanation of the reasoning behind the conclusion that cost studies were not required. Finally, CMS’ position was not firm or settled; the agency had told the court that it was reviewing and refining its interpretation through the rule making process.

CMS has not completed the rule making process it began last May. Given that the agency approved California’s  proposed amendments only after additional information was provided and a monitoring plan was in place, its approval of future across-the-board cuts mandated by a state legislature is unlikely. Maybe this lengthy litigation was necessary to prompt CMS into making rules everyone can live with. On the other hand, if the Court of Appeals decides that no one can sue to stop rate cuts before they are implemented, CMS might be free to let the proposed rule die.