Medical Device Daily Washington Editor

Hospital mergers, though common, do not always get a green light from governments. And the proposed merger between two systems in Northern Virginia has bumped up against the opposition of a federal agency and the state's attorney general's office.

The deal between Inova Health Systems (Falls Church, Virginia) and Prince William Health System (Manassas, Virginia) was initially proposed in April 2006 and was welcomed by residents of western Prince William County, which has seen a population boom along with the rest of the metropolitan Washington area. Many in the community hoped that the deal, requiring Inova to invest $200 million to upgrade operations at Prince William Hospital and other operations in the Prince William system, would bring local care to residents in the western half of the county.

However, the Federal Trade Commission and the state's attorney general reported last week that they oppose the transaction. FTC's board voted unanimously to oppose the move and seek a temporary restraining order and preliminary injunction in federal district court to block the deal "pending a full administrative trial on the [merger's] merits."

FTC says the proposed acquisition "would violate the federal antitrust laws by reducing competition for general acute care inpatient hospital services in Northern Virginia" and raise prices.

The FTC said that "Northern Virginia residents have benefitted from the robust competition" between the systems "through better services and lower prices," that comment attributed to Jeffrey Schmidt, director of the FTC's Bureau of Competition. Schmidt argued that the merger would squelch "vital competition" and force "many residents ... to accept reduced healthcare coverage or no coverage at all."

Inova, a non-profit, includes five hospitals, with the merger giving it control of almost 75% of acute-care hospitals in the region.

A statement at Inova's web site said that the FTC challenge "is not the final word on the proposed merger," and that "Prince William Health System intends to vigorously pursue its decision to join Inova Health System to bring the people of Prince William County the high-quality, sophisticated and accessible healthcare services they deserve."

Melinda Hatton, senior VP/general counsel of the American Hospital Association (Chicago), said in an e-mail to Medical Device Daily that AHA is "concerned about the ruling and intends to look deeper into the facts. Among other things, FTC's decision to pursue this case through its own administrative channels instead of before an impartial federal judge is very concerning."

Medicare PHR demo underway

Advocates of personal health records (PHRs) must have felt gratified to hear the Centers for Medicare & Medicaid Services is interested in a demonstration project for PHRs, with the first leg now underway in South Carolina.

The announcement states that CMS's approach is to "encourage beneficiaries covered by traditional Medicare to take advantage of Internet-based resources to track their healthcare services and better communicate with their providers." The pilot allows beneficiaries to enter their health information into a repository based on their own Medicare claims data, including medical conditions, hospitalizations, doctor visits and medication. CMS said it is "ensuring that strict privacy and security safeguards are in place to protect all beneficiary data."

Beneficiaries do not have to key in the names and addresses of their providers, which "will be automatically entered into the PHR once the individual registers and requests the data," the announcement said. Beneficiaries will have to enter their own prescription and OTC drug information, however. The beneficiaries control access to their PHRs.

Acting CMS administrator Kerry Weems said in the statement that the PHR portal will enable Medicare beneficiaries to "be more involved with their healthcare services" and will "help CMS understand how to best educate beneficiaries on the use of a PHR ... ."

The pilot was rolled out April 4 and will run for 12 months with feedback helping CMS to design improved PHRs. The software is under the management of HealthTrio (Centennial, Colorado), "which currently offers PHRs to thousands of individuals through employer contracts," according to CMS. Palmetto GBA (Columbia, South Carolina), a Medicare contractor serving the Southeast, will handle the Medicare data input into each beneficiary's record. The pilot is under the management of information technology contractor QSSI (Gaithersburg, Maryland).

CMS clarifies CHIP/Crowd-out ruling

The Children's Health Insurance Plan (CHIP) has been the subject of intense conflict between Congress and the White House for a number of months, the administration saying it fears the crowding of children off private insurance rolls if the program is expanded to cover children living in households with incomes two-and-a half-times the poverty level.

A letter from Herb Kuhn, the agency's acting director of the Center for Medicare and Medicaid Operations, clarified a few points on the policy. According to the CMS letter to state health officials, "any changes made to a state's crowd-out procedures ... need not be applied to prior enrollees." The letter also states "because of the unique importance of timely prenatal care, we would not expect states to apply crowd-out procedures to coverage for unborn children."

However, the administration stands by its position: that requiring demonstration of at least 95% of children in families making 250% of the federal poverty level or less are covered before states can enroll those in homes with higher incomes "is an achievable goal ... we are convinced that a number of states have already reached this goal."