OFFICE OF THE MAYORCITY AND COUNTY OF HONOLULU

530 SOUTH KING STREET, ROOM 300 * HONOLULU, HAWAII 96813PHONE: (808) 768-4141 * FAX: (808) 768-4242 * INTERNET: www.honoIuIu.ov

PETER B. CARLISLE DOUGLASS. CHINMAYOR MANAGING DIRECTOR

CHRYSTN K. A. EADSDEPUTY MANAGING DIRECTOR

October29, 2012

The Honorable Joshua Booth Green, M.D.SenatorHawaii State Capitol415 S. Beretania Street, Room 222Honolulu, Hawai’i 96813

Dear Senator Green:

Thank you for your letters dated August 9, 2012 to city director of humanresources Noel Ono and to me and for your advocacy on behalf of AutomatedHealthcare Solutions (AHCS). I apologize for the delayed response; however, yourcharges against the City and County of Honolulu (the “city”) were so severe in tone thatit prompted the city to carefully consider your letter and evaluate its actions up untilnow.

To summarize, you requested the city’s prompt and immediate payment of thebalance billed and cite, among other reasons, the convenience of AHCS services to thedrug dispensing physicians and city’s claimants to whom they dispense drugs. Pleasebe advised that the city considers this to be an internal billing dispute between itself andAHCS. I respectfully must inform you that we are unable to agree to the discountproposed by AHCS for the reasons stated below.

As you are a strong supporter of controls against the unsustainable rate ofincrease in healthcare costs, you are aware of the abuse now taking place in physiciandispensing that has caused an exponential increase in the city and State of Hawaii’sprescription drug costs. Furthermore, physician dispensing is unique only to theworkers’ compensation and automobile insurance segment of the market (less than 3%of the total Hawai’i healthcare market). This practice does not currently exist undergroup health plans like Hawai’i Medical Service Association (HMSA) or federally fundedprograms like Medicare and Medicaid. Only a few physicians engage in the practice ofdrug dispensing and their practices are not in areas underserved by pharmacies.

The Honorable Joshua Booth Green, M.D.SenatorOctober 29, 2012Page 2 of 4

Under workers’ compensation insurance, prescription drugs are reimbursed atthe Average Wholesale Price (AWP) as published in Red Book (a Thompson Reutersreference source), plus a 40% markup, which companies might then exploit as follows:

1. A drug re-packager or manufacturer fills out a form to list their drug with RedBook. Red Book merely publishes what is identified on the listing form anddoes not provide any data services. Therefore, the AWP has no relevance toany actual average or wholesale amount. It is merely an amount listed on theform by the re-packager/manufacturer of the drug and published as such byRed Book. When the city’s medical payment integrity vendor asked RedBook if they would publish their repackaged AWP for Acetaminophen(Tylenol) at $1 million per pill, Red Book purportedly replied, “yes.”

2. Drugs endowed with Red Book-listed AWP’s are sold to physicians forphysician dispensing by various firms. These firms appear to compete for thephysician business on the basis of having higher registered AWP’s than theircompetitors. The pitch to the dispensing physician is, “once you compare ourAWP’s with the AWP’s from your current sources, you will clearly see whichones are more profitable.”

3. Physicians dispense these drugs and “wash their hands” by passing theirclaims for collection to companies like AHCS who is the “expert” collectionagency for such claims using their strategy of influence wielding throughpractices such as lobbying and campaign contributions to receptivepoliticians.

Dispensing physicians also now appear to prescribe all sorts of compoundeddrugs that are amended from readily available substances. The best example of this isdiluted “Ben Gay” at 1/1 0th to 1/25th of the active strength contained in its ingredients.The city’s contractor used this example in its testimony in support of a Hawai’ilegislative bill that sought to control this practice. The city has a claimant for whom thedispensing physician prescribed and dispensed over $8,600 of this compound eventhough the claimant repeatedly objected stating that he did not use it and it wasstacking up in his garage. The dispensing physician still insisted the claimant walk outwith a few tubes of this compound each visit anyway at a billed cost of $299.00/tube.

How much are dispensing physicians actually paying for the medications theydispense at such high “AWP’s” while claiming that it is because of low purchasingvolumes that their prices reflect costs higher than retail pharmacies? This table showsa handful of examples that the city obtained from a dispensing physician and offers acomparison of the rates actually billed to employers (such as the city and the State ofHawai’i) and insurers compared to rates offered by a sample local pharmacy:

The Honorable Joshua Booth Green, M.D.SenatorOctober 29, 2012Page 3 of 4

AHCS Physician Billed as LongsMedication Dispensed Billed Paid % of Cost PricingCarisoprodol 350mg #30 $277.47 [ $4.80 1 5,781% $18.29Diclofenac Sodium 100mg #30 $20074 [ $1282 1,566% [ $8559Naproxen 500mg #60 $188.16 $4.40 1 4,276% $32.39Orneprazole 20mg #60 $367.11 $11.42 1 3,215% $124.89

AHCS is not a provider of service but rather a self-described technologycompany/bill collection agency which buys the drug claim up front from the dispensingphysician. As such, AHCS enters into a business arrangement with the physician at itsown risk. In processing AHCS-referenced claims, IMS (the city’s medical paymentintegrity vendor), pursuant to HAR 12-15-55(c), repeatedly requested from AHCS acopy of the invoice for the dispensed drug that would identify the National Drug Code(NDC) number and the AWP at the time of purchase by the provider of service. AHCShas refused to provide the requested information.

This past May, AHCS requested that IMS negotiate an agreement for the cityclaims. IMS agreed and executed a non-disclosure agreement with AHCS asrequested. AHCS then provided a pricing proposal insisting that IMS negotiate withAHCS on the outstanding city claims first, as they represented their largest aggregatebilled amount. IMS and the city jointly performed an analysis of the AHCS pricingproposal. The counter-offer presented by the city and IMS was generous relative tolocal pharmacy pricing and prices available to city claimants through the city’spharmacy benefit management program. AHCS did not respond to the city or IMS, butwithout notice, immediately began filing billing dispute requests with the Hawai’idepartment of labor and industrial relations. As such, the city intends to present itscase during the formal dispute resolution process once the State initiates this.

Given the foregoing, the city urges you, in the meantime, as an advocate ofresponsible medicine and cost-effective care, to investigate the practice of physiciandispensing in this state. Here are some key concerns:

• With so many drug options available to them, why are dispensing physicianschoosing the most expensive ones? Why should the city pay $832.37 forCarisoprodol 350mg per 90 tabs when the physician paid $14.40 out ofpocket and the local pharmacy sells it for $57.65? How can the governmentjustify this expense to taxpayers?

The Honorable Joshua Booth Green, M.D.SenatorOctober 29, 2012Page 4 of 4

• Why are some dispensing physicians choosing to dispense uniquelycompounded preparations of dubious therapeutic value? For example, whythe diluted Ben Gay cited above or Speed Gel, a topical anti-inflammatoryidentified in Red Book as active ingredient “Homeopathic” billed against thecity taxpayers at $41 6.01/tube when the physician pays $43.20/tube?

• Why do some dispensing physicians insist their patients “load-up” on thedispensed drugs? Please see the attached department of labor ruling fromthe Big Island.

HMSA’s portion of prescription drug costs account for 15.4% of the total claimscosts paid in 2011 with the remainder going to Hospital (48.4%), Professional Services(34.2%), and Dental, Vision, and Chiropractic (2%). Please feel free to use any of theexamples provided here as a cost basis and calculate what would happen to healthinsurance costs in Hawai’i if HMSA bore the same impact of physician dispensing in itsprogram as the city does in its workers’ compensation program. For example, AHCSbilled $181.07 for 60 tabs of Hydrocodone/APAP 7.5-500 mg, while HMSA’s fullycovered benefit allows $12.17. You might reasonably conclude that the cost ofprescription drugs under such an arrangement would at minimum eclipse the total costof all other healthcare services combined and leave Hawai’i with a bankrupt system andno coverage. Also note that while severely impacting employers and workers’compensation insurers, this practice also affects consumers indirectly in the form ofincreased automobile insurance premiums and reduced benefits when their personalinjury protection coverage exhausts due to the high cost of such physician dispensedmedications.

Also attached is a New York Times article that might interest you if you pursuethis inquiry. We would be happy to provide more articles as AHCS has become thenational example of public outrage and scorn for such physician dispensing practices.

Very truly yours,

as.nManaging Director

Attachments

cc: Bruce Coppa, Governor’s OfficeDwight Takamine, Director, Department of Labor and Industrial Relations

STATE CAPITOLHONOLULU, HAWAII 96813

OFFICE OF SENATOR JOSHUA BOOTH GREEN M.D.

August 9, 2012

Noel Ono, DirectorCity and County ofHonolulu, Human Resources Dept650 S. King Street, 10th FloorHonolulu, HI 96813

cc’d: Douglas Chin, Managing Director

Dear Director Ono,

I recently met with representatives from Automated Healthcare Solutions, a company thatprovides physicians with a full service solution that allows them to dispense medicationsto their workers’ compensation patients. The service improves the care provided to theseinjured workers as they are given necessary medication at point of care at no cost, asopposed to having to travel to the pharmacy and risk being denied due to insuranceverification issues, etc.

One of the prescription services provided by AHCS is that they purchase the prescriptionclaims from the dispensing physicians, paying the physicians upfront for the claims andthen billing insurance carriers at the Hawaii fee schedule (1.4 x Average WholesalePrice).

AHCS has provided me with accounts receivable data for the City of Honolulu’s injuredworkers’ medication claims which demonstrates that through May of 2012 PrescriptionPartners (AHCS’ billing arm) has billed your agency $799,685 at the fee schedule but hasonly received $180,182 in payments from you (see attached).

Per its claims’ purchase agreement with the medical clinics that treat your workers,AHCS has paid the clinics $599,779, leaving them with a LOSS of $379,598! What’smost disturbing is that for the current year, you have only paid 1% of your outstandinginvoices.

I appreciate the fiscal strain that our government agencies have been under over recentyears but I also appreciate the fact that budgets have increased recently and also the

Senatwt Joo1ua Baøil1 ç’teeu .iJL.3rd District — North Kona I South Kona I North Kohala I South Kohala

HAWAII ST4&TE CAPITOL, Room 222 - HONOLULU, HAWAII 96813PhONE: (808) 586.9385 CehI: (808) 937.0991: TOLL FREE hAWAII ISLAND: (808) 974.400 cxl. 9385 FAX: (808) 586-9391

EMAIL: oshinaboothicc,i@yahioo.om

1fljc cnatt

STATE CAPITOLHONOLULU, HAWAII 96813

OFFICE OF SENATOR JOSHUA BOOTH GREEN M.D.

simple fact that one needs to pay one’s bills. Your non-payment has already impactedpatient care for the City of Honolulu workers as AHCS has been forced to go to acollection-based arrangement with the physicians. As a result, the physicians arereluctant to dispense certain necessary medications to your workers due to the uncertaintythat they will ever recoup their costs.

AHCS has attempted to negotiate with Kris Kadzielawa at IMS, your Third PartyAdministrator firm, but his offer of 20 cents on the reimbursable dollar for past and futureclaims is both unreasonable and unsustainable.

AHCS has graciously agreed to a reasonable discount on outstanding payments andfuture claims. I ask that you kindly settle up with them by August 24th at the latest.

Many thanks,

Josh Green, M.D.State Senate3rd District

Seitatoit Jadtw .9)oth eeii M.)3rd District — North Kona I South Kona / North Kohala I South Kohala

HAWAII STATE CAPITOL, Room 222 - HONOLULU, HAWAII 96813PhONE: (808) 586-9385 CeII: (808) 937-0991: TOLL FREE hAWAII ISLAND: (80$) 974-40() exL. 9385 FAX: (808) 586-9391

E-IAIL: josIiuabooLhareeii@yahoo.com

tic

4

Ijc cnatcSTATE CAPITOL

HONOLULU, HAWAII 96813

OFFICE OF SENATOR JOSHUA BOOTH GREEN M.D.

Senatwt Jofuu .i3aath Lw j1L93.3rd District — North Kona / South Kona I North Kohala / South Kohala

HAWAII STATE CAPITOL, Room 222 - HONOLULU, HAWAII 96813PhONE: (808) 586.9385 -Cell: (808) 937-0991: TOLL FREE hAWAII ISLAND: (808) 971-400 cxl. 9385 FAX: (808) 586-9391-

EMAIL: joshnabootIigrecii(yahoo.com

2010

2011

2012

Total

Billed (1.4x AWP) Collections % Paid to Clinics AHCS Margin I (Loss)

$82,019.18 $76,637.88 93% $57,413.43 $19,224.45$364,255.15 $101,461.82 28% $254,978.61 ($153,516.79)

$353,410.93 $2,081.85 1% $247,387.65 ($245,305.80)

$799,685.26 $180,181.55 23% $559,779.68 ($379,598.13)

STATE OF HAWAIIDEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS

DISABILIVI COMPENSATION DIVISIONWEST KAWAII DISTRICT OFFICE

P.O. BOX 4KEAIAKEKUA, HAWAII oa7u

CJ’nfl ER3EST C TORRICERPC) BOX 3112

KAILUA KONA HI 96745 —

DECS1ONenpayc GROUP BUl1,D)RS INC

JSUPPLEMLL TO IPULAThD

COMPRc5tE AND4ELEASEAGRE)MENTV1JATED J3/2OlO

-I

,urw,a, GAII,AGL12R BJ\SSETT SI’RVICES INCceor PIONEER PLAZA

900 FORT ST STE 420

HONOLULU HI 96813

Case No 90900692D/A; 6/23/2009

INTRODUCTION

Pursuant to a Stipulated Compromise and Release Agreement; Approval and

Order dated 12/13/2010, the parties agreed the claimaiit had suffered personal

jnuries to the lumbosacral spine, left hip, left t1igh, left leg, left knee,

left elbow, left forearm, left wrist, chest, and 11th rib by accident arising

out of and in the course of employment with the above-named employer on

4/23/2009. Said greement provided benefits pursuant to Chapter 386, Hawaii

Revised Statutes (HRS) Specifically, said Order provided for such medical

care, services, and aupplies as the nature of the injury may require,

temporary total disability benefits beginning (Waiting period 4/24/2009

through 4/2G/0O9) 4/27/2009 through 5/2/2010, for’a total of $30,425.00.

The parties further agreed the claimant suffered 7% permanent partial

disability of the whole person inclusive of the 11th rib, 24% permanent

partial disability of the left lower extremity, 5% permanent partial

diabi1iI;y of th left hand, 2% permanent partial disability of the left

upper extremity, and certain disfigurement. The average weekly wages of the

claimant were $1,478.00.

hearing presided over by Hearings Officer Kimoto was held on

6/13/2012.

ISSUE

Is the claimant entitled to further medical care for the injury of

4/23/2009?

I i,”WC ISA (Rev 8!08) 1JG—9?2

ERNEST C ‘EOflRICER C90900592)Page 2

PARTIES’ POSITIONS -

The claimant contends that he went to Aloha Pain Clinic and saw Rudolph

Puaua, M.D., ior hi left hip and left leg pain, Claimant’s last attending

physician was Terry Smith, M.D., and claimant could not find another doctor

to treat his work injury. On 2/15/2012, claimant was prescribed medications

including Ondansetron 4mg 430, IZanitidine 300mg fl60, Flector Patch l.3 ff30,

‘Amitiza 24mng ff60, •r1eloxicam 7.5mg 60, Speed Gel Rx Pain Relief Gel 30m1,

‘7.olpidem Tartrate 5mg ff30, Hydrocodone, and Acetaminophen 10-325mg #90.

Claimant told Dr. Puana that he did not want to take medicati’bns, but he was

prescribed all of theme medications. claimant tries to take as little

medications possible for any of hi conditions.

On 6/12/2012, claimant sent an email to Aloha Pain Clinic questioning

the necessity of all of the prescribed medications with the total cost

exceeding $5,000.00, Claimant will be trying to return the medications since

he will not be baking the medications.

The employer contends that they have not denied further medical care

for claimant, Upon receiving the medical bills from Aloha Pain Clinic,.

employer questi.oned, the $5,201.34 -in prescription medications and wanted an

independent medical evaluation since it appeared claimant may have suffered a

new injury. By letter dated 3/30/2012, employer asked Aloha Pain Clinic to

provide claimant rith a written prescription since claimant was provided a

prescription uard from First Script. In comparing the cost of the

medications from Aloha Pain Clinic, if claimant utilized the prescription

card from ‘:Lrs1 Script, the same medications would cost $944.08.

FflDINGS OF FACT

The History and Physical report dated 2/15/2012 from Aloha Pain Clinic

noted claimant’s ].eft hip pain became more significant lately. Claimant was

rioted to be taking Diovan and gout medications and no pain medications. In

his report dated 5/25/2010, James Langwortby, 4.D., noted claimant’s

medications were Driovan and AJ.lopurinal. Claimant’s medications have been

consistently limited to only Diovan and Allopurinal. during these periods.

Claimant does not want to take the medications prescribed on 2/15/2012 -

and he will be returning the medications. In refusing the medications, Aloha

Pain Clinic cannot ‘charge the employer and it is determined employer shall

nob he liable for the costs of the prescription medications. Claimant, shall

not be charged for these prescription medications,

Employer has not denied further medical care, services, or supplies for

claimant’s work injury:

PRINCIPLES OF LAW

Sections 386-21 and-386-26, L-1RS, provide tb.at a liable employer ahaJ.l

pay for such medical care, services, and supplies as the nature of the injury

may require.

ERNEST C TO!flICER (90900592)

Y’ige 3

CONCLUSZOS OF LAW

The Director finds, based on the Findings of Fact and Principles of

Laq, the claimant continues to be entitled to further medical care, but the

employer is not liable for the prescription medications dispensed by Aloha

Pain Clinic on 2/15/2012. The Director credits the position of t:he claimant

and the employer.

DECISION AD ORDER

1. SectionS 386-21 and 38-26, FIRS, said employer shall

continue to pay for such medical care, services, and

supplies as the nature of the injury may require, excluding

the prescripti.on medications dispensed on 2/15/2 012 by

Aloha gain Clinic. Claimant shall not be charged for the

prescription, medications.

BY ORDER OF THE DIRECTOR, AUGUST 8, 2012.

APPEAL: Thi. decision may be appeai.ed by filing a written n tine of appeal with the

Director of Labor an ThcIustrial Relations or the Director’s co1nty representative within

twenty days after a copy of this decision ha been sent.

It is the policy of the Department of Labor and Industrial R atiozis that no person shall

on the basis of race, color, sex, marital atatus, religion, reed, ethnic origin,

national origin, age, disability, ancestry, arrest/court rec’rd, sexual orientatiàn, and

Mational Guard participation be subjected to discrimination, excluded’ from participation,

or denied the benefi.trj of the department’s services, programs, activtieo, rr employment,

IC-)

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1.2012

insurers Pay Big Markups asDoctors Dispense DrugsEy BARRY MEIER and KATIE THOMAS

When a pharmacy sells the heartburn drug Zantac, each pill costs about 35cents. But doctors dispensing it to patients in their offices have chargednearly 10 times that price, or $3.25 a pill.

The same goes for a popular muscle relaxant known as Soma, insurers say.From a pharmacy, the per-pill price is 6o cents. Sold by a doctor, it cancost more than five times that, or $3.33.

At a time of soaring health care bills, experts say that doctors, middlemenarid drug distributors are adding hundreds of millions of dollars annuallyto the costs borne by taxpayers, insurance companies and employersthrough the practice of physician dispensing.

iViost common among physicians who treat injured workers, it is a twist ona typical doctor’s visit. Instead of sending patients to drugstores to getprescriptions filled, doctors dispense the drugs in their offices to patients,With the bills going to insurers. Doctors can make tens of thousands ofdollars a year operating their own in-office pharmacies. The practice hasbecome so profitable that private equity firms are buying stakes in thebusinesses, and political lobbying over the issue is fierce.

Doctor dispensing can be convenient for patients. But rules in many statesgoverning workers’ compensation insurance contain loopholes that allowdoctors to sell the drugs at huge markups. Profits from the sales areshared by doctors, middlemen who help physicians start in-officepharmacies and drug distributors who repackage medications for officesale.

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Alarmed by the costs, some states, including California and Oklahoma,have clamped down on the practice. But legislative and regulatory battlesover it are playing out in other states like Florida, Hawaii and Maryland.

In Florida, a company called Automated HealthCare Solutions, a leader inphysician dispensing, has defeated repeated efforts to change what doctorscan charge. The company, which is partly owned by Abry Partners, aprivate equity firm, has given more than $3.3 million in politicalcontributions either directly or through entities its principals control,public records show.

Insurers and business groups said they were amazed by the little-knowncompany’s spending spree. To plead its case to Florida lawmakers,Automated HealthCare hired one of the state’s top lobbyists, BrianBallard, who is also a major national fund-raiser for the Mitt Romneycampaign.

“I consider the fees that these people are charging to be immoral,” saidAlan Hays, a Republican state senator in Florida who introduced a bill tobar physicians from dispensing pills that was defeated. “They’re legalunder the current law, but they’re immoral.”

Physician prescribing works like this: Middlemen like AutomatedHealthCare help doctors set up office pharmacies by providing them withbilling software and connecting them with suppliers who repackagemedications for office sale. Doctors sell the drugs but they do not collectpayments from insurers. In the case of Automated HealthCare, thecompany pays the doctor 70 percent of what the doctor charges, thenseeks to collect the full amount from insurers.

The number of doctors nationwide who dispense drugs in their office isnot known and the practice is prevalent only in states where workers’compensation rules allow for large markups.

Dr. Paul Zimmerman, a founder of Automated HealthCare, said thatinsurers and other opponents of doctor dispensing were distorting itscosts by emphasizing the prices of a few drugs, rather than the typicalprice spread between physician- and pharmacy-dispensed drugs.

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Both Dr. Zimmerman and physicians who sell drugs also said the workerscompensation system was so bureaucratic and complex that an injuredemployee could wait days before getting a needed medication through apharmacy.

“We did not institute this because of the money,” Dr. Marc Loev, amanaging partner of the Spine Center, a chain of clinics in Maryland,testified last year at a public hearing in Baltimore. “We instituted itbecause we were having significant difficulty providing the care forworkers’ compensation patients.”

The loophole that raises the price of physician-dispensed drugs ofteninvolves a benchmark called “average wholesale price.” The cost of amedication dispensed through a workers’ compensation plan is pegged insome states to that benchmark, which is supposed to represent a drug’stypical wholesale cost.

But doctor-dispensed drugs can undergo an “average wholesale price”makeover. It happens when firms that supply doctors with medicationsbuy them in bulk from wholesalers and repackage them for office sale.These “repackagers” can set a new “average wholesale price,” one that isoften many times higher than the original.

For example, in 2010, a physician associated with the Spine Center, Dr.Loev’s practice in Maryland, gave a patient a prescription for 360 patchescontaining a pain-numbing drug, lidocaine. The worker’s insurer wascharged $7,304, according to a copy of that bill provided to The New YorkTimes by a lawyer, Michael S. Levin, who represents insurance companies.

A similar number of patches dispensed by a doctor in California, whichchanged its regulations in 2007, is about $4,068, according to theCalifornia Workers’ Compensation Institute, a research group.

Warren G. Moseley, the president of a company in Tulsa, Okia., PhysiciansTotal Care, that repackages drugs for office sale by doctors, said it chargedphysicians $2,863 for 360 patches.

Dr. Loev, who uses Automated HealthCare’s services, declined to beinterviewed and did not respond to specific written questions from TheTimes.

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Dr. Charles Thorne, a principal at Multi-Specialty HealthCare, anotherMaryland-based chain of clinics that dispenses drugs, also declined to beinterviewed.

Dr. Zimmerman, the co-founder of Automated HealthCare, said that drugprices are set by companies that repackage medications for office sales.

He added that Automated HealthCare referred doctors to about a dozenrepackagers. But the company has a relationship with one repackagingcompany called Quality Care Products, based in the Midwest. The twofirms have exhibited their services together and jointly sponsor a charitygolf tournament.

The president of Quality Care, Gene Gunderson, declined to beinterviewed and the company did not respond to written questions.

Data collected by Florida insurers who handle workers’ compensationclaims shows that Quality Care supplies about 40 percent of the drugs soldby doctors in the state, a market share three times as high as that of itsclosest competitor.

Robert M. Mernick, the president of Bryant Ranch Prepack, a company inNorth Hollywood, Calif., that repackages medications for office sale, saidhe found it extraordinary that lawmakers in other states like Florida andMaryland were allowing such drug markups to continue.

“I see it as corruption,” he said. “I think it is horrible.”

In 2010, Abry Partners, a private equity firm in Boston, bought a stake inAutomated HealthCare for $85 million. Officials of Abry also declined tobe interviewed for this article.

That same year, Florida lawmakers tried to clamp down on how muchdoctors could charge for drugs. Automated HealthCare responded with amajor lobbying and spending campaign, focusing its efforts on stateleaders like the president of the Florida senate, Mike Haridopolos.

When the bill was reintroduced this year, Mr. Haridopolos declined toallow a vote. The state’s insurance commissioner had backed the move,saying it would annually save firms and taxpayers $62 million, a figuredisputed by Automated HealthCare.

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Mr. Haridopolos said he didn’t believe the bill had a chance of winning. “Itseemed like a big political food fight,” he said.

Mr. Hays, the legislator who introduced the measure, said he found thathard to believe. “The strategy of the people that were opposed to this billwas to put the right amount of dollars in the right hands and get the billblocked,” he said. “And they were successful in doing that.”

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