Medicaid Patients Could Face Higher Fees Under a Proposed Federal Policy

WASHINGTON — Millions of low-income people could be required to pay more for health care under a proposed federal policy that would give states more freedom to impose co-payments and other charges on Medicaid patients.

Hoping to persuade states to expand Medicaid, the Obama administration said state Medicaid officials could charge higher co-payments and premiums for doctors’ services, prescription drugs and certain types of hospital care, including the “nonemergency use” of emergency rooms. State officials have long asked for more leeway to impose such charges.

The 2010 health care law extended Medicaid to many childless adults and others who were previously ineligible. The Supreme Court said the expansion of Medicaid was an option for states, not a requirement as Congress had intended. The administration has been trying to persuade states to take the option, emphasizing that they can reconfigure Medicaid to hold down their costs and “promote the most effective use of services.”

In the proposed rule published Tuesday in the Federal Register, the administration said it was simplifying a complex, confusing array of standards that limit states’ ability to charge Medicaid beneficiaries. Under the proposal, a family of three with annual income of $30,000 could be required to pay $1,500 in premiums and co-payments.

As if to emphasize the latitude given to states, the administration used this heading for part of the new rule: “Higher Cost Sharing Permitted for Individuals With Incomes Above 100 Percent of the Federal Poverty Level” (that is, $19,090 for a family of three).

Barbara K. Tomar, director of federal affairs at the American College of Emergency Physicians, said the administration had not adequately defined the “nonemergency services” for which low-income people could be required to pay. In many cases, she said, patients legitimately believe they need emergency care, but the final diagnosis does not bear that out.

“This is just a way to reduce payments to physicians and hospitals” from the government, Ms. Tomar said.

With patients paying more, the federal government and states would pay less than they otherwise would. Medicaid covers 60 million people, and at least 11 million more are expected to qualify under the 2010 law. The federal government pays more than half of Medicaid costs and will pay a much larger share for those who become eligible under the law.

In the proposed rule, the administration said it had discovered several potential problems in its efforts to carry out the law.

First, it said, it has not found a reliable, comprehensive and up-to-date source of information about whether people have employer-sponsored health insurance. The government needs such information to decide whether low- and middle-income people can obtain federal subsidies for private insurance.

The subsidies can be used to buy coverage in competitive marketplaces known as insurance exchanges. Under the law, people can start enrolling in October for coverage that starts in January 2014, when most Americans will be required to have health insurance. People who have access to affordable coverage from employers will generally be ineligible for subsidies.

In applying for subsidies, people must report any employer-sponsored insurance they have. But the administration said it could be difficult to verify this information because the main sources of data reflect only “whether an individual is employed and with which employer, and not whether the employer provides health insurance.”

Since passage of the health care law, the administration has often said that people seeking insurance would use a single streamlined application for Medicaid and the subsidies for private coverage. Moreover, the state Medicaid agency and the exchange are supposed to share data and issue a “combined eligibility notice” for all types of assistance.

But the administration said this requirement would be delayed to Jan. 1, 2015, because more time was needed to establish electronic links between Medicaid and the exchanges.

Leonardo D. Cuello, who represents Medicaid beneficiaries as a lawyer at the National Health Law Program, expressed concern.

“Under the proposed rule,” Mr. Cuello said, “many people will be funneled into health insurance exchanges even though they have special needs that are better met in Medicaid. And if you asked the right questions, you would find out that they are eligible for Medicaid.”

The federal government will have the primary responsibility for running exchanges in more than half the states. About 20 states are expected to expand Medicaid; governors in other states are opposed or uncommitted.

The proposed rule allows hospitals to decide, “on the basis of preliminary information,” whether a person is eligible for Medicaid. States must provide immediate temporary coverage to people who appear eligible.

Kenneth E. Raske, president of the Greater New York Hospital Association, said this could be a boon to low-income people. “Currently,” he said, “only children and pregnant women are presumed eligible for inpatient admissions under Medicaid in New York.”

The public has until Feb. 13 to comment on the proposed rule. Comments can be submitted at www.regulations.gov.

Read More..

Medicaid Patients Could Face Higher Fees Under a Proposed Federal Policy

WASHINGTON — Millions of low-income people could be required to pay more for health care under a proposed federal policy that would give states more freedom to impose co-payments and other charges on Medicaid patients.

Hoping to persuade states to expand Medicaid, the Obama administration said state Medicaid officials could charge higher co-payments and premiums for doctors’ services, prescription drugs and certain types of hospital care, including the “nonemergency use” of emergency rooms. State officials have long asked for more leeway to impose such charges.

The 2010 health care law extended Medicaid to many childless adults and others who were previously ineligible. The Supreme Court said the expansion of Medicaid was an option for states, not a requirement as Congress had intended. The administration has been trying to persuade states to take the option, emphasizing that they can reconfigure Medicaid to hold down their costs and “promote the most effective use of services.”

In the proposed rule published Tuesday in the Federal Register, the administration said it was simplifying a complex, confusing array of standards that limit states’ ability to charge Medicaid beneficiaries. Under the proposal, a family of three with annual income of $30,000 could be required to pay $1,500 in premiums and co-payments.

As if to emphasize the latitude given to states, the administration used this heading for part of the new rule: “Higher Cost Sharing Permitted for Individuals With Incomes Above 100 Percent of the Federal Poverty Level” (that is, $19,090 for a family of three).

Barbara K. Tomar, director of federal affairs at the American College of Emergency Physicians, said the administration had not adequately defined the “nonemergency services” for which low-income people could be required to pay. In many cases, she said, patients legitimately believe they need emergency care, but the final diagnosis does not bear that out.

“This is just a way to reduce payments to physicians and hospitals” from the government, Ms. Tomar said.

With patients paying more, the federal government and states would pay less than they otherwise would. Medicaid covers 60 million people, and at least 11 million more are expected to qualify under the 2010 law. The federal government pays more than half of Medicaid costs and will pay a much larger share for those who become eligible under the law.

In the proposed rule, the administration said it had discovered several potential problems in its efforts to carry out the law.

First, it said, it has not found a reliable, comprehensive and up-to-date source of information about whether people have employer-sponsored health insurance. The government needs such information to decide whether low- and middle-income people can obtain federal subsidies for private insurance.

The subsidies can be used to buy coverage in competitive marketplaces known as insurance exchanges. Under the law, people can start enrolling in October for coverage that starts in January 2014, when most Americans will be required to have health insurance. People who have access to affordable coverage from employers will generally be ineligible for subsidies.

In applying for subsidies, people must report any employer-sponsored insurance they have. But the administration said it could be difficult to verify this information because the main sources of data reflect only “whether an individual is employed and with which employer, and not whether the employer provides health insurance.”

Since passage of the health care law, the administration has often said that people seeking insurance would use a single streamlined application for Medicaid and the subsidies for private coverage. Moreover, the state Medicaid agency and the exchange are supposed to share data and issue a “combined eligibility notice” for all types of assistance.

But the administration said this requirement would be delayed to Jan. 1, 2015, because more time was needed to establish electronic links between Medicaid and the exchanges.

Leonardo D. Cuello, who represents Medicaid beneficiaries as a lawyer at the National Health Law Program, expressed concern.

“Under the proposed rule,” Mr. Cuello said, “many people will be funneled into health insurance exchanges even though they have special needs that are better met in Medicaid. And if you asked the right questions, you would find out that they are eligible for Medicaid.”

The federal government will have the primary responsibility for running exchanges in more than half the states. About 20 states are expected to expand Medicaid; governors in other states are opposed or uncommitted.

The proposed rule allows hospitals to decide, “on the basis of preliminary information,” whether a person is eligible for Medicaid. States must provide immediate temporary coverage to people who appear eligible.

Kenneth E. Raske, president of the Greater New York Hospital Association, said this could be a boon to low-income people. “Currently,” he said, “only children and pregnant women are presumed eligible for inpatient admissions under Medicaid in New York.”

The public has until Feb. 13 to comment on the proposed rule. Comments can be submitted at www.regulations.gov.

Read More..

Despite Strong Earnings, Google Is Still Stymied by Mobile

SAN FRANCISCO — Although Google is scrambling to meet consumers as they flock to mobile devices, the question is whether it is moving fast enough.

Investors were comforted on Tuesday when Google announced strong fourth-quarter earnings, and the stock rebounded from a dip over the last week, climbing 5 percent in after-hours trading.

But a closer look at the results shows that while Google continues to be a moneymaking machine, its most lucrative business, search on desktop computers, is slowing, while Google has not yet figured out how to make equivalent profits on mobile devices.

“You would expect Google to be a key player benefiting from mobile, but that hasn’t played out in the last year,” said Jordan Rohan, a Stifel Nicolaus analyst.

The price advertisers pay Google each time someone clicks on an ad, known as cost per click or C.P.C., decreased 6 percent from the fourth quarter a year ago, falling for the fifth consecutive quarter on a yearly basis, though not as much as some analysts had feared.

The cost per click has been declining largely because advertisers pay less for mobile ads, and more people are using Google on their mobile devices and fewer on their desktop computers.

Still, Google has been trying to improve its mobile products — from developing new kinds of mobile ad campaigns to building devices like the Nexus 4 smartphone — and its executives say it is a matter of time before the numbers improve. Already, in the fourth quarter, the cost per click rose 2 percent from the previous quarter.

“We’re in some uncharted territory because of the rapid rate of change in these things, but I’m very optimistic about it,” said Larry Page, Google’s chief executive, on a conference call with analysts after the earnings were announced. “I think the C.P.C.’s will improve as the devices improve, as well.”

Mr. Page, who has had health problems related to his voice, sounded unusually weak and breathy.

Google reported revenue that was lower than analysts had expected. Google warned last week that analysts’ expectations were off target because Google sold Motorola’s set-top box division during the quarter and so did not include it in the quarterly results. Still, even including that division of Motorola, Google’s revenue would have missed expectations.

The company reported fourth-quarter revenue of $14.42 billion, an increase of 36 percent over the year-ago quarter. Net revenue, which excludes payments to the company’s advertising partners, was $11.34 billion, up from $8.13 billion. Net income rose 7 percent to $2.89 billion, or $8.62 a share.

The fourth quarter is generally Google’s brightest because it makes much of its money on retail ads that run during the holiday shopping season. This holiday season was the first that Google charged e-commerce companies to be included in its comparison shopping engine, and these so-called product listing ads contributed to its bottom line.

“Despite talk about retail having a weak season, Google’s product listing ad program has taken off quite successfully,” said Sid Shah, director of business analytics at Adobe, which handles $2 billion in annual advertising spending.

Home Depot increased mobile commerce sales by four times after using Google mobile ads, said Patrick Pichette, Google’s chief financial officer. He also cited YouTube ad revenue, saying the “Gangnam Style” video, the most-watched on record, has earned $8 million in online advertising deals. Election ad spending on Google increased five times over the 2008 election, he said.

Nonetheless, Google’s mobile challenge overhung even its usual holiday shopping sparkle. Consumers are increasingly shopping on phones and tablets, yet Google and other companies have not yet figured out how best to profit from mobile users.

One problem is that advertisers pay about half as much for an ad on a mobile device, in part because they are not yet sure how effective mobile ads can be. Another challenge is that consumers increasingly use apps, like Yelp or Kayak, to search on mobile devices instead of using Google.

And even when consumers use Google for mobile searches, they are often doing so on Apple devices like iPhones, for which Google has to pay Apple a fee. Those types of fees are large — equivalent to 25 percent of Google’s revenue in the quarter.

The shift to mobile is happening as Google’s biggest, most lucrative business — desktop search — is slowing. The share of clicks on Google results that happen on desktop computers has fallen to 73 percent from 77 percent in the last six months, while the share of clicks on tablets and smartphones has increased to 27 percent from 23 percent, according to data from Adobe.

The problem is that clicks on retail ads on tablets, for instance, cost about 16 percent less than they do on the desktop, according to Adobe. The price of clicks on retail ads on tablets rose 16 percent over the last year, but on smartphones they fell 11 percent.

As the desktop search sector slows, Google has a new search competitor to contend with: Facebook, which last week introduced a new form of personalized social search on the site.

Google has also recently become a maker of mobile devices, both by acquiring money-losing Motorola and by producing the line of Nexus devices with manufacturer partners.

In the fourth quarter, Google sold about 1.5 million Nexus phones and tablets, not including those sold by other retailers, according to estimates from JPMorgan, and has had trouble keeping supply up with demand.

Eventually, Google hopes, these various businesses will help it solve the mobile revenue riddle, but analysts say they do not expect it to happen in the near term. “You have your Motorola Android phone, get offered a local deal, go into the merchant, use Google Checkout to pay and get rewards,” said Colin Gillis, an analyst at BGC Partners. “That’s the grand vision and it’s a nice vision, but it’s not happening in March.”

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The Lede Blog: Prince Harry Compares War to PlayStation, and Taliban Are Not Amused

A Taliban spokesman said on Tuesday that Prince Harry must have “mental problems,” following the broadcast of remarks by the royal in which he said that killing militants from an Apache helicopter was similar to playing video games.

As soon as Britain’s Ministry of Defense announced on Monday that Prince Harry had left Afghanistan, ending his four-month deployment there, the British news media rushed to broadcast video of the royal officer at war, which was recorded with his cooperation on the condition that it not be released until his tour was over.

Britain’s Channel 4 News broke into its bulletin on Monday night just minutes after the announcement to broadcast its edit of the footage, which was shot late last year at Camp Bastion in Afghanistan’s Helmand Province by the British Press Association.

A video report from Britain’s Channel 4 News shot during Prince Harry’s recent deployment to Afghanistan.

The Channel 4 News report drew attention to the frequency with which the prince, whose mother was being chased by photographers when she died in a car accident, mentioned his distaste for the British press.

At one stage in the interview, Prince Harry said that he was not troubled by killing militants. “Take a life to save a life,” he said. “If there’s people trying to do bad stuff to our guys, then we’ll take them out of the game.”

In another edit of the footage, posted online by The Guardian, Prince Harry, who is known as Captain Wales in the army, explained that he was glad to have been “pushed forward to the front seat,” the one reserved for the attack helicopter’s gunner. That was, he said, “a joy for me because I’m one of those people that loves playing PlayStation and Xbox, so with my thumbs I like to think I’m probably quite useful — if you ask the guys I thrash them at FIFA the whole time,” referring to a popular video game series.

“This is a serious war, a historic war, resistance for us, for our people,” a Taliban spokesman, Zabiullah Mujahid, told Agence France-Presse in response, “and now this prince comes and compares this war with his games, PlayStation or whatever he calls it.”

But the spokesman added, “We don’t take his comments very seriously, as we have all seen and heard that many foreign soldiers, occupiers who come to Afghanistan, develop some kind of mental problems on their way out.”

In another part of the interview, posted online by The Telegraph, Prince Harry said that his brother, Prince William, was jealous of him. “He’d love to be out here and, to be honest with you, I don’t see why he couldn’t,” Harry said. “No one knows who’s in the cockpit. Yes you get shot at, but, you know, if the guys who are doing the same job as us are being shot at on the ground, then I don’t think there’s anything wrong with us being shot at as well. Yeah, people back home might have issues with that, but we’re not special.”

Video of remarks by Prince Harry about how much his brother would like to serve in Afghanistan.

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Square Feet: Pittsburgh Seeks to Expand Riverfront Access to the Public

PITTSBURGH — Pittsburgh exists for three reasons: the Allegheny, Monongahela and Ohio.

In the 20th century, the banks of those rivers were controlled by industrial behemoths. They largely lost that identity after the waning of the steel industry in the 1980s. Over the last two decades, however, the city’s progress in clearing and cleaning its waterfront has created 12 miles of recreational trails, three professional sports stadiums, several boat landings and an influx of nearly 2,000 new downtown residents.

The city has managed to leverage a $124 million investment in publicly accessible riverfront into $4 billion in corporate, public, nonprofit and entertainment development downtown.

That success has renewed a debate that would have been unthinkable in Pittsburgh’s polluted industrial heyday: how best to expand public access to the shorelines of the three rivers. Projects proposed for two of the largest tracts left to be developed on the downtown fringe illustrate the opportunities and limits of public-private partnerships.

This month, the city’s Urban Redevelopment Authority approved preliminary plans for an $80 million to $90 million investment in new roads, streets and utilities on a 178-acre former industrial site that is the biggest remaining waterfront property in the city. The developers will use a tool called tax increment financing, which earmarks a portion of a site’s future property taxes to build its infrastructure. Such financing, approved by both the authority and the City Council on a case-by-case basis, has galvanized redevelopment on Pittsburgh’s complex industrial sites.

The latest project, which uses the acronym Almono for the city’s three rivers, is a case in point. It envisions a $900 million office, industrial and residential development on a former steel and coke manufacturing site on the Monongahela River that closed in 1997.

In 2002, an alliance of four philanthropies bought the property for $10 million to protect it for postindustrial development. “It was a once-in-a-century opportunity to develop the riverfront, and we thought foundations, as nonprofit owners, could supply patient money,” said William P. Getty, president of the Claude Worthington Benedum Foundation.

The current Almono partnership comprises the Heinz Endowments, the Benedum Foundation and an affiliate of the Allegheny Conference on Community Development. It is managed by the Regional Industrial Development Corporation of Southwestern Pennsylvania, a nonprofit economic development group.

The former industrial site occupies a strategic location between downtown and two rapidly expanding research institutions, the University of Pittsburgh and Carnegie Mellon. Both universities lease space in the adjacent Pittsburgh Technology Park. Carnegie Mellon also conducts robotics field testing at the Almono site.

Donald F. Smith Jr., president of the development corporation, says the partnership is talking with both universities about their futures at the site. “The universities are important players,” he noted. “They will have space needs for their tech transfer efforts.”

Private developers will be asked to submit proposals for four interconnected zones on the Monongahela River that will include two million square feet of office space, research and clean manufacturing, and 1,200 residential units. The master plan developed by the Rothschild Doyno Collaborative, an architecture and urban design firm, calls for alternative technologies for energy generation and storm and wastewater management, along with 25 acres of parks, trails and river access. The design also suggests new uses for a few historic structures, like a rail yard roundhouse and a 1,300-foot-long steel mill.

“Riverfront access, beautification and redevelopment of the entire neighborhood is important,” said Jim Richter, executive director of the Hazelwood Initiative, a community development organization.

While plans include continued traffic on a CSX rail line through the site, a proposed highway has been suspended because of its $4 billion price tag and community opposition.

Read More..

The Week: A Roundup of This Week’s Science News

“Science,” a colleague once said at a meeting, “is a mighty enterprise, which is really rather quite topical.” He was so right: as we continue to enhance our coverage of the scientific world, we always aim to keep the latest news front and center.

His observation seemed like a nice way to introduce this column, which will highlight the week’s developments in health and science news and glance at what’s ahead. This past week, for instance, the mighty enterprise of science addressed itself to such newsy topics as the flu (there’s still time to get vaccinated!), and mental illness and gun control.

In addition to the big-headline stories that invite wisdom from scientists, each week there is a drumbeat of purely scientific and medical news that emerges from academic journals, fieldwork and elsewhere. These developments, from the quirky to the abstruse, often make their way into the daily news cycle, depending on the strength of the research behind them. (Well, that’s how we judge them, anyway.)

Many discoveries are hard to unravel. “In a way, science is antithetical to everything that has to do with a newspaper,” the same colleague observed. “You couldn’t imagine anything less consumer-friendly.”

Let’s aim to fix that. Below, a selection of the week’s stories.

DEVELOPMENTS

Health

Strange, but Effective

People with a bacterial infection called Clostridium difficile — which kills 14,000 Americans a year — have a startling cure: a transplant of someone else’s feces into their digestive system, which introduces good bacteria that the gut needs to fight off the bad. For some people, antibiotics don’t fix this problem, but an infusion of diluted stool from a healthy person seems to do the trick.

Genetics

Dig We Must

Hillery Metz and Hopi Hoekstra/Harvard University

Evolutionary biologists at Harvard took a tiny species of deer mice, known for building elaborate burrows with long tunnels, and bred it with another species of deer mice, which builds short-tunneled burrows. Comparing the DNA of the original mice with their offspring, the biologists pinpointed four regions of genetic code that help tell the mice what kind of burrow to construct.

Aerospace

Launch, Then Inflate

Uncredited/Bigelow Aerospace, via Associated Press

NASA signed a contract for an inflatable space habitat — roughly pineapple-shaped, with walls of floppy cloth — that will ideally be appended to the International Space Station in 2015. NASA aims to use the pod to test inflatable technology in space, but the company that builds these things, Bigelow Aerospace, has bigger ambitions: think of a 12-person apartment and laboratory in the sky, with two months’ rent at north of $26 million.

Biology

What’s Green and Flies?

Jodi Rowley/Australian Museum

National Geographic reported on an Australian researcher working in Vietnam who discovered a great-looking new species of flying frog. Described as having flappy forearms (the better for gliding), the three-and-a-half-inch-long frog likes to “parachute” from tree to tree, Jodi Rowley, an amphibian biologist at the Australian Museum in Sydney, told the magazine. She named it Helen’s Flying Frog, for her mother.

Privacy

That’s Joe’s DNA!

People who volunteer their genetic information for the betterment of science — and are assured anonymity — may find that their privacy is not a slam dunk. A researcher who set out to crack the identities of a few men whose genomes appeared in a public database was able to do so using genealogical Web sites (where people upload parts of their genomes to try to find relatives) as well as some simple search tools. He was trying to test the database’s security, but even he did not expect it to be so easy.

Genetics

An On/Off Switch for Disease

Geneticists have long puzzled over what it is that activates a disease in one person but not in another — even in identical twins. Now researchers from Johns Hopkins and the Karolinska Institute in Sweden who studied people with rheumatoid arthritis have identified a pattern of chemical tags that tell genes whether to turn on or not. In rheumatoid arthritis, the immune system attacks the body, and it is thought the tags enable the attack.

Planetary Science

That Red Planet

Everybody loves Mars, and we’re all secretly hoping that NASA’s plucky little rover finds evidence of life there. Meanwhile, a separate NASA craft — the Mars Reconnaissance Orbiter, which has been looping the planet since 2006 — took some pictures of a huge crater that looks as if it once held a lake fed by groundwater. It is too soon to say if the lake held living things, but NASA’s news release did include the happy phrase “clues to subsurface habitability.”

COMING UP

Animal Testing

Retiring Chimps

Emily Wabitsch/European Pressphoto Agency

A lot of people have strong feelings about the use of chimpanzees in biomedical and behavioral experiments, and the National Institutes of Health has been listening. On Tuesday, the agency is to release its recommendations for curtailing chimp research in a big way. This will be but a single step in a long process and it will apply only to the chimps the agency owns, but it may well stir big reactions from many constituencies.

Read More..

The Week: A Roundup of This Week’s Science News

“Science,” a colleague once said at a meeting, “is a mighty enterprise, which is really rather quite topical.” He was so right: as we continue to enhance our coverage of the scientific world, we always aim to keep the latest news front and center.

His observation seemed like a nice way to introduce this column, which will highlight the week’s developments in health and science news and glance at what’s ahead. This past week, for instance, the mighty enterprise of science addressed itself to such newsy topics as the flu (there’s still time to get vaccinated!), and mental illness and gun control.

In addition to the big-headline stories that invite wisdom from scientists, each week there is a drumbeat of purely scientific and medical news that emerges from academic journals, fieldwork and elsewhere. These developments, from the quirky to the abstruse, often make their way into the daily news cycle, depending on the strength of the research behind them. (Well, that’s how we judge them, anyway.)

Many discoveries are hard to unravel. “In a way, science is antithetical to everything that has to do with a newspaper,” the same colleague observed. “You couldn’t imagine anything less consumer-friendly.”

Let’s aim to fix that. Below, a selection of the week’s stories.

DEVELOPMENTS

Health

Strange, but Effective

People with a bacterial infection called Clostridium difficile — which kills 14,000 Americans a year — have a startling cure: a transplant of someone else’s feces into their digestive system, which introduces good bacteria that the gut needs to fight off the bad. For some people, antibiotics don’t fix this problem, but an infusion of diluted stool from a healthy person seems to do the trick.

Genetics

Dig We Must

Hillery Metz and Hopi Hoekstra/Harvard University

Evolutionary biologists at Harvard took a tiny species of deer mice, known for building elaborate burrows with long tunnels, and bred it with another species of deer mice, which builds short-tunneled burrows. Comparing the DNA of the original mice with their offspring, the biologists pinpointed four regions of genetic code that help tell the mice what kind of burrow to construct.

Aerospace

Launch, Then Inflate

Uncredited/Bigelow Aerospace, via Associated Press

NASA signed a contract for an inflatable space habitat — roughly pineapple-shaped, with walls of floppy cloth — that will ideally be appended to the International Space Station in 2015. NASA aims to use the pod to test inflatable technology in space, but the company that builds these things, Bigelow Aerospace, has bigger ambitions: think of a 12-person apartment and laboratory in the sky, with two months’ rent at north of $26 million.

Biology

What’s Green and Flies?

Jodi Rowley/Australian Museum

National Geographic reported on an Australian researcher working in Vietnam who discovered a great-looking new species of flying frog. Described as having flappy forearms (the better for gliding), the three-and-a-half-inch-long frog likes to “parachute” from tree to tree, Jodi Rowley, an amphibian biologist at the Australian Museum in Sydney, told the magazine. She named it Helen’s Flying Frog, for her mother.

Privacy

That’s Joe’s DNA!

People who volunteer their genetic information for the betterment of science — and are assured anonymity — may find that their privacy is not a slam dunk. A researcher who set out to crack the identities of a few men whose genomes appeared in a public database was able to do so using genealogical Web sites (where people upload parts of their genomes to try to find relatives) as well as some simple search tools. He was trying to test the database’s security, but even he did not expect it to be so easy.

Genetics

An On/Off Switch for Disease

Geneticists have long puzzled over what it is that activates a disease in one person but not in another — even in identical twins. Now researchers from Johns Hopkins and the Karolinska Institute in Sweden who studied people with rheumatoid arthritis have identified a pattern of chemical tags that tell genes whether to turn on or not. In rheumatoid arthritis, the immune system attacks the body, and it is thought the tags enable the attack.

Planetary Science

That Red Planet

Everybody loves Mars, and we’re all secretly hoping that NASA’s plucky little rover finds evidence of life there. Meanwhile, a separate NASA craft — the Mars Reconnaissance Orbiter, which has been looping the planet since 2006 — took some pictures of a huge crater that looks as if it once held a lake fed by groundwater. It is too soon to say if the lake held living things, but NASA’s news release did include the happy phrase “clues to subsurface habitability.”

COMING UP

Animal Testing

Retiring Chimps

Emily Wabitsch/European Pressphoto Agency

A lot of people have strong feelings about the use of chimpanzees in biomedical and behavioral experiments, and the National Institutes of Health has been listening. On Tuesday, the agency is to release its recommendations for curtailing chimp research in a big way. This will be but a single step in a long process and it will apply only to the chimps the agency owns, but it may well stir big reactions from many constituencies.

Read More..

DealBook: Michael Dell’s Empire in a Buyout Spotlight

The computer empire of Michael S. Dell spreads across a campus of low-slung buildings in Round Rock, Tex.

But his financial empire — estimated at $16 billion — occupies the 21st floor of a dark glass skyscraper on Fifth Avenue in Manhattan.

It is there that MSD Capital, started by Mr. Dell 15 years ago to manage his fortune, has quietly built a reputation as one of the smartest investors on Wall Street. By amassing a prodigious portfolio of stocks, companies, real estate and timberland, Mr. Dell has reduced his exposure to the volatile technology sector and branched out into businesses as diverse as dentistry and landscaping.

Now, Mr. Dell is on the verge of making one of the biggest investments of his life. The 47-year-old billionaire and his private equity backers are locked in talks to acquire Dell, the company he started with $1,000 as a teenager three decades ago, in a leveraged buyout worth more than $20 billion. MSD could play a role in the Dell takeover, according to people briefed on the deal.

The private equity firm Silver Lake has been in negotiations to join with Mr. Dell on a transaction, along with other potential partners like wealthy Asian investors or foreign funds. Mr. Dell would be expected to roll his nearly 16 percent ownership of the company into the buyout, a stake valued at about $3.5 billion. He could also contribute additional personal money as part of the buyout.

That money is managed by MSD, among the more prominent so-called family offices that are set up to handle the personal investments of the wealthy. Others with large family offices include Bill Gates, whose Microsoft wealth financed the firm Cascade Investment, and New York’s mayor, Michael R. Bloomberg, who set up his firm, Willett Advisors, in 2010 to manage his personal and philanthropic assets.

“Some of these family offices are among the world’s most sophisticated investors and have the capital and talent to compete with the largest private equity firms and hedge funds,” said John P. Rompon, managing partner of McNally Capital, which helps structure private equity deals for family offices.

A spokesman for MSD declined to comment for this article. The buyout talks could still fall apart.

In 1998, Mr. Dell, then just 33 years old — and his company’s stock worth three times what it is today — decided to diversify his wealth and set up MSD. He staked the firm with $400 million of his own money, effectively starting his own personal money-management business.

To head the operation, Mr. Dell hired Glenn R. Fuhrman, a managing director at Goldman Sachs, and John C. Phelan, a principal at ESL Investments, the hedge fund run by Edward S. Lampert. He knew both men from his previous dealings with Wall Street. Mr. Fuhrman led a group at Goldman that marketed specialized investments like private equity and real estate to wealthy families like the Dells. And Mr. Dell was an early investor in Mr. Lampert’s fund.

Mr. Fuhrman and Mr. Phelan still run MSD and preside over a staff of more than 100 overseeing Mr. Dell’s billions and the assets in his family foundation. MSD investments include a stock portfolio, with positions in the apparel company PVH, owner of the Calvin Klein and Tommy Hilfiger brands, and DineEquity, the parent of IHOP and Applebee’s.

Among its real estate holdings are the Four Seasons Resort Maui in Hawaii and a stake in the New York-based developer Related Companies.

MSD also has investments in several private businesses, including ValleyCrest, which bills itself as the country’s largest landscape design company, and DentalOne Partners, a collection of dental practices.

Perhaps MSD’s most prominent deal came in 2008, in the middle of the financial crisis, when it joined a consortium that acquired the assets of the collapsed mortgage lender IndyMac Bank from the federal government for about $13.9 billion and renamed it OneWest Bank.

The OneWest purchase has been wildly successful. Steven Mnuchin, a former Goldman executive who led the OneWest deal, has said that the bank is expected to consider an initial public offering this year. An I.P.O. would generate big profits for Mr. Dell and his co-investors, according to people briefed on the deal.

Another arm of MSD makes select investments in outside hedge funds. Mr. Dell invested in the first fund raised by Silver Lake, the technology-focused private equity firm that might now become his partner in taking Dell private.
MSD’s principals have already made tidy fortunes. In 2009, Mr. Fuhrman, 47, paid $26 million for the Park Avenue apartment of the former Lehman Brothers chief executive Richard S. Fuld. Mr. Phelan, 48, and his wife, Amy, a former Dallas Cowboys cheerleader, also live in a Park Avenue co-op and built a home in Aspen, Colo.

Both are influential players on the contemporary art scene, with ARTNews magazine last year naming each of them among the world’s top 200 collectors. MSD, too, has dabbled in the visual arts. In 2010, MSD bought an archive of vintage photos from Magnum, including portraits of Marilyn Monroe and Mahatma Gandhi, and has put the collection on display at the University of Texas, Mr. Dell’s alma mater.

Just as the investment firms Rockefeller & Company (the Rockefellers, diversifying their oil fortune) and Bessemer Trust (the Phippses, using the name of the steelmaking process that formed the basis of their wealth) started out as investment vehicles for a single family, MSD has recently shown signs of morphing into a traditional money management business with clients beside Mr. Dell.

Last year, for the fourth time, an MSD affiliate raised money from outside investors when it collected about $1 billion for a stock-focused hedge fund, MSD Torchlight Partners. A 2010 fund investing in distressed European assets also manages about $1 billion. The Dell family is the anchor investor in each of the funds, according to people briefed on the investments.

MSD has largely remained below the radar, though its name emerged a decade ago in the criminal trial of the technology banker Frank Quattrone on obstruction of justice charges. Prosecutors introduced an e-mail that Mr. Fuhrman sent to Mr. Quattrone during the peak of the dot-com boom in which he pleaded for a large allotment of a popular Internet initial public offering.

“We know this is a tough one, but we wanted to ask for a little help with our Corvis allocation,” Mr. Fuhrman wrote. “We are looking forward to making you our ‘go to’ banker.”

The e-mail, which was not illegal, was meant to show the quid pro quo deals that were believed to have been struck between Mr. Quattrone and corporate chieftains like Mr. Dell — the bankers would give executives hot I.P.O.’s and the executives, in exchange, would hold out the possibility of giving business to the bankers. (Mr. Quattrone’s conviction was reversed on appeal.)

The MSD team has also shown itself to be loyal to its patron in other ways.

On the MSD Web site, in the frequently asked questions section, the firm asks and answers queries like “how many employees do you have” and “what kind of investments do you make.”

In the last question on the list, MSD asks itself, “Do you use Dell computer equipment?” The answer: “Exclusively!”

Michael J. de la Merced contributed reporting.

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This post has been revised to reflect the following correction:

Correction: January 19, 2013

An article on Friday about MSD Capital, an investment firm started by Michael S. Dell to manage his fortune, misstated, in some editions, the year its energy hedge fund raised $1 billion from outside investors. It was in 2011, not earlier this year. (Another of the firm's hedge funds, the MSD Torchlight Partners fund, raised $1 billion in 2012).

A version of this article appeared in print on 01/18/2013, on page B1 of the NewYork edition with the headline: Michael Dell’s Empire In a Buyout Spotlight.

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DealBook: China’s Focus on Aerospace Raises Security Questions

TIANJIN, China — When Airbus executives arrived here seven years ago scouting for a location to assemble passenger jets, the broad, flat expanse next to Tianjin Binhai International Airport was a grassy field.

Now, Airbus, the European aerospace giant, has 20 large buildings and is churning out four A320 jetliners a month for mostly Chinese state-controlled carriers. The company also has two new neighbors — a sprawling rocket factory and a helicopter manufacturing complex — both producing for the Chinese military.

The rapid expansion of civilian and military aerospace manufacturing in Tianjin reflects China’s broader ambitions.

As Beijing’s leaders try to find new ways to invest $3 trillion of foreign reserves, the country has been aggressively expanding in industries with strong economic potential. The Chinese government and state-owned companies have already made a major push into financial services and natural resources, acquiring stakes in Morgan Stanley and Blackstone and buying oil and gas fields around the world.

Aerospace represents the latest frontier for China, which is eyeing parts manufacturers, materials producers, leasing businesses, cargo airlines and airport operators. The country now rivals the United States as a market for civilian airliners, which China hopes to start supplying from domestic production. And the new leadership named at the Party Congress in November has publicly emphasized long-range missiles and other aerospace programs in its push for military modernization.

If Boeing’s difficulties with its recently grounded aircraft, the Dreamliner, weigh on the industry, it could create opportunity. Chinese companies, which have plenty of capital, have been welcomed by some American companies as a way to create jobs. Wall Street has been eager, too, at a time when other merger activity has been weak.

Washington is trying to figure out what to do about China’s deal-making broadly. “Many of these transactions raise important security issues for our country,” said Michael R. Wessel, a member of the U.S.-China Economic and Security Review Commission, which was created by Congress to monitor the bilateral relationship. “China’s interest in promoting these investments isn’t necessarily consistent with our own interests, and it’s appropriate to thoroughly examine the transactions.”

In aerospace, the Chinese deal-makers have deep ties to the military, raising additional issues for American regulators. The main contractor for the country’s air force, the state-owned China Aviation Industry Corporation, known as Avic, has set up a private equity fund to purchase companies with so-called dual-use technology that has civilian and military applications, with the goal of investing as much as $3 billion. In 2010, Avic acquired the overseas licensing rights for small aircraft made by Epic Aircraft of Bend, Ore., using lightweight yet strong carbon-fiber composites — the same material used for high-performance fighter jets.

Provincial and local government agencies in Shaanxi province, a hub of Chinese military aircraft testing and production, have set up another, similar-sized fund for acquisitions. Last month, a consortium of Chinese investors, including the Shaanxi fund, struck a $4.23 billion deal with the American International Group to buy 80 percent of the International Lease Finance Corporation, which owns the world’s second-largest passenger jet fleet.

“There has always been an obvious cross-fertilization of ideas, expertise and money between the civilian and military,” said Martin Craigs, a longtime aerospace executive in Asia who is now the chairman of the Aerospace Forum Asia, a nonprofit group in Hong Kong. He added that Chinese companies had been actively hiring senior American and European aerospace engineers, so national security concerns could be quelled some by hiring the right people.

The push into aerospace coincides with growing worries in the West and across Asia about China’s increasingly assertive territorial claims, including the dispatch of Chinese warships to waters long patrolled by Japan, the Philippines and Vietnam.

Coincidentally, hours after the A.I.G. deal was announced, two Chinese navy destroyers and two frigates showed up in disputed waters patrolled by Japan. China and Japan have stepped up public criticisms of each other since. And the Obama administration has begun a strategic “pivot,” shifting military forces from the Mideast back to the western Pacific, a move that Chinese officials have criticized as an attempt to contain their country.

Such confrontations in the region are drawing attention to China’s deal-making ambitions.

In October, a $1.79 billion bid by a business linked to Beijing’s municipal government to acquire the corporate jet and propeller plane operations of bankrupt Hawker Beechcraft in Wichita, Kan., fell apart over national security concerns in Washington. Executives found it hard to disentangle the civilian operations from the company’s military contracting business.

But many aerospace experts predict that Chinese investors and companies will find ways to appease American regulators. “There will be concerns undoubtedly and generally quite valid, but the commercial imperatives are such that people will find a way around them,” said Peter Harbison, the chairman of CAPA-Center for Aviation, a global aerospace consulting firm.

The sale of A.I.G.’s leasing business is expected to face scrutiny by the Committee on Foreign Investment in the United States, the government panel that reviews the national security implications of deals involving foreign buyers.

The group’s customers include many of the largest carriers in the United States, and the federal government has long counted on being able to use civilian passenger jets to transport troops overseas during a national emergency. When Saddam Hussein sent the Iraqi army into Kuwait in 1990, the Defense Department relied on the emergency mobilization of civilian jetliners to ferry 60 percent of the soldiers sent to and from the Mideast during the first Persian Gulf war and a quarter of the cargo, according to a RAND study.

Henri Courpron, the chief executive of A.I.G.’s International Lease Finance Corporation, said that he did not believe the United States should be concerned that the acquisition would prevent civilian aircraft from being available in a future crisis. Only 8 percent of the company’s aircraft are currently leased to American air carriers, and most of these are narrow-body aircraft that lack the range to ferry troops across oceans.

“It’s really a nonissue — we have 900-plus aircraft in our fleet, and there are only 11 wide bodies” currently being leased to American carriers, he said in a telephone interview. He added that the carriers have control over the aircraft during the leases. Executives from the consortium buying the stake in the leasing company declined repeated requests for interviews.

Chinese suitors in the aerospace industry understand the concerns. In part, they watched the experience in the natural resources industry. The China National Offshore Oil Corporation failed in its 2005 bid to acquire Unocal after intense political opposition. After that, Chinese energy giants have been more cautious, pursuing minority stakes in the United States and limiting their outright acquisitions.

Chinese companies are taking a similar tack in aerospace, pursuing joint ventures and technical cooperation agreements alongside acquisitions. For example, Avic is working with General Electric and other American aerospace companies on the production of a civilian jetliner, the C919. Beijing envisions the narrow-body C919 as the next step toward building a domestic aerospace business that can compete with Boeing and Airbus.

Western companies and their advisers say that they are acutely aware that technology transfers could help China strengthen its military and develop more competitive civil airplanes, and are taking precautions to protect trade secrets and national security. “You transfer the part that is most easily reverse engineered, or easily dissected,” said a lawyer with detailed knowledge of these transactions.

But many in the aerospace sector are more skeptical that the West can avoid losing control of technology. “The mentality is, they’re going to find a way to get there anyway, and we may as well get there with them,” Mr. Harbison of the CAPA-Center for Aviation said.

Airbus executives say that they are being prudent. They add that there are few trade secrets about the A320 manufactured here, an aircraft that was designed in 1986. “The A320 is well known all over the world,” said Jean-Luc Charles, the general manager of Airbus’s operations here.

A tour of the main assembly area, a hangar with gray steel walls and large red cranes overhead, suggests that it may be possible to protect the technology. The seats are installed here and the aircraft painted, but the factory is largely assembling planes from kits imported from Europe. Entire fuselages, with green protective coatings, are brought by ship from Hamburg, Germany. Even the stepladders and freight elevators give weight limits in German, and the tool boxes are labeled in English, not Chinese.

Mr. Charles said that 95 percent of the parts are still imported, and that it would take many years for that amount to shrink. “One by one, we start to give them the parts,” he said. “But each subassembly is a complex project — it takes five years.”

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DealBook: Thai Magnate's $11.2 Billion Bid Poised to Win Fraser & Neave

HONG KONG — After four months of fierce bidding between two Asian tycoons, a multibillion-dollar battle for control of Fraser & Neave appears to have reached its end.

A bidding deadline on Monday evening set by Singapore’s takeover regulator came and went, meaning the victor will probably be TCC Assets, which is controlled by Charoen Sirivadhanabhakdi of Thailand. TCC Assets raised its offer on Friday to 9.55 Singapore dollars a share, valuing Fraser & Neave at 13.76 billion Singapore dollars ($11.19 billion).

That was apparently enough to chase away a counteroffer by Overseas Union Enterprise, which is part of the Indonesian billionaire Mochtar Riady’s Lippo Group and is led by Mr. Riady’s son Stephen.

Overseas Union had entered the contest for Fraser & Neave in November, when it bid 9.08 dollars a share.

Under the terms of the auction process — set last week by the takeover regulator, the Securities Industry Council, and intended to remove uncertainty for shareholders — Overseas Union had until 6 p.m. on Monday in Singapore to submit an increased offer.

Had it done so, TCC Assets would have had 24 hours to counter, and the auction would have continued until one of the parties failed to submit a counteroffer.

In a statement after the deadline passed, Overseas Union confirmed it had not made a new bid, saying that in order to succeed it “would need to significantly increase the offer price to a level which is no longer as attractive to Overseas Union, in particular, given the potential impact of the recent measures taken by the Singapore government in relation to the property market.”

Fraser & Neave, established in 1883 to sell carbonated drinks in Southeast Asia, owns businesses that include beverages, shopping centers and full-service apartments. In September, the company agreed to sell its controlling stake in Asia Pacific Breweries, the maker of Tiger Beer, to Heineken in a deal worth $4.6 billion.

TCC Assets already owned a 30 percent stake in Fraser & Neave, and in September made an initial takeover bid for the company at 8.88 dollars a share. Since then, TCC Assets has increased its stake to 40 percent. The Thai company’s revised bid on Friday represented a 5.2 percent premium to the offer submitted by Overseas Union in November.

The passing of Monday’s deadline without a new bid from Overseas Union means shareholders are likely to favor the higher offer from TCC Assets when they vote on the deal. A vote has yet to be scheduled.

Investors in Fraser & Neave have been bullish for months. On Monday, an hour before the deadline, the stock closed at a record high of 9.74 dollars. That was up 1.7 percent from the closing price on Friday and above any of the takeover bids that had been announced.

Overseas Union is being advised by Credit Suisse, Bank of America Merrill Lynch and C.I.M.B. of Malaysia. TCC Asset’s advisers are the United Overseas Bank, DBS of Singapore and Morgan Stanley.

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