Last week, Senate Finance Committee Ranking Member Ron Wyden (D- Ore.) introduced the “Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act of 2017.”  As its name suggests, it seeks to require parties (e.g., PBMs) that contract with pharmaceutical manufacturers for drug rebates to be more transparent regarding the rebates they receive on behalf of their health plan clients, specifically Part D plans and qualified health benefit plans that participate on ACA Exchanges (“Exchange Plans”). The Act would: (1) require the Secretary of the Department of Health & Human Services (HHS) to make available on its website the PBM transparency data submitted by PBMs that contract with Part D Sponsors or Exchange Plans, (2) require the Secretary of HHS to adopt a minimum percentage of drug rebates that a PBM would need to pass through to its Part D or Exchange Plan clients, and (3) amend the definition of negotiated price under the Part D program to change what price concessions would have to be reflected at the point-of-sale.  This post focuses on the first two changes.  The third change will be addressed in a separate post. Continue Reading Wyden’s C-THRU Act – Publicizing PBM Rebate Data

A series of recoupment letters from the New York State Medicaid Fraud Control Unit (MFCU) to healthcare providers who have management or billing company arrangements based on a percentage of collections has prompted the Medical Society of the State of New York (MSSNY) to warn its members that such arrangements are fraudulent under Medicaid law.  The warning, posted on its blog on February 10, 2017, also urged members to review their billing arrangements to make sure the compensation is based either on time or a fixed, flat fee.

In a redacted MFCU recoupment letter linked to the post, MFCU states that as a result of an audit and investigation, it has determined that the percentage based contract violates state and federal Medicaid regulations, including Section 360.7.5(c), which permits Medicaid providers to contract with billing agents if the compensation paid to the agent is “reasonably related to the cost of the services” and “unrelated, directly or indirectly, to the dollar amounts billed and collected.”  The audit period was five years, and MFCU sought to collect the overpayment amount plus an additional nine percent (9%) interest. Continue Reading New York Medical Society Warns Providers to Avoid Percentage-Based Fees

The President has released a “budget blueprint” for fiscal year 2018. Although there are many aspects of the budget blueprint to digest, several budget items signal that government health care fraud enforcement remains a priority under the new administration.

  • Overall, the President’s 2018 budget requests $69.0 billion for the Department of Health and Human Services (“HHS”). According to the blueprint, this a $15.1 billion or 17.9% decrease from the FY 2017 annualized level.
  • However, the budget blueprint increases funding for the Health Care Fraud and Abuse Control (HCFAC) program, which is designed to coordinate federal, state and local health care fraud and abuse enforcement efforts.
  • Specifically, the blueprint proposes $751 million of discretionary funding for the HCFAC program, which exceeds FY 2017 funding by $70 million, according to the budget blueprint.
  • The budget blueprint explains that additional funding for the HCFAC program “has allowed the Centers for Medicare & Medicaid Services in recent years to shift away from a ‘pay-and-chase’ model toward identifying and preventing fraudulent or improper payments from being paid in the first place.”

In a proposed budget that cuts HHS funding by nearly 18%, the increase in HCFAC funding stands out. The President’s budget affirms a trend that we have observed away from “pay-and-chase” toward proactive data analysis. As discussed in a prior post, recent False Claims Act cases strongly suggest that growing experience with data mining has given enforcers greater confidence in their ability to identify potential fraud and abuse. As a result, proactive data analysis could lead to a greater number of FCA cases originating with government investigators instead of through qui tam FCA actions.

Since the 21st Century Cures Act became law on December 13, 2016, we have been blogging on regulatory and clinical areas affected by its provisions (see herehere and here). On March 14, 2017, FDA made further progress on its Cures Act obligations by releasing in the Federal Register a proposed list of Class II devices that may be exempted from premarket notification (or 510(k)) requirements. The list is currently open for public comment until May 15, 2017.  Under the Cures Act, the final list of exempted devices must be published by July 11, 2017.

Continue Reading Cures Act Developments: FDA Proposes Class II Device Exemptions

Earlier this month, Mintz Levin’s Health Care Enforcement Defense Group published its most recent Health Care Qui Tam Update that looks at 18 health care-related qui tam cases unsealed in October and November of 2016.

The Update presents two unique cases in-depth and covers some of the trends revealed in these recently unsealed cases:

  • The cases identified were filed in federal district courts in 12 states, including California (5), New York (3), Alabama (1), Arkansas (1), Florida (1), Hawaii (1), Kansas (1), New Jersey (1), New Mexico (1), North Carolina (1), Oklahoma (1), and Pennsylvania (1).
  • The federal government declined to intervene in nine of the 18 cases. Five more cases were voluntarily dismissed before any action was taken by the government. The federal government intervened, in whole or in part, in three cases. In the two remaining cases, the government’s intervention status could not be discerned from the unsealed filings.
  • Nature of the Claims
    • Nine of the recently unsealed cases included both state and federal claims.
    • Four involved allegations of unlawful kickbacks. Of these, two also alleged violations of the Stark Law (42 U.S.C. § 1395nn).
    • Claims for relief under state or federal anti-whistleblower retaliation provisions appeared in nine of the 18 recently unsealed cases.
    • The cases remained under seal for an average of just over two years (774 days). The median number of days cases remained under seal was 573.5. United States ex rel. DiBenedetto v. Vahedi, which was heard in the U.S. District Court for the Central District of California, was under seal for the shortest amount of time, at 104 days. United States ex rel. Harmsen v. Moore County Dental Care Center, which was filed in the U.S. District Court for the Middle District of North Carolina, was under seal the longest, at 2,075 days (over five and a half years)
  • In nearly three-quarters of the unsealed cases (13 of 18), relators were current or former employees of the defendant.

See HERE for the full Update and to find our key takeaways from the cases discussed.

 

As the healthcare industry moves towards value-based purchasing, pay-for-performance, and other payment reform models, industry leaders have identified federal fraud and abuse laws as a barrier to full implementation of such models.  Last month, the Health Care Leadership Council released a White Paper entitled “Health System Transformation: Revisiting the Federal Anti-Kickback Statute and Physician Self-Referral (“Stark”) Law to Foster Integrated Care Delivery and Payment Models” (“HCL White Paper”), identifying current fraud and abuse laws as impeding transformation of the healthcare system.  Pharmaceutical and device manufacturers have also taken advantage of the OIG’s Solicitation of New Safe Harbors and Special Fraud Alerts (“OIG Solicitation”) to advocate for more flexible fraud and abuse laws with respect to value-based arrangements. Continue Reading Pharmaceutical Manufacturers and Healthcare Leaders cite Fraud and Abuse Laws as Obstacle to Value-Based Arrangements

In a February 24th blog post, we described Medicaid block grants and per capita caps in terms of A x B = C to demonstrate how those payment policies work.  ‘A’ is the amount a state is paid per beneficiary, ‘B’ is the number of beneficiaries in a given state, and ‘C’ is the total state payment from the federal government.  We have since been asked by numerous providers to describe the nuts and bolts of how a per capita cap, the current Medicaid financing structure in the proposed American Health Care Act, would work.  For the Medicaid provider, the nuts and bolts of how they are paid would change very little while the amount they are paid might change a lot.  Continue Reading Provider Payments Under a Medicaid Per Capita Cap

Here we are in March 2017 and no one is sure where things stand with the 340B Drug Discount Program.   HRSA and its oversight of the 340B program are subject to the recent Executive Orders restricting issuance of federal regulations and the promised repeal of the Affordable Care Act (ACA) has the potential to impact 340B operations.  In fact, the only thing that appears certain for the 340B program is that nothing is certain.  So let’s review several recent 340B developments, and potential developments to come.

Omnibus Guidance

In June 2016, I predicted in this blog that the final version of the long-promised HRSA 340B Omnibus Guidance, which would have provided clarity on 340B program standards, would never actually be issued or implemented.  And in fact, at the end of January 2017, HRSA withdrew the final 340B Omnibus Guidance while it is was still pending at OMB.  Even if it had issued, the Guidance would have been subject to the terms of the regulatory freeze President Trump imposed by Executive Order immediately after his inauguration on January 20, 2017. Continue Reading The Uncertain Future of the 340B Drug Discount Program

In the alphabet soup that is health and FDA law and policy (if you don’t know what we mean, are you sure you should be reading this blog?), one acronym that doesn’t get a lot of respect is “UFA.” This is the first is a series of blog posts that aim to educate and inform our readers about why the UFA acronym matters and how the UFA legislative process may be particularly significant in 2017.

UFA stands for “User Fee Act,” of which there are many flavors in this modern era – from the old-timer Prescription Drug User Fee Act (PDUFA), born in 1992, to the more toddler-ish Biosimilar User Fee Act (BsUFA) that joined us in 2012. Other important UFAs for the U.S. health care system and stakeholders are the Medical Device User Fee Amendments (MDUFA), which were enacted first in 2002, and the Generic Drug User Fee Amendments (GDUFA) that launched at the same time as their biosimilar companion. Continue Reading Let the 2017 “UFA” Games Begin!

Last week, the Medicare Payment Advisory Commission (the “Commission”) debated a package of policy reforms that would change the way Medicare reimburses physicians for Medicare Part B drugs. In the midst of calls to lower drug prices, the Commission has been developing its Part B reform package over the last two years and now, finally, appears poised to move forward with a vote at next month’s meeting.

Medicare Part B drugs are a multi-billion dollar benefit and typically include higher cost specialty drugs that are administered in a physician’s office on an outpatient basis. Drugs covered under Medicare Part B are reimbursed through a so-called “buy and bill” approach. That is, the physician buys the drugs and bills Medicare for their use. Medicare pays the provider the average sales price (“ASP”) of the drug plus a markup of 6% of the ASP.  The 6% markup is generally considered compensation to physicians for the storage, handling, and other administrative costs associated with these specialty drugs. Continue Reading Medicare Advisors Debate Part B Drug Payment Reforms