The Department of Justice (DOJ) recently intervened in a False Claims Act (FCA) case that raises a variety of interesting allegations, including payment of kickbacks by a compounding pharmacy to contracted marketing companies in the form of percentage-based compensation, to TRICARE beneficiaries in the form of copayment waivers, and to physicians who submitted prescriptions without seeing patients. According to the complaint, Patient Care America (PCA), a Florida compounding pharmacy, implemented a scheme to manipulate the compounding formula for pain and scar creams that resulted in the submission of false claims to TRICARE. The complaint also names two of PCA’s senior executives (one of which has since left the company) as well as the private equity firm that owns a controlling interest in PCA. Continue Reading DOJ Intervenes in False Claims Act Case Against a Compounding Pharmacy and a Private Equity Firm
Last month, the U.S. Government Accountability Office (GAO) released a report in which it found that manufacturer drug coupon programs for privately insured patients could potentially cause the Medicare Part B program to overspend on certain high-cost Part B drugs. The pricing for most drugs reimbursed by the Medicare Part B program is based on each drug’s average sales price (ASP), which is defined as the amount that physicians and other purchasers pay manufacturers for the drug. Currently, the ASP does not take into account drug coupons offered to privately insured patients. Continue Reading GAO Report Suggests Discount Coupons Impact Medicare Spending for Part B Drugs
Last week, the OIG issued a favorable opinion to a hospice provider seeking to make supplemental payments to skilled nursing facilities. Under the proposed arrangement, the hospice provider would make a supplemental payment to the nursing facility for dual-eligible individuals electing the hospice benefit that would be in addition to and separate from what the managed care organization (“MCO”) pays the nursing facility.
This supplemental payment by the hospice provider is different than the traditional payments that hospice providers make to nursing facilities for dual-eligible individuals. Traditionally, when a dual-eligible individual residing in a nursing facility elects the hospice benefit, Medicare pays the hospice provider a per diem rate that does not include room and board. Medicaid is responsible for paying the individual’s room and board. Medicaid pays room and board to the hospice provider and the hospice provider pays the nursing facility the negotiated rate. In a 1998 Special Fraud Alert on nursing home arrangements with hospices, the OIG specifically stated that this payment arrangement, in which the hospice provider pays the nursing facility only after receiving payment from Medicaid, is acceptable. Continue Reading OIG Gives Green Light to Hospice Provider’s Payment to Nursing Facilities
The long-running test-referral prosecution against Biodiagnostic Laboratory Services, LLC (“BLS”), a New Jersey clinical blood testing laboratory; its owner and employees; and BLS’s referring physicians recently reached another milestone. In a criminal case that the U.S. Attorney’s Office for the District of New Jersey has called the “largest physician bribery case ever prosecuted,” resulting in 40 guilty pleas, BLS was sentenced on June 28, 2016 and ordered to forfeit all of its assets.
In addition, on June 30, 2016, the 27th BLS referring physician pleaded guilty to charges that he violated the Federal Travel Act by taking bribes from BLS. The physician admitted that, between April 2011 and June 2012, BLS paid him approximately $1,500 per month. This physician plea is another in the long line of individual criminal pleas, 38 of which are catalogued here. Continue Reading Biodiagnostic Laboratory Services Sentenced; Another Physician Pleads Guilty
The OIG recently issued a favorable advisory opinion permitting a health system (the “Health System”) to become the sole owner of a Group Purchasing Organization (“GPO”), some of whose members were also owned by the Health System (the “Proposed Arrangement”).
Despite determining that the Proposed Arrangement does not qualify for protection under the GPO safe harbor, the OIG considered whether allowing the GPO to be wholly owned by the same entity that also owns almost 1% of the member pool increases the risk of fraud and abuse to Federal health care programs.
The GPO Structure
The GPO has over 84,000 members nationwide, many of which are hospitals, nursing facilities, clinics, physician practices, laboratories, home care, and equipment organizations. It operates by negotiating products and pricing with vendors on behalf of its members and receives administrative fees from the vendors based on a percentage of the value of sales to the members. The GPO provides annual written disclosures to the members regarding purchases made on behalf of each member and maintains records regarding discounts and vendor administrative fee distributions to members.
The Proposed Arrangement
To increase efficiencies, the GPO underwent a series of mergers and stock sales (not at issue here), after which the Health System owned 95% of the GPO, with an unrelated entity owning the remaining 5%. About 800 of the 84,000 members (just under 1%) are owned by the Health System. Under the Proposed Arrangement, the Health System would purchase the remaining 5% of the GPO to become the sole owner. Continue Reading OIG Issues Favorable GPO Advisory Opinion
As 2015 comes to a close and you look ahead to the New Year, we hope that you will consider joining us for an informative webinar on health care enforcement trends for 2016. On Wednesday, January 13, 2016, my colleagues Hope Foster, Laurence Freedman, and Bridget Rohde will host “Health Care Enforcement in 2016: A Look Back on 2015 and Forecasting the Year Ahead.” The webinar will highlight key enforcement activities from 2015 and the trends we expect to see in 2016. Continue Reading Upcoming Webinar and Report – Health Care Enforcement in 2016
Next week, my colleague Karen Lovitch will be co-presenting a discussion on Hot Topics in Laboratory Compliance at the American Health Lawyers Association’s Fraud and Compliance Forum in Baltimore, Maryland. The presentation will focus on:
- The health care fraud enforcement climate for laboratories;
- Relevant state and federal fraud and abuse laws;
- Legal risks presented by interactions with health care professionals and other sales and marketing activities; and
- Legal and business risks related to interactions with patients, including collection of outstanding invoices.
In this issue, the team highlights a case that was filed back in 2006, with allegations that focus on a hospital’s failure to maintain a culture of compliance.
- United States Of America ex rel. Dan Bisk, State Of New York ex rel. Dan Bisk v. Westchester Medical Center, 1:06cv15296 (S.D.N.Y) – the defendant’s former compliance officer alleged a variety of FCA and Stark Law violations involving the New York hospital, and claimed the defendant retaliated against him; the government focused its investigation on a particular physician practice group.
The team also reviews a trio of cases against the same defendant, alleging dermatology sweetheart deals.
- United States ex rel. Ross v. Family Dermatology of Penn., P.C., No. 1:11-cv-2413 (N.D. Ga.); United States ex rel. Baucom v. Family Dermatology of Penn., P.C., No. 1:11-cv-4260 (N.D. Ga.); and United States ex rel. Milstein v. Family Dermatology, P.C., 1:13-cv-01027 (N.D. Ga.) – the relators had different levels of involvement with the defendants, but each is a physician who alleged that the multi-state dermatology practice, and its husband and wife owners, would buy dermatology practices, then enter into independent contractor agreements with the remaining physicians, and require them to refer their pathology specimens to a lab owned by the defendants, in violation of FCA, Stark Law and AKS.
Read the full Qui Tam Update for more information about these cases, and the trends we’ve observed in all of the recently unsealed cases. In our Qui Tam Update series, we monitor recently unsealed FCA cases, identify trends in health care enforcement, and discuss noteworthy cases and developments. To receive the Qui Tam Update by email, subscribe here.
Earlier today, Attorney General Loretta Lynch announced the largest coordinated crackdown in the Medicare Fraud Strike Force’s eight-year history. The government brought charges against 243 individuals for approximately $712 million in alleged Medicare fraud.
The government alleges a wide array of misconduct ranging from conspiracy to commit health-care fraud, violations of the Anti-Kickback Statute, money laundering, and aggravated identity theft. The individuals charged include doctors, nurses, patient recruiters, home health care providers, pharmacy owners, and other license medical professionals. Notably, almost 50 of these individuals were charged with fraud related to the Medicare prescription drug benefit program (“Part D”).
Last week I attended the American Health Lawyers Association Institute on Medicare and Medicaid Payment Issues in Baltimore, Maryland. Taking a comprehensive approach to reimbursement issues, the program offered a variety of sessions ranging from Medicare and Medicaid program fundamentals to areas of highly-specific technical expertise. Conference faculty included speakers from all parts of the health care regulatory system, including two of my colleagues, Thomas S. Crane and Ellyn Sternfield.
Many of the sessions focused on government regulation and enforcement initiatives and trends related to Medicare and Medicaid reimbursement. Throughout the entire meeting, three themes emerged that are of particular interest:
- Data, Data, Data!
Speakers focused on the government’s use of data-driven analysis to identify and predict areas of potential fraud. This discussion confirmed our predictions that the increasing availability of health care claims and payment data and availability of Medicare billing data may lead to increased government and private health care scrutiny, enforcement, and litigation. Government speakers emphasized the use of a multitude of data sources to identify outliers and investigate potential fraud or abuse.