Earlier this month, the Office of the Inspector General for the Department of Health and Human Services (“OIG”) published its Semiannual Report to Congress covering the period from October 1, 2016 to March 31, 2017. The report describes OIG’s work and accomplishments during the 6-month reporting period. Like other OIG reports, including the annual OIG Work Plan, the report gives a good indication of priority areas for OIG and can help guide compliance priorities for providers. Below are some highlights of the report in the following focus areas: Continue Reading OIG Publishes Semiannual Report to Congress
For several years now, the public outcry over the issue of drug pricing and reimbursement has increased in frequency and fervor. At least one government agency wants you to know that it has been listening and wants to help provide the information necessary to forge a solution.
On Friday February 17, 2017, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued an Online Portfolio on Drug Pricing and Reimbursement, pulling together OIG’s body of work related to drug pricing and reimbursement in HHS programs, including Medicaid and Medicare, since 2010. Continue Reading OIG Publishes Online Portfolio Highlighting its Body of Work on Drug Pricing and Reimbursement
Earlier today, my colleagues Tom Crane and Larry Freedman released a Health Care Enforcement Defense Advisory regarding the Supreme Court’s long-awaited, unanimous decision in Universal Health Services v. United States ex rel. Escobar (“Escobar”). As they discuss in detail, the Court ruled that under certain circumstances the theory of “implied false certification” can give rise to liability under the False Claims Act (“FCA”).
The Court explained that FCA liability can attach when (1) “the claim does not merely request payment, but also makes specific representations about the goods or services provided,” and (2) the defendant’s “failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.” However, the Court also limited the scope of the FCA by imposing a “rigorous” and “demanding” standard of materiality.
For more information and a discussion on what this decision might mean for health care enforcement defense, please click here.
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
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”).
The Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) recently released its Semiannual Report to Congress (“Report”), summarizing OIG’s activities for the six-month period ending on March 31, 2015.
The Report highlights OIG’s accomplishments over the first half of FY 2015, including OIG’s expected recoveries of over $1.8 billion, comprised of approximately $544.7 million in audit receivables and $1.26 billion in investigative receivables. Over the same period, OIG reported 486 criminal actions against individuals and entities that engaged in crimes against HHS programs and 326 civil actions, including false claims cases, unjust-enrichment lawsuits, civil monetary penalties settlements, and administrative recoveries related to provider self-disclosure matters. OIG also reported exclusions of 1,735 individuals and entities from participation in Federal health care programs.
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.
Yesterday the Office of Inspector General for the Department of Health and Human Services (the “OIG”) issued Advisory Opinion 15-04 (“Advisory Opinion”) in which it found that an exclusive arrangement between a laboratory and a physician practice could potentially generate prohibited remuneration under the Anti-Kickback Statute and also subject the laboratory to certain administrative sanctions. Notably, the OIG also concluded that the proposed arrangement could constitute grounds for permissive exclusion under the federal prohibition against charging the Medicare and Medicaid programs “substantially in excess” of usual charges.
The Proposed Arrangement
The Requestor – a multi-regional medical laboratory – proposed entering into exclusive agreements with physician practices whereby the laboratory would provide all required laboratory services (unless the patient chose a different laboratory) to the physician practices. According to the Requestor, some physician clients want this type of arrangement because they prefer to work with a single laboratory for ease of communication and consistency in the reporting of test results. However, some commercial insurance plans require their enrollees to use a particular laboratory and do not pay for out-of-network laboratory services (“Exclusive Plans”). The Requestor certified that approximately 70 percent of its physician practice clients had indicated that between 10 percent and 40 percent of their patients are enrolled in Exclusive Plans. As part of the proposed arrangement, the Requestor would not bill the patient, the physician practice, the Exclusive Plan, or any secondary insurer for services furnished to patients enrolled in Exclusive Plans. Nearly all other patients – whether covered by a federal health care program or a commercial insurance plan – would be billed in accordance with fee schedules or contracted rates.
Under the written agreement between the parties, each physician would be required to represent that neither the physician nor the practice would receive any financial benefit from the Requestor’s provision of free laboratory services to patients covered by Exclusive Plans, including any financial benefit received through an incentive program that would pay a bonus or impose a penalty based upon the utilization (or lack thereof) of laboratory services. The Requestor certified that it would not provide any items, services, or financial benefits, other than a limited-use electronic health records interface for submitting orders to and receiving results from the Requestor. Physician practices would be eligible to enter into the proposed arrangement only if they did not draw the samples and thus did not bill for the blood draw or the testing.
The OIG’s Analysis
The OIG found that the proposed arrangement could generate remuneration under the Anti-Kickback Statute. The OIG pointed to two facts that, taken together, supported its conclusion that the proposed arrangement would “reduc[e] administrative and possibly financial burdens associated with using multiple laboratories.” First, the OIG claimed that physician practices would gain certain efficiencies because they would receive test results with consistent reference ranges (which might not be the case if they used multiple laboratories). Second, although a physician practice typically does not pay for the EHR interface itself, the OIG believed that the proposed arrangement would relieve physician practices from having to pay monthly maintenance fees charged in connection with any EHR interface that it currently maintained with one or more other laboratories. The OIG thus concluded that it could not rule out with sufficient confidence the possibility that the Requestor would be offering remuneration to induce the referral of federal health care program beneficiaries. The OIG also noted that the Requestor had failed to provide any evidence of quality or safety improvements that would justify the proposed arrangement, or of any safeguards that would make the remuneration low risk under the Anti-Kickback Statute. In fact, the OIG noted that the Proposed Arrangement could be construed as causing the inappropriate steering of patients, including federal health care program beneficiaries.
In a footnote, the OIG acknowledged that any remuneration offered to patients through the proposed arrangement presents a low risk of fraud and abuse under the Anti-Kickback Statute due to the lack of connection to services payable by a federal health care program.
Finally, the OIG concluded that the proposed arrangement may justify use of the OIG’s permissive exclusion authority under Section 1128(b)(6)(A) of the Social Security Act, which is often referred to as the “substantially in excess” provision. This statute authorizes permissive exclusion authority for the OIG in cases where a provider or supplier charges the Medicare and Medicaid programs amounts that are “substantially in excess of” their “usual charges to other payors for the same items or services.” Although the OIG has stated previously that providing discounted or free services to uninsured or underinsured patients does not implicate the statute, it noted that the proposed arrangement involved the provision of free services to insured patients. The OIG thus found that the proposed arrangement could potentially cause more than half of the laboratory’s non-Medicare and non-Medicaid patients to receive free services while Medicare and Medicaid would be charged at the regular rate.
Notably, the OIG has only opined on this permissive exclusionary authority on only a handful of occasions, and the most recent was in 2013. The last time the OIG concluded that an arrangement could trigger exclusion under this section was in Advisory Opinion 99-13, which concerned client billing arrangements between laboratories and their physician clients. The OIG later issued clarifying letters on April 20, 2000 and April 26, 2000. The OIG has tried and failed on multiple occasions to implement regulations interpreting the substantially in excess provision. Its last attempt was on September 15, 2003, but it withdrew the proposed rule in 2007.
The reasoning applied in this negative OIG advisory opinion is difficult to comprehend. The OIG’s conclusion that the proposed arrangement would amount to remuneration apparently is based only on the fact that the physician practices would receive intangible, non-quantified benefits from consistent reference ranges and an untested presumption that the physician practices had other interfaces that resulted in charges for monthly maintenance fees, which may or may not be the case. We note that the OIG has long been critical of the relationships between laboratories and physician practices, as evidenced most recently by a June 2014 Special Fraud Alert addressing payments by laboratories to physicians.
This week, two of Mintz Levin’s health law attorneys will speak at the American Health Lawyers Association Institute on Medicare and Medicaid Payment Issues in Baltimore, Maryland.
Ellyn Sternfield from our DC office will be speaking about the 340B Drug Pricing Program, a topic she covers often on this blog. Ellyn will be joined by Barbara S. Williams to discuss the 340B Program, and their presentation promises to be informative. They will give an overview of 340B Program requirements, 340B compliance and audit issues (including lessons learned), the aftermath of PhRMA and HHS litigation, expectations from HRSA, and a look at advocacy efforts.
Thomas S. Crane from our Boston and DC offices will discuss overpayments and Stark self-disclosures – topics he writes and speaks on frequently – on a panel with Lisa Ohrin Wilson from CMS and Robert L. Roth. Their session will cover requirements and logistics to disclose and repay overpayments, along with updates on final and proposed regulations, distinctions between OIG and self-referral disclosures, and self-referral disclosure protocol hot topics.
Ellyn and Tom will each bring decades of experience and insight to these discussions. If you are in Baltimore for the AHLA Institute this week, take the opportunity to see them both.
- The 340B Program: Overview, Compliance, and What to Expect in the Year Ahead
- Speakers: Ellyn Sternfield & Barbara S. Williams
- Wednesday, March 25 at 3:30pm & Thursday, March 26 at 11:15am
- Hot Topics in Overpayments and Stark Self-Disclosures
- Speakers: Thomas S. Crane, Lisa Ohrin Wilson & Robert L. Roth
- Thursday, March 26 at 10:00am and 1:45pm
Earlier this month, Mintz Levin’s Hope Foster and Bridget Rohde hosted a webinar entitled “Health Care Enforcement in 2015: A Look Back on 2014 and Forecasting the Year Ahead.” A video recording of the webinar, along with an accompanying PDF, can be found below.
The webinar provides a detailed look back on the health care enforcement efforts of 2014, by focusing on three core areas:
- Criminal Prosecutions. The webinar addresses the high priority that DOJ officials are giving to their health care enforcement efforts, highlighted by U.S. Attorney Loretta E. Lynch underscoring the importance and effectiveness of DOJ’s Health Care Fraud Prevention and Enforcement Action Team (“HEAT”) and the Medicare Fraud Strike Force (“Strike Force”). Hope and Bridget identify and discuss four notable characteristics of the 2014 Strike Force prosecutions: the geographic breadth of the prosecutions, the variety of the providers and medical professionals targeted, the types of charged crimes (including both fraud and financial crimes), and the wide-ranging penalties that have included stiff sentences and hefty fines. For example, the presenters discuss the case of ArthroCare Corporation, a medical device manufacturer, in which the DOJ was able to obtain 20 year and 10 year prison sentences against the CEO and CFO, respectively.
- Joint Civil and Criminal Matters. Hope and Bridget discuss notable criminal and civil resolutions, including a massive civil and criminal action against Endo Health Solutions, Inc., and its subsidiary Endo Pharmaceuticals, Inc. (collectively, “Endo”). In response to criminal and civil allegations related to Endo’s off-label promotion of its drug Lidoderm, Endo paid $193 million and entered into a corporate integrity agreement.
- Civil Enforcement. The webinar also focuses on the continued role of the False Claims Act as the government’s primary civil remedy, with recoveries totaling $2.3 billion in 2014. Also discussed is the extraordinary increase in the number of whistleblowers coming forward as qui tam relators.
After discussing the three areas above, the presenters provide insight into the likely trends of health care enforcement in 2015.