Anti-Kickback

Published on: July 27, 2018

Potential Stark Law and Anti-Kickback Statute Reforms to Support Coordinated Care

During a hearing on July 17, 2018, Department of Health and Human Services (HHS) Deputy Secretary Eric Hargan announced that HHS is interested in reforming the Stark law and the Anti-Kickback Statute (AKS). As value-based care is becoming more prominent in the healthcare system, coordinated care between providers is a necessity; but the Stark law and AKS are considered an impediment to coordinated care. Hargan contends that since the Stark law was created in a fee-for-service context, it “may unduly limit ways that physicians and healthcare providers can coordinate patient care [in a value-based system].”

HHS’s push for reform comes out of the “Regulatory Sprint to Coordinated Care,” which is an initiative launched by CMS that seeks to remove barriers to coordinated care while still upholding laws and rules that keep patients safe. According to Hargan, HHS is working on creating administrative rules to address these barriers.

Aside from the regulatory hurdles that the Stark law imposes on coordinated care, HHS is also concerned about the strict liability aspect of the Stark law. Strict liability imposes civil liability with monetary penalties onto the provider, regardless of the intent underlying the Stark law violation arises from an accident. HHS believes that strict liability turns providers away from entering into coordinated care arrangements, because the complexity of the Stark law may cause providers to violate it unintentionally and become liable. A suggested change from HHS is to define “noncompliance” in a clearer manner, which would allow providers to feel more at ease with participating in coordinated care.

Published on: May 31, 2018

Pfizer Agrees to Pay $24 Million to Settle Anti-Kickback Claims

by Wachler & Associates, P.C.

On May 24, 2018, the U.S. Department of Justice announced a $23.85 million settlement with Pfizer, Inc., to settle anti-kickback claims against the company. The settlement arose after an investigation led by U.S. Attorney Andrew Lelling, which looked into the drug industry’s support of patient assistance charities. Pfizer is now among a group of multiple drug companies (Celgene Corp., Aegerion Pharmaceuticals, and Jazz Pharmaceuticals) who have settled with the Department of Justice for their use of patient assistance charities. Pfizer also signed a five-year monitoring agreement with the Department of Health and Human Services Office of Inspector General, and is required to implement measures to ensure that its arrangements with patient assistance charities are in compliance with the law

Pfizer was allegedly using an “independent” charity to pay illegal kickbacks to Medicare patients, covering out of pocket costs for prescription drugs. Pfizer made donations to Patient Access Network Foundation (PAN), a copay assistance nonprofit organization, and used a specialty pharmacy, Advanced Care Scripts, to direct Medicare patients taking its drugs toward the foundation to cover their copays.

The scheme centered around three drugs, two for kidney cancer (Sutent and Inyalta), and one for arrhythmia (Tikosyn). Pfizer was allegedly aware that PAN used their donations to cover the copays of patients taking these drugs. In fact, PAN and the pharmacy would notify Pfizer when patients using these drugs got the copay assistance. Price increases of the drugs were concealed from patients but left Medicare with a higher bill.

Published on: February 23, 2016

OIG Advisory Opinion Examines Radiology Arrangement Regarding Transcription Fees Paid to Third Party

by Wachler & Associates, P.C.

The Department of Health and Human Services’ Office of Inspector General (“OIG”) recently released OIG Advisory Opinion No. 15-15, in which the OIG determined that an arrangement involving an acute care hospital (“Hospital”), radiology practice and family medicine clinic (“Clinic”) would not generate prohibited remuneration under section 1129B(b) of the Social Security Act, the Federal anti-kickback statute (“AKS”).

Under the arrangement, the Clinic refers patients and certain diagnostic tests to the Hospital, and thus the Clinic’s physicians are referral sources for the Hospital. The radiology practice contracts with the Hospital to supervise radiology services and provide professional interpretations of all radiologic imaging taken at the Hospital, and members of the radiology practice can influence referrals to the Hospital. The Clinic includes technologists who provide radiologic imaging services for the Clinic’s patients, and the Clinic transmits the resulting images to the radiology practice to interpret the images and is thus a referral source for the radiology practice. The radiology practice’s radiologists interpret the images and dictate reports, but send the dictated reports to the Hospital and the Hospital’s employees transcribe the reports on behalf of the radiologists, who send the final reports back to the Clinic. The radiology practice pays the Hospital a “flat rate per line of transcription” fee that is fair market value for the service, and the Clinic pays no portion of any transcription cost. The Clinic bills third-party payors, including Medicare and Medicaid, for the technical component, and the radiology practice bills these payors for the professional component of the radiology services. The OIG also noted that the Hospital is located in a sparsely populated region, the Clinic is in a rural community in that region, and that the radiology practice is the only radiology practice within a 100-mile radius of the Clinic or Hospital.

Crucial to the OIG’s finding, the Centers for Medicare & Medicaid Services’ (“CMS”) Medicare Claims Processing Manual provides that with regards to the professional component of a radiology service, the interpretation of the diagnostic procedure includes a written report. Further, CMS advised the OIG that transcription costs are considered indirect expenses under the methodology establishing resource-based practice expense relative value units (RVUs), meaning that such costs are not separately identified but are included in both the professional and technical components for each service. As such, CMS’ position is that when the technical component and professional component are provided and billed by different entities, the two providers may determine who will pay for transcription costs.

Published on: September 25, 2015

Florida Hospital District Settles False Claims Act Allegations for $69.5 Million

by Wachler & Associates, P.C.

The U.S. Department of Justice (DOJ) recently announced a $69.5 million settlement with the North Broward Hospital District (the “District”) arising out of allegations that the District violated the federal Stark law and False Claims Act by entering into improper financial relationships with employed physicians.

The lawsuit alleged that the District provided compensation to nine employed physicians that exceeded fair market value for the physicians’ services, and instead rewarded the physicians for their referrals of patients to the District. The compensation arrangements were alleged to violate the federal Stark law, which prohibits physician referrals of Medicare and Medicaid services to entities with which the physician has a financial relationship, unless an exception applies. Stark exceptions related to physician compensation and employment arrangements require, in addition to other requirements, that the physician’s compensation is consistent with fair market value and not determined in a manner that takes into account the volume or value of the physician’s referrals. By submitting claims pursuant to referrals that violated the Stark law, the District also submitted claims in violation of the False Claims Act.

The lawsuit against the District was originally filed by a whistleblower pursuant to the qui tam provisions of the False Claims Act, which allow private individuals to sue on behalf of the government and share in the recovery. The whistleblower in this case brought the lawsuit after the District offered to employ him under terms that he believed may violate the Stark law. The DOJ announced that the whistleblower will receive over $12 million for his role in the case. The DOJ also announced that the recovery marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which is a partnership between the U.S. Attorney General and U.S. Secretary of Health and Human Resources that has been instrumental in the government’s recovery of $16 billion from fraud in the federal health care programs since 2009.

Published on: October 28, 2014

CMS Extends Fraud and Abuse Waivers for ACO Shared Savings Program

by Wachler & Associates, P.C.

On October 17, 2014, the Centers for Medicare and Medicaid Services (CMS) extended its interim final rule regarding fraud and abuse waivers for accountable care organizations (ACOs) that participate in the Medicare Shared Savings Program. The Medicare Shared Savings Program was one of the initial steps taken under the Affordable Care Act to both increase quality and lower costs in the Medicare program. ACOs that participate in the Medicare Shared Savings Program can share in the savings generated to Medicare.

Originally, the interim final rule was published in the November 2, 2011 Federal Register, and had the typical three-year period before becoming a final rule. The continuation of the interim final rule extends the timeline for an additional year, establishing a new deadline of November 2, 2015. The interim final rule offers five waivers to ACOs, which allow healthcare entities to form and operate ACOs without fear of violating federal fraud and abuse laws. The ACO waivers include:

An ACO participation waiver;

Published on: October 13, 2014

OIG Releases Proposed Rule Affecting Anti-Kickback Statute Safe Harbors

by Wachler & Associates, P.C.

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently published a proposed rule that affects providers and suppliers seeking to comply with the federal Anti-Kickback Statute (AKS) and Civil Monetary Penalty (CMP) provisions. The proposed rule alters existing safe harbors, codifies statutory changes, and adds new protections for arrangements that the OIG believes present low risk to federal health care programs.

The AKS provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under Federal health care programs. The law prohibits all types of remuneration, including kickbacks, bribes, and rebates. Due to the extremely broad reach of the statute, Congress authorized the OIG to develop safe harbor regulations that protect industry payment and business practices that, if structured properly, would not be treated as criminal offenses under the AKS even though they may induce referrals of business under the Federal health care programs. In authorizing these safe harbors, Congress intended that the safe harbor regulations be updated periodically to reflect changes in business practices and technology in the health care industry. The proposed rule will also codify statutory changes emanating from the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and the Affordable Care Act of 2010.

Specifically, the proposed rule applies to safe harbors or exceptions related to 1) referral services, 2) cost-sharing waivers, 3) agreements between Medicare Advantage (MA) plans and Federally Qualified Health Centers (FQHCs), 4) the Medicare Coverage Gap Discount Program, and 5) free or discounted local transportation services.

Published on: June 10, 2014

Medtronic Settles with DOJ for $9.9 Million to Resolve Kickback Allegations

by Wachler & Associates, P.C.

On May 28, 2014, the U.S. Department of Justice (DOJ) settled a whistleblower lawsuit against Medtronic, Inc. for $9.9 million. Medtronic, the fourth largest medical device supplier in the world, was accused of violating the Anti-Kickback Statute and False Claims Act by paying kickbacks to physicians for using Medtronic’s defibrillators and pacemakers.

The allegations came to light after former Medtronic employee-whistleblower notified authorities of the illicit payments, which occurred between 2001 and 2009. In addition to tying kickbacks to the usage of Medtronic products, the complaint details that Medtronic allegedly produced business development and marketing plans for the doctors at no cost, paid doctors to speak at events with the goal of increasing referrals, and gave doctors tickets to sporting events. The complaint further outlines that Medtronic’s sales staff provided doctors with lavish trips and gifts, and even offered cash payments for the utilization of Medtronic devices. Also, business plans were in place in which sales representatives were allegedly instructed to visit doctors’ offices to review patient charts and flag those who they thought should receive an implant despite patients not meeting the criteria for an implantable device.

This settlement should encourage providers to ensure their physician arrangements do not violate provisions of the Anti-Kickback Statute, False Claims Act, or any other fraud and abuse laws. Wachler & Associates healthcare attorneys regularly counsel providers in proactively addressing potential kickback violations and defending providers against government allegations. If you or your healthcare entity have any questions regarding the Anti-Kickback or Statute Stark Law, or wish to have your arrangement reviewed by our attorneys please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

Published on: January 17, 2014

OIG Approves Industry Stakeholders’ Contributions to a Patient Assistance Program under the Anti-Kickback Statute

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS), Office of Inspector General (OIG) recently released an advisory opinion that highlights long-standing OIG guidance as to how industry stakeholders can contribute to independent, bona fide charitable assistance programs. In this case, the patient assistance program (“Requestor”) provides grants to patients suffering from a specific disease for insurance premiums and other expenses not covered by insurance. The Requestor is a supporting organization of a nonprofit charitable foundation (“Foundation”) that exists solely to support the disease.

The Requestor’s main source of funding is the Foundation. However, all funds received from the Foundation are ultimately donations by pharmaceutical manufactures of the drugs used to treat the disease. The Requestor thus sought an advisory opinion to determine if such an arrangement would be grounds for civil monetary penalties under section 1128A(a)(5) of the Social Security Act (“Act”), covering improper beneficiary inducements, or other provisions of the Act as those sections relate to the Federal anti-kickback statute.

In the advisory opinion, AO No. 13-19, the OIG reiterates long-standing OIG guidance that industry stakeholders may contribute to the health care safety net for financially needy patients, including beneficiaries of Federal health care programs, by contributing to independent, bona fide charitable assistance programs. The OIG also states that such programs should not exert influence over donors, and donors should not have links to the charity that could directly or indirectly influence the charity’s operations or subsidy programs. Further, such programs cannot function as a conduit for payments from donors to patients, impermissibly influence beneficiary choices, or engage in practices that effectively subsidize a donor’s particular product.