May 22, 2015

PHARMACIES ARE RECEIVING LETTERS FROM THE DOJ REGARDING BILLING FRAUD AND FALSE CLAIMS ACT INVESTIGATIONS.

Recently, pharmacies (specifically compounding pharmacies) across the country have begun receiving letters from the U.S. Department of Justice (DOJ) notifying them that the pharmacy is being investigated for fraud under the False Claims Act for knowingly billing for drugs that were not medically necessary. Industry insiders have reported that, just yesterday (on 5/21/2015), at least four pharmacies received these investigation notices from the DOJ. The industry insiders also reported that the letters were hand-delivered on Thursday, May 21, 2015, by U.S. Navy CIS agents, were signed by the U.S. Attorney General, and demanded that the pharmacies respond to the billing fraud allegations within twenty (20) days.

Further, pharmacies are being investigated and receiving DOJ letters specifically related to their contacts with patients, and allegations of impropriety regarding the same. These actions/letters are, of course, somewhat related to major recent developments related to Tricare's scrutiny of compounding pharmacies. For more information, please see the Enhanced Compound Ingredient Screening Notice issued by the Department of Defense's Pharmacy Operations Division on May 11, 2015, which is available here.

Letters from the DOJ alleging billing fraud, False Claims Act violations, or referencing a DOJ investigation are extremely time-sensitive. False Claims Act fines and penalties can be crippling for a pharmacy. A pharmacy that receives such a letter must act quickly to engage experienced healthcare legal counsel to defend it against these allegations and to represent them during the investigation.

The Health Law Partners, P.C. (HLP), is a full-service healthcare law firm representing pharmacies and other healthcare entities across the country. Healthcare regulatory matters are extremely complex and frequently evolving, and healthcare investigations require representation by attorneys experienced in such matters. The attorneys at HLP specialize in healthcare fraud and abuse matters, including government investigations. HLP has experience defending pharmacies in DOJ investigations and understands the defenses available to fight allegations of billing fraud and False Claims Act violations.

If you received a letter from the DOJ regarding an investigation, or for more information, please contact Adrienne Dresevic, Esq., adresevic@thehlp.com, or Clinton Mikel, Esq., cmikel@thehlp.com, at (248) 996-8510.

May 18, 2015

PHYSICIANS AND HEALTHCARE ATTORNEYS: Join HLP at the ABA's Physicians Legal Issues Conference on June 10-12th in Chicago.

We invite you to join Adrienne Dresevic, Esq., and Clinton Mikel, Esq., at the American Bar Association's Physicians Legal Issues Conference on June 10-12th in Chicago, Illinois. This annual conference is attended by both attorneys and physicians and is held in conjunction with the Chicago Medical Society and the American Association for Physician Leadership.

This year's theme is "Thriving in a Time of Change". This unique program has been designed to bring physicians and legal experts, as well as government and payer representatives, together, from around the country, to provide perspectives and ideas directly to physicians and attorneys on ways for physicians to thrive, not just "survive" in these uncertain times. Ms. Dresevic and Mr. Clinton are both presenting at the conference, covering issues such as the Stark Law, Anti-Kickback Statute, and HIPAA. Whether you are a physician or entering the field of healthcare, this conference will provide valuable insight and strategies that can improve your practice.

For program details, please visit http://ow.ly/NbMz3.

May 11, 2015

Proposed Legislation Would change Michigan CRNA Supervision Requirements and Increase Access to Anesthesia Care

On May 7, 2015, Michigan Senator Mike Kowall (R-White Lake) introduced legislation that would allow hospitals more flexibility in determining the best anesthesia delivery model for their patient's needs. While certified registered nurse anesthetists ("CRNAs") provide the anesthesia care during most patient procedures - staying with the patient throughout the entire procedure - Michigan law still requires physician supervision of CRNAs. However, Michigan law does not even require the supervising physician to be an anesthesiologist or surgeon.


The proposed legislation would change this model and increase access to anesthesia care for Michigan patients in medically underserved rural and urban areas, while also containing anesthesia-related costs statewide. Under S.B. 320, Michigan hospitals could choose to keep the current physician-supervision model or move to a model that allows CRNAs to practice without mandatory physician supervision. If enacted, Michigan would join 40 other states that do not require physician supervision for CRNAs to administer anesthesia. The bill is currently in the Michigan Senate awaiting testimony before the Senate Health Policy Committee. More information on S.B. 320 may be found on the Michigan Legislature's website, available here.

Continue reading "Proposed Legislation Would change Michigan CRNA Supervision Requirements and Increase Access to Anesthesia Care" »

May 6, 2015

ABA HEALTH LAW SECTION ANNOUNCES SLATE OF 2015-2016 OFFICERS AND COUNCIL


Congratulations to Founding Shareholder, Adrienne Dresevic, nominated to once again serve on Council for the ABA Health Law Section. Nominations will be voted on by the membership at the Annual Meeting, August 2.

Continue reading "ABA HEALTH LAW SECTION ANNOUNCES SLATE OF 2015-2016 OFFICERS AND COUNCIL" »

May 6, 2015

MEDICARE APPEALS BACKLOG: THE AHA CONTINUES TO FIGHT FOR JUDICIAL RELIEF

The AHA has taken its first steps to appeal a lower court's refusal to intervene to address the significant appeals backlog pending at the ALJ level of appeal.

On May 4, 2015, the AHA submitted its Opening Brief to the U.S. Court of Appeals for the D.C. Circuit, alleging that the District Court erred in its decision not to issue providers' and suppliers' mandamus relief. The AHA pressed the Circuit Court to overturn the District Court's ruling, which acknowledged the repercussions of the backlog but nonetheless concluded court intervention was inappropriate. http://www.aha.org/advocacy-issues/legal/litigation.shtml

More information regarding the ALJ appeals backlog is available here: http://www.thehealthlawpartners.com/docs/6.6.14.pdf

Continue reading "MEDICARE APPEALS BACKLOG: THE AHA CONTINUES TO FIGHT FOR JUDICIAL RELIEF" »

April 28, 2015

Electronic Case Adjudication and Processing Environment (ECAPE) Update

The appeals backlog has taken a toll not only on appellants, but also the Office of Medicare Hearings and Appeals (OMHA), tasked to adjudicate the appeals. The appeals submission and document management processes are overdue for an upgrade in order to keep up with OMHA's substantial workload. The new system to be put into place in early 2016 is the Electronic Case Adjudication and Processing Environment (ECAPE), which is a "dynamic workflow and case management system that supports an electronic, unified OMHA business process". ECAPE will allow OMHA to take advantage of the effectiveness and efficiency that electronic processing has to offer; this change will be a significant benefit for the appellants requiring information from OMHA.

What this means to us; ECAPE will provide functionality for:
• Case and workload management
• Exhibiting
• Scheduling
• Document generation
• Electronic filing of requests for hearing and supporting documents
• Enhanced management information and business intelligence
Under ECAPE, appellants will have the ability to view the entire case file. Appellants will be able to ensure that documents submitted at the lower levels of appeal are sent to the ALJ as required under the regulations. This will negate the necessity for appellants resubmitting documents, and will assist OMHA to address its storage concerns.

Slowly we will start to see these changes take place from early 2016 to Spring 2017.

Continue reading "Electronic Case Adjudication and Processing Environment (ECAPE) Update" »

April 27, 2015

Bill To Amend Michigan No-Fault Law Could Substantially Decrease Revenue To Healthcare Industry

On Thursday, April 24, 2015, the Michigan House of Representatives' Insurance Committee passed a bill to reform Michigan's No-Fault law and sent it to the House floor for a vote. The bill (SB 248) will have significant negative changes for No-Fault reimbursements for health care providers in Michigan.

As currently proposed, the bill will cap reimbursements for accident victims at 150% of the amount that would be paid for the same services by Medicare. Additionally, it would create a fraud authority to investigate alleged fraudulent activities relative to No-Fault claims.

Now that the bill has been passed out of the House Insurance Committee, it could be up for passage by the House of Representatives during the week of April 27. If passed, it would be sent back to the Senate relative to the amendment currently proposed by the House. The bill, as currently proposed, will have a devastating financial impact on many healthcare providers and suppliers. The HLP will provide updates as to this bill's progress and the impacts to healthcare providers and suppliers in Michigan.

Continue reading "Bill To Amend Michigan No-Fault Law Could Substantially Decrease Revenue To Healthcare Industry" »

April 3, 2015

CMS Delays Finalizing Overpayment Regulations; But, Providers Still Must Return Medicare Overpayments Despite The Lack of Regulations

Section 1128J(d) of the Social Security Act (the "Act") requires providers and suppliers who have received an overpayment from the Federal health care programs to report and return the overpayment within 60 days of identifying the overpayment or by the date any corresponding cost report is due, whichever is later. The Centers for Medicare and Medicaid Services ("CMS") published a proposed rule on this statute way back in February 2012. Over three years later, CMS has not finalized the overpayment regulations for Medicare Parts A and B.

The Act requires notice to be provided in the Federal Register if there are exceptional circumstances that cause new regulations to be finalized more than three years after publishing the proposed rule. Therefore, in February 2015, CMS published a notice extending the deadline for CMS to finalize the regulations until February 16, 2016. The "exceptional circumstances" CMS cites in the notice are "the significant policy and operational issues that need to be resolved in order to address all of the issues raised by the comments to the proposed rule and to ensure appropriate coordination with other government agencies." The extension may indicate that the Medicare Parts A and B overpayment regulations will not closely mirror the regulations already published for Medicare Advantage and Medicare Part D overpayments. Additionally, the emphasis on a need for "coordination with other government agencies" may signal that the interested agencies (CMS, the DOJ, and the OIG) disagree on significant aspects of the final regulations.

For now, the most important takeaway from the notice is that "even without a final regulation [stakeholders] are subject to the statutory requirements found in section 1128J(d) of the Act and could face potential False Claims Act liability, Civil Monetary Penalties Law liability, and exclusion from Federal health care programs for failure to report and return an overpayment." In short, we will have to wait to see how restrictive the Medicare Parts A and B overpayment regulations will be and for clarification on issues such as when an overpayment is said to be "identified." But, for now, we know that the government will not hold back on enforcing the overpayment statute already on the books.

Continue reading "CMS Delays Finalizing Overpayment Regulations; But, Providers Still Must Return Medicare Overpayments Despite The Lack of Regulations" »

March 20, 2015

Proposed Bill to Permanently Fix Annual Medicare Physician Reimbursement Crisis

House Speaker John Boehner and Minority Leader Nancy Pelosi announced yesterday that they agreed to advance a bill to permanently fix the payment system for Medicare physicians. Details of the bill have yet to be released, but multiple news agencies are reporting that Boehner and Pelosi agreed to a $210 billion deal that would replace the Medicare Sustainable Growth Rate, which is the formula used to determine payments to Medicare physicians. Each year, this formula requires Congress to pass a "doc fix" or else Medicare physicians face a significant cut in reimbursement. The latest "doc fix" expires on March 31st. If the proposed bill is not agreed upon by the end of the month (and in lieu of the bill passing, another "doc fix" is not passed), then Medicare physicians could face 20% cuts in reimbursement.

Continue reading "Proposed Bill to Permanently Fix Annual Medicare Physician Reimbursement Crisis" »

March 17, 2015

A Healthcare Provider's Guide to Bullying

In an effort to combat and draw attention to the seriousness of Bullying, OCMS partnered with Marlene Seltzer, MD, Director of the Beaumont Children's Hospital NoBLE Anti-Bullying Program and Rob Iwrey, Esq. (and staff) at The Health Law Partners, P.C., to develop informational materials that would assist physicians in recognizing the signs of bullying and the services available to victims and their families.

IMPORTANT FACTS ABOUT BULLYING

"Bullying" is defined as any unwanted, aggressive behavior(s) by another youth or group of youths that involves an observed or perceived power imbalance and is repeated multiple times or is highly likely to be repeated. Bullying may inflict harm or distress on the targeted youth including physical, psychological, social or educational harm.
Bullying behavior can start as early as pre-school, however it typically peaks in late elementary/early middle school and is known to continue into high school (can continue into higher education and the workplace also). It is estimated that approximately 28% of 6th-12th graders have reported being bullied, unfortunately, as children age, many do not report encounters to adults at all. It has been suggested that 160,000 students stay home from school, every day, for fear of being bullied and is also attributable for countless physical and mental injuries (including deaths) of children and young adults throughout the United States.

Types of bullying:

• Physical - causing bodily injury; also taking or destroying a person's belongings
• Verbal - making disparaging comments, taunting, threatening, or intimidating
• Social - sometimes referred to as indirect or relational: hurting someone's relationships or reputation through means such as gossip, rumors or exclusion
• Cyber - bullying via electronic communication including: emails, texts, websites, social media, embarrassing photos, rumors, and fake profiles

Symptoms of Bullying (not an exhaustive list):

Physical:
• pain- headache, abdominal, musculoskeletal
• enuresis
• change in sleeping patterns
• change in eating patterns
• fatigue
• dizziness
• more frequent URI's
Youth at Higher Risk for Being Targeted:
• those who are overweight/obese

Mental:
• anxiety
• depression
• loneliness
• decreased self-esteem
• substance use/abuse
• self-harm/cutting
• suicidal ideation/attempts
• those with autistic spectrum disorder or developmental disabilities
• LGBTQ
• those with disabilities (physical, learning, emotional)

What to do if a Youth has been EXPOSED?
• encourage dialogue and listen non-judgmentally
• validate their feelings and the seriousness of their situation
• evaluate for suicidal ideation
• provide a message of support and education
• both youth and parents may need support, education, and guidance
• witnesses are also at risk and need support and education
• youth may need a referral for counseling or psychiatric evaluation
• youth/parents may need information about Michigan's anti-bullying law
• treatment/evaluation of any medical problems, secondary to bullying

Recommendation(s) for Physicians:
• screen all youth for exposure to bullying, as part of medical history, screening for all roles (target, perpetrator, witness) and types
• consider screening older youth without family/friends present
• ask simple, age appropriate questions
• ask both general and specific questions (giving examples may be helpful)
• for younger children, ask questions like "what are lunch and recess like at your school?" or if they get teased at school (may yield more information than using the word "bullying")
• written questions can be used in addition to verbal questions

IMPORTANT REMINDERS:
• bullied youth may feel ashamed, humiliated, and/or that they are at fault
• witnesses may feel decreased self-worth if they did nothing to intervene, or joined in
• youth who bully may not take responsibility for their actions, blame the victim, or have previously been a victim
• perpetrators may be well connected socially or may be isolated
• sibling bullying confers the same risks

What to do for a Patient who has been BULLIED?
If a patient has been bullied, physicians should consider referring the patient to one or more of the following:
• emergency room (for an acutely suicidal patient)
• mental health provider
• law enforcement
• school staff responsible for the implementation of bullying policy/enforcement pursuant to Matt's Safe School Law (discussed below)
• community, school and/or local health facility anti-bullying programs (e.g., Beaumont Children's Hospital anti-bullying program)

The patient and parents should be advised of Matt's Safe School Law:
"Matt's Safe School Law" was passed in 2011. Since June of 2012, the law (MCL 380.1310b) requires all public school districts in Michigan to implement policies and procedures prohibiting bullying and setting forth an appropriate response to incidents/complaints.
Added to Matt's Safe School Law in January 2015 was Senate Bill 74 which now includes cyberbullying as a prohibited type of bullying in Michigan schools. Schools will have to report any cyberbullying, assure confidentiality of people who report, and report any instances to the State Department of Education.

School bullying policies MUST include, at a minimum:
• a statement prohibiting bullying of a pupil
• a statement prohibiting retaliation or false accusation against a target of bullying, a witness, or another person with reliable information about an act of bullying
• a provision indicating that all pupils are protected under the policy and that bullying is equally prohibited, without regard to its subject matter
• a procedure for reporting an act of bullying
• a procedure for prompt investigation of a report of violation of the policy or a related complaint
• A procedure for each public school to document any prohibited incident that is reported and a procedure to report all verified incidents of bullying and the resulting consequences, including discipline and referrals

NOTE: The law also provides that parents and/or others who report bullying,
in good faith, are immune from potential liability arising out of a bullying incident.

Mandatory Reporting Requirements for Physicians:
Michigan law requires medical care providers and institutions to make police reports of all people who present suffering from violently-inflicted injury (MCL 750.411). This law applies regardless of the patient's relationship with the person who inflicted the injury (i.e., it applies to bullying, child abuse [which has additional reporting requirements not discussed here], domestic violence and violent injuries generally).

FAQ's Related to Filing a Report:

Under what circumstances must a report be made?
A report must be made immediately when any person suffering from any wound or other injury inflicted by a knife, gun, or other deadly weapon, or by other means of violence, comes or is brought to any hospital or pharmacy in Michigan, or is under the care of a physician or surgeon in Michigan. "Other means of violence" may include, but are not limited to, beating, biting, strangling, hitting, kicking, punching, and slapping.
Who must report? Any physician or surgeon who has a person under his or her care who is suffering from a wound or injury inflicted by any violent means MUST REPORT. Every person, firm, or corporation conducting any hospital or pharmacy in Michigan, or the person managing or in charge of the hospital or pharmacy, to which the person suffering from the wound or injury inflicted by any means of violence comes, or is brought MUST REPORT. All nursing personnel and staff are encouraged to notify a physician when such a situation exists. Failure to report is a criminal misdemeanor.

What about physician-patient privilege?
Michigan law states that the physician-patience privileges that exist under Michigan law do not apply to reports made pursuant to this law and are not valid reasons for a failure to comply with the reporting law. For this reason, reporting as required by the law is also exempt from HIPAA. Moreover, the physician-patient privilege is not a defense to a misdemeanor charge for failure to report injuries inflicted by violence.

Can a patient sue me?
The reporting law includes a specific grant of civil and criminal immunity for people who make good faith reports under this law. Any person who makes a report under this section is presumed to have acted in good faith. Of course, this immunity only applies to reporting and does not extend to any act of omission that amounts to professional malpractice.

To whom must the report be made?
The report must be made to the police department in the jurisdiction in which the hospital, pharmacy, physician, or surgeon is located. If there is no local police department, the report must be made to the county sheriff.

How must the report be made?
The report must be made by BOTH telephone and in writing.
What must be reported? The report must state the name and residence of the injured person, if known; the whereabouts of the injured person; the cause, character, and extent of the injuries; and may state the identification of the perpetrator, if known.

What may happen then?
Further investigation and prosecution, if any, will be handled by the police department and prosecutor where the violence causing the injury was committed. For this reason, in addition to the mandatory report, a patient may wish to report the violence directly to the police department in the jurisdiction where the violence occurred. The mandatory report does not ensure that arrest or prosecution will follow.

What must the patient be told?
Although the law does not require that the patient be informed about the mandatory reporting, it is recommended that the patient be informed for their personal safety and to get them involved in the process. If the patient requests that you do not report, you may explain that reporting is mandatory but limited to the information required by law.
What must be documented regarding the report? Document the fact that a report was made by phone and in writing, when the report was made, and to whom at what phone number and address. If an investigating officer is involved, note the name of the officer, badge number, report number, phone number, and any action taken. If a report to Adult or Child Protective Services is filed note this as well. Keep the original of this report in the file, and fax a copy to the local law enforcement agency. Retain the fax confirmation page with the original copy of the report.
A sample report is attached at the end of this pamphlet.

FOR MENTAL HEALTH PROFESSIONALS

Action to Protect a Patient from Harm to Self (or Others):
When a patient, who is the victim of bullying, expresses intent to harm him/herself, a mental health provider has discretion
to seek hospitalization of the patient, even if the patient is not amenable to referral.

Involuntary Admission:
Under Michigan law, a patient may be involuntarily hospitalized to protect the patient or others. The law requires that the patient be determined to be a "person requiring treatment," which, in relevant part is one of the following criteria:
1. An individual who has a mental illness, and who as a result of that mental illness can reasonably be expected within the near future to intentionally or unintentionally seriously physically injure himself, herself or another individual, and who has engaged in an act or acts or made significant threats that are substantially supportive of that expectation.
2. An individual who has mental illness, whose judgment is so impaired that he or she is unable to understand his or her need for treatment and whose continued behavior as the result of this mental illness can reasonably be expected, on the basis of competent clinical opinion, to result in significant physical harm to himself, herself, or others.
If either of these criteria are met, involuntary admission into a psychiatric hospital can be pursued. A "Petition/Application for Hospitalization" must be completed by anyone with the requisite knowledge, however, to have a patient taken into protective custody, a
Clinical Certificate must also be signed by a psychologist or psychiatrist as well. Under Michigan law, a law enforcement officer who is provided with a completed Petition/Application for Hospitalization and a signed Clinical Certificate will take a patient into custody and take the patient to the appropriate pre-admission screening unit or hospital, however, when a patient expresses intent to harm others, a mandatory duty
can also be triggered. A template of the Petition/Application for Hospitalization and Clinical Certificate can be located and printed from the Oakland County Medical Society website at www.ocms-mi.org/web_ government.htm:

Duty to Report:
State law requires disclosure of mental health recipient's records to a public agency to prevent harm to other individuals, including harm that could result from bullying. Required Duty to Warn/Duty to Protect Others (MCL 330.1946)

FOR MENTAL HEALTH PROFESSIONALS

FAQ's by Mental Health Professionals on Reporting:

Who must report?
A "mental health professional," which includes psychiatrists, psychologists, certified social workers, social workers, social work technicians, licensed professional counselors, marriage and family therapists, and musical therapists treating a patient who communicates a threat of physical violence against a reasonably identifiable third person and has the apparent ability and intent to carry out the threat in the near future has a duty to take action. If a patient is being treated through a team in the hospital, the hospital shall designate a person to communicate the threat to necessary persons or agencies.

To whom must the action be directed?
One or more of the following must be done in a timely manner:
• hospitalize the patient or initiate proceedings to hospitalize the patients; and/or
• make a reasonable attempt to communicate the threat to the third person and to the local police or county sheriff's department where the third person lives or for the area where the patient lives, or the state police
• if the threatened party is a minor or otherwise declared incompetent, in addition to the steps above, the mental health professional must notify the Department of Social Services in the county where the minor lives and also notify the minor's custodial parent, non-custodial parent, or legal guardian, whoever is most appropriate.

How should the report be made?
The report should be made by telephone and in writing (letter, fax, email, etc.).

What must be reported?
The exact nature of the threat must be communicated.

February 4, 2015

Outpatient "Observation" Battle Continues

On January 22, 2015, in the case of Barrows v. Burwell, No. 3:11-cv-1703, 2015 WL 264727 (2nd Cir., January 22, 2015), the United States Court of Appeals for the Second Circuit ruled that Medicare beneficiaries be granted the opportunity to demonstrate a Constitutionally-protected property interest to challenge their patient status designations as hospital outpatients rather than inpatients.

Continue reading "Outpatient "Observation" Battle Continues" »

February 4, 2015

MEDICARE CONTINUING TO DISCLOSE PROVIDERS' DATA

Health care providers across the country are still adapting to the unprecedented disclosure of health care information that is associated with the government's effort create a more transparent health care system. As many providers recall, in April, 2014, the Centers for Medicare & Medicaid Services ("CMS"), which administers the Medicare program, publicly released detailed data itemizing and summarizing health care providers' and suppliers' charges and payment, based on National Provider Number ("NPI"). The data was readily available, for full searching and analysis, to any individual or entity that wanted to see how individuals and entities were billing Medicare.

Physicians should be mindful that their claim information will likely continue to be made publically available on a going-forward basis. Unfortunately for the provider community, the future disclosure of CMS' data will continue to allow scrutiny of the provider's claim information, and will continue to permit the public at large, news sources, competitors, and others to shed light on generalized data and allege that such data supports fraud, waste and abuse. Unfortunately, due to the release of such partial data without explanation, it forces physicians to defend their billings, even when such billings are otherwise appropriate. In fact, even CMS' website for disclosing the information notes the associated challenges with the pooled data: "While the Physician and Other Supplier PUF has a wealth of information on payment and utilization for Medicare Part B services, the dataset has a number of limitations. Of particular importance is the fact that the data may not be representative of a physician's entire practice as it only includes information on Medicare fee-for-service beneficiaries. In addition, the data are not intended to indicate the quality of care provided and are not risk-adjusted to account for differences in underlying severity of disease of patient populations."

Although the recent trend toward transparency--and the specific disclosure of data--is viewed with unease by many in the physician community, health care providers nonetheless should recognize that CMS and other private payors have always had this information at their disposal and were able to run internal analytics. The distinction, however, was that such information was not public. Given the future of health care, physicians should operate with the foreknowledge that each claim that they submit potentially is subject to scrutiny; however, in the future, it seems that providers will also be subject to scrutiny in the public arena.

Continue reading "MEDICARE CONTINUING TO DISCLOSE PROVIDERS' DATA " »

February 4, 2015

The Government Clarifies that the Provision of Free POCT Cups to Physicians Violates the Stark Law and Anti-Kickback Statute: Ameritox, Ltd. v. Millennium Laboratories, Inc.

The government recently took the unusual step of filing an amicus brief in a civil case involving Stark Law and Anti-Kickback Statute ("AKS") issues. See, Ameritox, Ltd. v. Millennium Laboratories, Inc., Case No. 14-14281 (U.S. Court of Appeals for the 11th Circuit). The amicus brief provides insight into - and clarification of - the government's position on free point-of-care testing cups ("POCT cups") provided to physicians and whether this meets the definition of remuneration under the Stark Law and AKS.

By way of brief background, Ameritox, Ltd. ("Ameritox"), a company that provides physicians with urine drug monitoring and reporting services, filed an action against Millennium Laboratories, Inc. ("Millennium"), under the Lanham Act and various state-law tort theories, alleging that Millennium engaged in unfair competition and tortiously interfered with Ameritox's business relationships by providing POCT cups to physicians in violation of the Stark Law and AKS. POCT cups are specimen collection cups with immunoassay testing strips embedded in the cup. This enables physicians to promptly (at the point-of-care) screen the urine of patients who may be taking illegal drugs or who are prescribing drugs that are subject to abuse or diversion. A jury found in favor of Ameritox, and Millennium appealed. The government submitted an amicus brief opposing Millennium's appeal.

The factual antecedents of this case can be traced to the April 2010 decision by CMS to reduce POCT cup reimbursement to $20 per cup. Following this reimbursement adjustment, Millennium initiated the practice of entering into "cup agreements" with physicians under which Millennium agreed to provide POCT cups to physicians free of charge if the physicians agreed: (i) not to bill any insurer for the urine testing service; and (ii) to return each test cup to Millennium for lab testing of the urine specimen. If the physicians failed to comply with these requirements, then Millennium would charge them for the price of the cups. These arrangements were held to violate the Stark Law and AKS, and the government filed its amicus brief, in significant part, to challenge the arguments being made by Millennium relating to Stark and AKS.

Stark Law:

The Stark Law, in sum, prohibits a physician from referring federal health care program beneficiaries for designated health services (such as, clinical laboratory services) to an entity with which the physician or an immediate family member has a direct or indirect financial relationship, unless an exception applies. A financial relationship includes a compensation arrangement involving remuneration between the physician and the entity furnishing the designated health service. Remuneration is broadly defined as including any remuneration, in cash or in kind, that is not specifically excluded from the definition.

At issue in the Millennium case is whether the provision of free POCT cups to physicians falls within the Stark Law's "laboratory supplies" exception to the definition of remuneration. This exception carves out of the definition of remuneration "[t]he provision of items, devices, or supplies that are used solely to (i) collect, transport, process or store specimens for the entity providing the item, device, or supply, or (ii) order or communicate the result of tests or procedures for such entity." The government takes the position that the POCT cups do not fall within this carve-out because, unlike ordinary specimen cups, POCT cups include immunoassay test strips that provide a valuable diagnostic tool for physicians, which is wholly independent from functions necessary for Millennium's purposes.

The carve-out requires that the supplies be used solely for transportation, collection, processing or storage purposes. The government disagrees with Millennium that, in order to meet the carve-out, the laboratory supplies need only be used primarily for transportation, collection, processing or storage purposes. According to the government, the use of the word "primarily" in the 2001 final rule preamble (upon which Millennium relies) cannot trump the use of the word "solely" in the actual text of the statute and regulation. Further, the government relies on the district court's finding that the test strips are not used or required in connection with processing the specimen for Millennium, nor do they communicate the preliminary results for Millennium. Rather, the test strips are used for the physician's own purposes and inure to the benefit of the physician.

Additionally, the government dismisses Millennium's argument that the provision of free POCT cups cannot constitute remuneration because the physicians agreed not to bill for them. In its amicus brief, the government clarifies that a physician agreeing not to bill for the tests has no bearing on whether or not the POCT cups constitute remuneration. Rather, under the Stark Law (and the AKS, see below), billing for a service is not necessary to be considered remuneration (e.g., non-billable gifts, such as cash, and cost-avoiding items and services, such as free drug testing strips, are remuneration).

Finally, the government clarifies that it does not preclude the possibility that items, devices or supplies provided by a laboratory or other entity that fall within the "laboratory supplies" carve-out can confer certain incidental benefits on physicians. The relevant question in this case is not simply whether there is a benefit to a physician, but whether the supply provided performs a function distinct from the functions covered by the carve-out. The POCT cups plainly fail that test because the testing strips are not relevant in any way for Millennium's legitimate collection, transportation, processing or storage of specimens for its own testing.

Anti-Kickback Statute:

The government applies a consistent rationale for its arguments on the AKS issues. In general, the AKS prohibits transactions intended to induce or reward referrals for items or services reimbursed by the federal health care program.

First, the government dismisses Millennium's argument that the Office of Inspector General ("OIG") has taken the position that free items and services that are "integrally related" to the offering provider's or supplier's services are not remuneration under the AKS. The government points to a number of OIG advisory opinions in support of its argument that to be "integrally related" to the offering provider's services the free items or services must be capable of being used only as part of the underlying service - without having any independent value outside of the underlying service.

The government provides a number of examples of items or services that have no independent value apart from the underlying services, such as: (i) free computer interfaces used only to transmit laboratory test results (OIG Advisory Op. 12-20); (ii) when a provider of imaging services obtains pre-authorizations from insurers for the requestor's own services (OIG Advisory Op. 10-20); and (iii) when a pharmacy provides community homes with access to a software program that enabled homes to communicate with the pharmacy regarding pharmacy orders (OIG Advisory Op. 12-19). Based on these opinions, the government acknowledges that "some incidental benefits to physicians may be permissible so long as they are directly related to the provider's services and do not extend beyond those services." Similar to its Stark Law argument, the government argues that the free POCT cups fail this test because they confer significant benefits on physicians that extend beyond, and are unrelated to, Millennium's laboratory testing services (which do not depend on POC testing in any way).

Second, the government challenges Millennium's assertion that the free POCT cups do not constitute remuneration if the physicians do not bill for them. In support of its argument, Millennium offers a footnote in the "OIG Special Fraud Alert: Laboratory Payments to Referring Physicians," which states that "fee or below-market point of care urine testing cups to health care providers who use the cups to perform billable in-office testing" might violate the AKS. The government characterizing this footnote as a "fleeting reference to billable services" that is unpersuasive when considering that the Special Fraud Alert, taken as a whole, reaffirms the position that "whenever a laboratory offers or gives to a source of referrals anything of value not paid for at fair market value, the inference may be made that the thing of value is offered to induce the referral of business." With that statement, the government clarifies its position that the fact the physician does not bill for the item or service does not, by itself, negate this inference.

Conclusion:

Essentially, if an entity provides a physician with an item that enables the physician to perform a service that would otherwise cost the physician money to perform (i.e., purchasing test strips in order to perform point-of-care testing), then the entity relieves the physician of that burden (i.e., provides a benefit to the physician, and thus meets the broad definition of remuneration). Unless the provision of free items or services satisfies a carve-out to the definition of remuneration, it is prohibited. It is clear that, as the Millennium case shows, one cannot attempt to structure a particular set of facts to meet an otherwise permissible carve-out, but then append other items which clearly fall outside of the exception to the definition of remuneration. As the government succinctly stated, the provision of free POCT cups "is no different from taping a five dollar bill to the inside of an ordinary specimen cup."

Continue reading "The Government Clarifies that the Provision of Free POCT Cups to Physicians Violates the Stark Law and Anti-Kickback Statute: Ameritox, Ltd. v. Millennium Laboratories, Inc." »

January 21, 2015

FDA Issues Draft Guidance on General Wellness and Medical Device Accessories

On January 20, 2015, the Food and Drug Administration ("FDA") published two draft guidance documents that revealed its way of thinking on the regulation of low risk general wellness products and regulation of medical device accessories.

Broadly speaking, the proposed guidance indicates that the FDA will not regulate low risk products intended only for general wellness. Specifically, the agency divided general wellness products into two categories:

1. Products that do not make any reference to diseases or medical conditions
2. Products that may help of reduce the risk of and products that may help living well with certain chronic diseases or conditions

The agency hopes that its policy will foster further development of low-risk products intended to promote a healthy lifestyle.

As for medical device accessories, the FDA will regulate based on the accessory's individual risks and not based on the risks of its parent device. For example, if a parent device is regulated as a Class III device, but the accessory is low risk, the accessory could be regulated as a Class I.

Public comments and suggestions regarding the draft documents are due within 90 days of publication.

FDA issues and regulations are major evolving issue for telehealth and mHealth providers. Any additional guidance from the FDA is a welcomed development, to the extent that it in any way clarifies the FDA's thinking on regulatory evolving health care delivery technologies.

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January 15, 2015

OIG Recommends Changes to Hospice Benefit Payments

According to a new report from the Office of Inspector General ("OIG") published on January 13, 2015, the OIG is concerned with the financial incentives created by the current Medicare payment system with regard to hospice beneficiaries in assisted living facilities. For example, hospices received significantly higher Medicare payments for beneficiaries in assisted living facilities than for beneficiaries in other settings - even though the OIG reports that hospice beneficiaries in assisted living facilities often required less complex care. Additionally, the OIG claims that for-profit hospices received significantly higher Medicare payments per beneficiary than non-profit hospices.

In the report, the OIG recommends changes to the current payment system to prevent hospices from targeting beneficiaries in assisted living facilities in order to make a higher profit. The OIG recommends that the Centers for Medicare and Medicaid Services:

1) reform payments to reduce the incentive for hospices to target beneficiaries with certain diagnoses and those likely to have long stays;
2) target certain hospices for review;
3) develop and adopt claims-based measures of quality;
4) make hospice data publicly available for beneficiaries; and
5) provide additional information to hospices to educate them about how they compare to their peers.

Continue reading "OIG Recommends Changes to Hospice Benefit Payments" »