Compounding Pharmacies and Alleged Tricare Abuses Back in the Spotlight

compounding pharmacyBy: Jacqueline Bain

On Thursday, February 11, 2016, the United States Attorneys’ Office from the Middle District of Florida announced a $10 million settlement with 4 physicians and 2 pharmacies regarding alleged abuses of Tricare program.  The case against these physicians and pharmacies was prosecuted as part of the United States government’s large-scale effort to combat questionable compounding practices.  Investigations revealed that patients were often prescribed compounded drugs that they never used, and that Tricare paid a mark-up cost of nearly 90% for compounded drugs over and above the pharmacy’s actual costs of making the drug.  Roughly 40% of the claims submitted by the pharmacies in question were written by 4 physicians with an ownership or financial interest in the pharmacies.

Tricare is a federal health care program designed to insure active duty military service members, reservists, members of the National Guard, retirees, survivors and their families.  Tricare outpatient costs have almost doubled in the last 5 years, and compound drugs have accounted for a large portion of that increase.  Continue reading

A Legal Look at The Healthcare Landscape in 2016

By: Jeff Cohen

MACRA 

The Medicare Access and CHIP Reauthorization Act was enacted to replace the flawed sustainable growth rate (SGR).  MACRA contains performance measures for new payment models that will go in place in 2017.  MACRA also established the Merit-Based Incentive Payment System (MIPS).

Physicians have to begin to learn about MACRA to improve performance and to avoid payment penalties.

We also have the Physician Quality Reporting System (PQRS), which penalizes providers for failing to report quality measures data on Part B services.  To avoid a 2018 PQRS payment adjustment, for instance, providers have to report for a 12 month period.

There is also the Value Based Payment Modifier (VM) program that rewards groups for providing high quality, low cost care.  It’s interesting to note that CMS proposes to publically report those providers who receive an upward adjustment.  It’s being waived for Pioneer ACOs.  It’s interesting to note that the measures used for the VM program are different than those used for ACOs; and this is causing a lot of confusion.

Bottom line:  an increased use of benchmark establishment for quality and cost and financial incentive programs to achieve or surpass those benchmarks.

STARK LAW CHANGES

A new compensation arrangement exception is established for timeshare arrangements for the use of office space, equipment, personnel, items, supplies and other services.  This sort of “overhead sharing” arrangement is done, but there hasn’t been a specific Stark provision for it till this year.  It’s expected to be particularly useful in physician/hospital arrangements.

This exception amplifies the existing requirements that such arrangements must (1) be located where the physician or practice sees its patients, and (2) be used for designated health services that are incidental to what the doctor does, meaning E&M services and DHS that are provided at the time of such E&M services. Continue reading

OIG Special Fraud Alert: Laboratory Payments to Referring Physicians

OIG crestThe Office of Inspector General of the Department of Health and Human Services today issued a Special Fraud Alert pertaining to relationships between laboratories and referring physicians.  Payments from labs to physicians who refer were targeted in the Alert.  The Alert also reiterates their suspicion of so-called “carve out” compensation relationships where state and federal healthcare program dollars are removed from the payment formula (which was previously addressed last year in Advisory Opinion 13-03).  While the Alert does not add anything new to the government’s view of such relationships, it does underscore the very suspect view the OIG has of payment relationships between labs and the physicians who refer to them.  Careful compliance with the Personal Services and Management Contracts Safe Harbor continues to be a core concern.

Justice Department Hits Physician Owned Distributorships (PODS)

money doctorFor the first time, the Department of Justice (DOJ) has fired a shot at a physician owned distributorship (POD).  In the case, the DOJ suit claims that the ownership interest of a neurosurgeon in a spinal surgery device distributorship has caused him to perform unnecessary surgeries.

PODs have been the source of considerable controversy for years.  A couple years ago, they caught the attention of Congress.  The Office of Inspector General of the Department of Health and Human Services (“OIG”) has even issued a Fraud Alert making clear their dislike of PODs and sending a clear shot across the bow of those who are in that industry.  In 2006, the Office of the Inspector General of HHS and CMS expressed major concerns about PODs, and cited concerns about “improper inducements.”  At that time, the OIG stopped short of prohibiting them, but called for heightened scrutiny.  CMS itself has stated that PODs “serve little purpose other than providing physicians the opportunity to earn economic benefits in exchange for nothing more than ordering medical devices or other products that the physician-investors use on their own patients.”

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OIG Blesses Medigap Discount Policy for In-Network Hospitals

OIG crestBy: Jackie Bain

On February 20, 2014, the Office of the Inspector General posted Advisory Opinion 14-02.  The Advisory Opinion reviews the following scenario for compliance with the Federal Anti-Kickback Statute, 42 USC § 1320a-7b.  Under the proposed scenario, a Medigap insurance provider participates with a preferred provider organization (“PPO”) which contracts with hospitals (“Network Hospitals”).  The Network Hospitals discount Medigap policy-holders’ inpatient deductibles up to 100%.  In exchange for each discount, the Medigap plan pays an administrative fee to the PPO.  The Medigap plan also pays a portion of the discounted savings directly to the policy-holder who stayed at the Network Hospital. Continue reading

Integrating Clinical Labs Into Substance Abuse Treatment Programs: A Whole Lot of Fuss Over Pee in a Cup

pee in a cupBy: David Hirshfeld

The recent and drastic cut in reimbursement for point-of-care urinalysis has caused just about all of our substance use treatment program clients to consider integrating clinical laboratories into their enterprise models.  These programs long for a way to restore the revenue stream that urinalysis had generated.  For sober living programs, the lost revenue often means the difference between profitability and breaking even.  For more comprehensive programs, the lost revenue can hinder their ability to expand or provide scholarships to those who could not otherwise afford treatment.  Regardless of their specific goals, our clients are amazed and dismayed at the regulatory minefield that awaits them; especially since their lab consultant (read “reagent salesperson”) makes the process sound so simple. Continue reading

Kill H.R. 2914

Background

H.R. 2914 is a bill filed by Congresswoman Speier that is intended (among other things) to prohibit medical practices providing the following sorts of medical services (“Non-ancillary Services”) to their own patients—

*The technical or professional component of (i) surgical pathology, (ii) cytopathology, (iii) hematology, (iv) blood banking, or (v) pathology consultation and clinical lab interpretation services

*Radiation therapy services and supplies

*Advanced diagnostic imaging studies (which include for instance MR and CT)

*Physical therapy services

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