Trump Administration Invites Health Care Industry to Help Rewrite Ban on Kickbacks

The Trump administration has labored zealously to cut federal regulations, but its latest move has still astonished some experts on health care: It has asked for recommendations to relax rules that prohibit kickbacks and other payments intended to influence care for people on Medicare or Medicaid.

The goal is to open pathways for doctors and hospitals to work together to improve care and save money. The challenge will be to accomplish that without also increasing the risk of fraud.

With its request for advice, the administration has touched off a lobbying frenzy. Health care providers of all types are urging officials to waive or roll back the requirements of federal fraud and abuse laws so they can join forces and coordinate care, sharing cost reductions and profits in ways that would not otherwise be allowed.

From hundreds of letters sent to the government by health care executives and lobbyists in the last few weeks, some themes emerge: Federal laws prevent insurers from rewarding Medicare patients who lose weight or take medicines as prescribed. And they create legal risks for any arrangement in which a hospital pays a bonus to doctors for cutting costs or achieving clinical goals.

The existing rules are aimed at preventing improper influence over choices of doctors, hospitals and prescription drugs for Medicare and Medicaid beneficiaries. The two programs cover more than 100 million Americans and account for more than one-third of all health spending, so even small changes in law enforcement priorities can have big implications.

Federal health officials are reviewing the proposals for what they call a “regulatory sprint to coordinated care” even as the Justice Department and other law enforcement agencies crack down on health care fraud, continually exposing schemes to bilk government health programs.

“The administration is inviting companies in the health care industry to write a ‘get out of jail free card’ for themselves, which they can use if they are investigated or prosecuted,” said James J. Pepper, a lawyer outside Philadelphia who has represented many whistle-blowers in the industry.

Federal laws make it a crime to offer or pay any “remuneration” in return for the referral of Medicare or Medicaid patients, and they limit doctors’ ability to refer patients to medical businesses in which the doctors have a financial interest, a practice known as self-referral.

These laws “impose undue burdens on physicians and serve as obstacles to coordinated care,” said Dr. James L. Madara, the chief executive of the American Medical Association. The laws, he said, were enacted decades ago “in a fee-for-service world that paid for services on a piecemeal basis.”

Melinda R. Hatton, senior vice president and general counsel of the American Hospital Association, said the laws stifle “many innocuous or beneficial arrangements” that could provide patients with better care at lower cost.

Hospitals often say they want to reward doctors who meet certain goals for improving the health of patients, reducing the length of hospital stays and preventing readmissions. But federal courts have held that the anti-kickback statute can be violated if even one purpose of the remuneration is to induce referrals or generate business for the hospital.

The premise of the kickback and self-referral laws is that health care providers should make medical decisions based on the needs of patients, not on the financial interests of doctors or other providers.

The Trump administration is calling its effort a “regulatory sprint to coordinated care.”CreditSarah Silbiger/The New York Times.

Health care providers can be fined if they offer financial incentives to Medicare or Medicaid patients to use their services or products. Drug companies have been found to violate the law when they give kickbacks to pharmacies in return for recommending their drugs to patients. Hospitals can also be fined if they make payments to a doctor “as an inducement to reduce or limit services” provided to a Medicare or Medicaid beneficiary.

Doctors, hospitals and drug companies are urging the Trump administration to provide broad legal protection — a “safe harbor” — for arrangements that promote coordinated, “value-based care.” In soliciting advice, the Trump administration said it wanted to hear about the possible need for “a new exception to the physician self-referral law” and “exceptions to the definition of remuneration.”

Almost every week the Justice Department files another case against health care providers. Many of the cases were brought to the government’s attention by people who say they saw the bad behavior while working in the industry.

“Good providers can work within the existing rules,” said Joel M. Androphy, a Houston lawyer who has handled many health care fraud cases. “The only people I ever hear complaining are people who got caught cheating or are trying to take advantage of the system. It would be disgraceful to change the rules to appease the violators.”

But the laws are complex, and the stakes are high. A health care provider who violates the anti-kickback or self-referral law may face business-crippling fines under the False Claims Act and can be excluded from Medicare and Medicaid, a penalty tantamount to a professional death sentence for some providers.

Federal law generally prevents insurers and health care providers from offering free or discounted goods and services to Medicare and Medicaid patients if the gifts are likely to influence a patient’s choice of a particular provider. Hospital executives say the law creates potential problems when they want to offer social services, free meals, transportation vouchers or housing assistance to patients in the community.

Likewise, drug companies say they want to provide financial assistance to Medicare patients who cannot afford their share of the bill for expensive medicines.

AstraZeneca, the drug company, said that older Americans with drug coverage under Part D of Medicare “often face prohibitively high cost-sharing amounts for their medicines,” but that drug manufacturers cannot help them pay these costs. For this reason, it said, the government should provide legal protection for arrangements that link the cost of a drug to its value for patients.

Even as health care providers complain about the broad reach of the anti-kickback statute, the Justice Department is aggressively pursuing violations.

A Texas hospital administrator was convicted in October for his role in submitting false claims to Medicare for the treatment of people with severe mental illness. Evidence at the trial showed that he and others had paid kickbacks to “patient recruiters” who sent Medicare patients to the hospital.

The owner of a Florida pharmacy pleaded guilty last month for his role in a scheme to pay kickbacks to Medicare beneficiaries in exchange for their promise to fill prescriptions at his pharmacy.

The Justice Department in April accused Insys Therapeutics of paying kickbacks to induce doctors to prescribe its powerful opioid painkiller for their patients. The company said in August that it had reached an agreement in principle to settle the case by paying the government $150 million.

The line between patient assistance and marketing tactics is sometimes vague.

This month, the inspector general of the Department of Health and Human Services refused to approve a proposal by a drug company to give hospitals free vials of an expensive drug to treat a disorder that causes seizures in young children. The inspector general said this arrangement could encourage doctors to continue prescribing the drug for patients outside the hospital, driving up costs for consumers, Medicare, Medicaid and commercial insurance.

 

 

 

CMS Administrator Seema Verma promotes cuts to 340B drug payments

http://www.healthcarefinancenews.com/news/cms-administrator-seema-verma-promotes-cuts-340b-drug-payments?mkt_tok=eyJpIjoiTURSaU5UWXhOV1EzTlRNeiIsInQiOiJvU3NYQXBoQkwzMXBteUNzVVNpXC9abldIM3RMZXkrc05LNUNXdXd1TzUrUmJwTFZYTDBFZmRYNmFvVnloTEE2K0dtZXhEbWYyRjFWTmpRT29Zb3I0ZFdLRW92bGFrQUJnYyt2N0JyV1dVSE5IR1RJRmczYnZJUlo1d1pYZzR1UkIifQ%3D%3D

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Senate committee is taking a closer look at the drug discount program.

The Centers for Medicare and Medicaid Services’ focus on lowering drug prices now includes the contentious 340B drug pricing program.

On Wednesday, CMS Administrator Seema Verma told the Pharmacy Quality Alliance that the agency’s change in the 340B payment rate to qualifying hospitals would save Medicare beneficiaries $320 million this year.

Under 340B, hospitals that serve a large number of vulnerable patients are able to buy drugs from manufacturers at discounted prices. However, Verma said Wednesday, “these discounts were not being passed on to our beneficiaries. So, CMS reduced the amount that beneficiaries and the federal government will pay hospitals for drugs that they acquire through this program.”

Medicare beneficiaries will save a total of $320 million in drug spending this year from the change, Verma said.

Last November, several hospital groups including the American Hospital Associationsued CMS for the $1.6 billion in cuts, representing a 28 percent decrease.

On Tuesday, a Senate health committee got involved when members questioned why a rule that would set ceiling prices on drugs in the program has been delayed five times.

The final rule would impose monetary penalties for manufacturers that charge more than the ceiling price for an outpatient drug and imposes other restrictions.

340B hospitals want to see the rule enforced.

The Government Accountability Office will be looking into the issue and the work of the Health Resource and Services Administration, the agency which manages the program and is responsible for the latest delay in implementation of the final rule until July 2019.

The problem is that states and providers do not know the ceiling prices. Confidentiality rules prevent the HRSA from sharing ceiling prices with states or 340B providers.

Because of this, 340B hospitals don’t know what they ought to be paying for discounted drugs, according to Ann Maxwell, assistant inspector general for evaluation and inspections for the Office of the Inspector General, speaking before the Senate Committee on Health, Education, Labor and Pensions.

This lack of transparency prevents ensuring that 340B providers are not overpaying pharmaceutical manufacturers and that state Medicaid programs are not overpaying 340B providers, Maxwell said.

The 340B drug pricing program debate pits the hospitals that benefit from the discounted prices of the program against organizations that contend these providers are taking advantage of the financial incentive.

The 340B program, established in 1992, generates savings for certain safety-net providers by allowing them to purchase outpatient drugs at discounted prices.

Opponents of 340B say seniors get none of the benefit and pay full price and that the disproportionate share hospitals that get the discount take advantage of the financial incentive by buying larger quantities of drugs and more expensive drugs.

HRSA reported that total 340B sales in 2016 amounted to approximately $16 billion, or about 3.6 percent of the U.S. drug market.

The Alliance for Integrity and Reform of 340B, or AIR340B released a new report with analytics by the Berkeley Research Group on Medicare Part B hospital outpatient reimbursements that found in 2016, 340B hospitals accounted for nearly two-thirds of Medicare Part B reimbursements – while only representing slightly more than half of all Medicare hospital outpatient revenue.

“Medicare patients treated in 340B hospitals have disproportionately high outpatient drug spend as compared to patients treated at non-340B hospitals,” AIR340B said

PhRMA said it was encouraged to see the Senate HELP Committee continuing to take a closer look at issues within the 340B program.

The New England Journal of Medicine concluded that financial gains for 340B hospitals have not been associated with clear evidence of expanded care or lower mortality among low-income patients, PhRMA said.

340B also drives a shift of treatment to more expensive hospital settings for physician-administered medicines, PhRMA said.

Hospitals and proponents say the 340B drug pricing program is one of the few federal programs to curb drug costs that is working.

“Sadly, the administration’s policy proposals would erode that progress and just put more money into the pockets of pharmaceutical companies,” 340B Heath said. “The administration’s proposals are based on a faulty understanding of the 340B program and the pharmaceutical market. The notion that 340B discounts are raising drug prices is simply false. Drug companies set the prices for their products and they, alone, decide how high those prices go.”

Hospitals participating in the 340B program account for 60 percent of all uncompensated care in the U.S. and serve a high proportion of low-income patients on Medicaid, 340B Health said.

“There is a clear history of manufacturers overcharging 340B providers. Delaying enforcement of this rule will have a tremendous adverse impact on hospitals, clinics and health systems caring for low-income and rural patients,” said Maureen Testoni, interim president and CEO of 340B Health.

America’s Essential Hospitals said federal scrutiny of manufacturer pricing practices has found overcharges in the 340B drug pricing program.

“These overcharges undermine the program’s ability to make drugs affordable for vulnerable patients and increase costs for their hospitals, which already operate with thin margins,” the group said.

 

Medicare Didn’t Investigate Suspicious Reports Of Hospital Infections

http://www.npr.org/sections/health-shots/2017/05/09/527432852/medicare-didnt-investigate-suspicious-reports-of-hospital-infections

Almost 100 hospitals reported suspicious data on dangerous infections to Centers for Medicare & Medicaid Services officials, but the agency did not follow up or examine any of the cases in depth, according to a report by the Health and Human Services inspector general’s office.

Most hospitals report how many infections strike patients during treatment, meaning the infections are likely contracted inside the facility. Each year, Medicare is supposed to review up to 200 cases in which hospitals report suspicious infection-tracking results.

The IG said Medicare should have done an in-depth review of 96 hospitals that submitted “aberrant data patterns” in 2013 and 2014. Such patterns could include a rapid change in results, improbably low infection rates or assertions that infections nearly always struck before patients arrived at the hospital.

The IG’s report, released Thursday, was designed to address concerns over whether hospitals are “gaming” a system in which it falls to the hospitals to report patient infection rates and, in turn, the facilities can see a bonus or a penalty worth millions of dollars.

The bonuses and penalties are part of Medicare’s Hospital Inpatient Quality Reporting program, which is meant to reward hospitals for low infection rates and give consumers access to the information at the agency’s Hospital Compare website.