On January 31, 2019, the Department of Health and Human Services (HHS) released a notice of proposed rulemaking (the Proposed Rule) as part of ongoing administration drug pricing reform efforts. The Proposed Rule would modify a regulatory provision that had previously protected certain pharmaceutical manufacturer rebates from criminal prosecution and financial penalties under the federal Anti-Kickback Statute.

Specifically, the Proposed Rule would exclude from “safe harbor” protection rebates and other discounts on prescription pharmaceutical products offered by pharmaceutical manufacturers to Medicare Part D plan sponsors or Medicaid Managed Care Organizations (MCOs), unless the price reduction is required by law (such as rebates required under the Medicaid Drug Rebate Program). The proposed exclusion would apply to rebates offered directly to Part D plan sponsors and Medicaid MCOs, as well as those negotiated by or paid through a pharmacy benefit manager (PBM). HHS stated that it does not intend for the revisions in this Proposed Rule to negatively impact protection of prescription pharmaceutical product discounts offered to other entities such as wholesalers, hospitals, physicians, pharmacies and third party payors in other federal health care programs. The proposed effective date of this regulatory modification is January 1, 2020, although HHS has sought comments regarding whether this allows sufficient time for parties to restructure existing arrangements.

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On December 7, 2016, the Office of Inspector General of the US Department of Health and Human Services published a final rule containing revisions to both the federal Anti-Kickback Statute safe harbors and the beneficiary inducement prohibition in the civil monetary penalty rules. Effective January 6, 2017, the Final Rule modifies certain existing safe harbors and adds additional safe harbors to the Anti-Kickback Statute and incorporates Affordable Care Act-mandated exceptions into the definition of remuneration under the civil monetary penalty rules.

Read the full article here.

On Tuesday, June 23, the U.S. Department of Health & Human Services Office of Inspector General (OIG) released two reports that hone in on data patterns showing potential fraud and abuse in the Medicare Part D program.  These reports were released less than a week after a coordinated national Medicare fraud takedown that included a significant number of Part D-related targets.

Medicare Part D is the optional prescription drug benefit for Medicare beneficiaries that went into effect in 2006.  In 2013, over 39 million beneficiaries were enrolled in the program.  The Centers for Medicare & Medicaid Services (CMS) relies on Part D plan sponsors and the Medicare Drug Integrity Contractor (MEDIC) to help CMS detect and prevent fraud, waste and abuse in the Part D program.

The OIG utilized Part D data analytics to identify three main trends that it sees as potential indicators of Part D fraud: increased spending for commonly abused opioids, over 1,400 pharmacies with questionable Part D billing patterns and specific geographic “hotspots” for specific non-controlled drugs.  The OIG provided five examples of hotspots around the country and compared per-beneficiary payment rates in the hotspots to the national averages.

The OIG issued this report in tandem with another document summarizing the work that  has been done thus far by OIG and CMS in identifying and addressing Part D program integrity weaknesses.  It also touched on MEDIC’s increased authority to access claims data from Medicare Parts A and B in its efforts to combat fraud.  This document emphasized that CMS, MEDIC, and Part D sponsors need to increase their efforts to address Part D fraud and abuse.  OIG also pushed for increased data collection, including expanded reporting requirements and drug utilization review programs, and for the implementation of even more robust oversight efforts, including mechanisms to recover payments from Part D sponsors.

Part D sponsors, pharmacies and providers should be keenly aware of the OIG’s continuous efforts to identify and combat against potential areas of fraud in the Part D program.  Active prescribers located in the OIG’s current hotspots should also prepare for increased scrutiny and continue their efforts to maintain compliance programs that can resolve any statistical issues the OIG may identify.

Read the full reports at http://oig.hhs.gov/oei/reports/oei-02-15-00190.pdf and http://oig.hhs.gov/oei/reports/oei-03-15-00180.pdf.

The Department of Health and Human Services Office of Inspector General (OIG) issued an update to its Work Plan on May 28 that included several new Medicare-related topics for OIG audit or inspection.  These additions expand OIG’s work in areas that OIG has previously identified as priorities, such as hospital-based services, lab testing and Part D payments.  These new topics included:

  • Hospital outpatient intensity-modulated radiation therapy claims;
  • Payments for clinical diagnostic laboratory tests, including the top 25 clinical diagnostic laboratory tests by Medicare expenditures in 2014. This report is required by the Protecting Access to Medicare Act; and
  • Compliance with various aspects of the inpatient rehabilitation facility prospective payment system, including the documentation required 42 CFR § 412.622(a)(3) (4) and (5).
  • Examining billing trends within the Part D program, especially those for opioid drugs and pharmacy billing patterns.

OIG also announced several new programmatic studies and reports, including:

  • Examining hospital preparedness for public health emergencies due to high-risk infectious diseases.
  • Identifying best practices and possible challenges in Accountable Care Organizations’ (ACO) use of electronic health records, such as interoperability issues.
  • Whether the durable medical equipment competitive bidding program is affecting beneficiary access to certain items, citing to “anecdotal reports [that] allege that competitive bidding has led to reduced access to DME and, in turn, compromised the quality of care beneficiaries receive” as the reason for adding this review.
  • Creating a portfolio report of the OIG’s Medicare Part D oversight work to summarize OIG audits, evaluations, legal opinions and investigative work, and provide progress information on recommendations to improve oversight of the program by the Centers for Medicare & Medicaid Services, plan sponsors and Medicare Drug Integrity Contractors or MEDICs. This report will likely be similar to the 2012 portfolio report highlighting OIG’s work on personal care services.
  • Examining CMS’s management of the Open Payments program, including CMS’ oversight of manufacturers’ and group purchasing organizations’ compliance with data reporting requirements and whether the required data for physician and teaching hospital payments is accurately and completely displayed in the publicly available database.