July 2013 Health Care Compliance Update

WK Health Law Daily The WK Health Law features the latest news involving Medicare, Medicaid, health care reform, health care compliance, fraud and abuse, and other health care reimbursement and compliance topics. The Daily is delivered via email to the customer’s computer, tablet, or smart phone. News stories include links to full text documents. For more information, go to http://wkhealthlawdaily.com. The following Health Care Compliance stories appeared in Health Law Daily in July: Fraud and Abuse/False Claims

Proposal granting equity to GPO’s members could violate the anti-kickback statute. The HHS Office of Inspector General (OIG) determined that a publicly traded company’s proposal to grant equity in the company to members of its subsidiary’s group purchasing organization (GPO) did not present a minimal risk of fraud and abuse and could violate the anti-kickback statute (Social Security Act §1128B(b)) (OIG Advisory Opinion, No. 13-09, July 23, 2013). The proposed remuneration would not provide a potential benefit to payors. Furthermore, the proposed arrangement would lock members into a contract, regardless of pricing benefits, and would require them to at least maintain purchasing levels for the duration of the contract, possibly resulting in prohibited remuneration. As a result, the OIG could potentially impose administrative sanctions on the Requestor pursuant to the exclusion authority at §1128(b)(7) or the civil monetary penalty provision at § 1128A(a)(7) of the SSA.

Louisiana reaches $45 million agreement with GSK to resolve fraud, deceptive marketing allegations. The Office of the Attorney General for Louisiana announced a $45 million agreement with GlaxoSmithKline (GSK) regarding allegations that GSK committed Medicaid fraud and deceptively marketed its diabetes drug Avandia along with other prescription medications. The recovery is the largest ever received by the state. In addition to Avandia, the settlement also resolves claims relating to the drugs Paxil, Wellbutrin, Advair, Lamictal, Zofran, Imitrex, Lotronex, Flovent and Valtrex for off-label, noncovered uses in violation of state laws. Louisiana Attorney General James D. Caldwell stated that independent pursuit of GSK by Louisiana resulted in “20 times more money” than it would have received in a multi-state settlement approved last year. In 2012, GSK pled guilty and agreed to pay $3 billion, primarily to the federal government, in order to resolve its criminal and civil liabilities arising from the unlawful promotion of certain prescription drugs, failure to report safety data to the Food and Drug Administration, and false price reporting practices in a matter brought by the Department of Justice.

Nursing home, pharmacy operation qui tam action raises triable issue of fact, summary judgment denied. Motions for summary judgment and a motion to strike in a lawsuit alleging anti-kickback and False Claims Act violations regarding acceptance of remuneration for a relationship between nursing homes and a pharmacy were denied (U.S. ex rel Nehls v Omnicare, Inc., July 23, 2013, Tharp, J). A pharmacy partly owned by the son was formed; its primary client was a group of nursing homes, with ownership interests by the father and the son. The relator was able to provide evidence that the father and son each benefitted directly and indirectly from the sale of the pharmacy to another company and that the motions were not justified. Antitrust

1 Antitrust lawsuit against Kaiser Foundation entities, employees’ unions dismissed. Prime Healthcare Services, Inc. (Prime) failed to plead facts sufficient to state a claim for violation of Section 1 of the Sherman Antitrust Act (15 U.S.C. sec. 1) against Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and Southern California Permanente Medical Group (together, Kaiser) and against various union defendants (Prime Healthcare Services, Inc. v Service Employees International Union, July 25, 2013, Curiel, G). Among other required elements, Prime failed to demonstrate the existence of an intent to restrain trade or an actual injury to competition. Prime also failed to sufficiently plead Section 2 claims of monopolization, attempted monopolization, and conspiracy to monopolize against Kaiser. The court granted Kaiser and the unions’ motions to dismiss and dismissed Prime’s complaint without prejudice. HIPAA

WellPoint settles potential HIPAA violations for $1.7 million. WellPoint Inc., an Indiana-based managed care company, has entered into a Resolution Agreement with HHS regarding possible Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Rules violations in the amount of $1.7 million. WellPoint submitted a breach report to HHS, as required under the Health Information Technology for Economic and Clinical Health (HITECH) Act, claiming that security weaknesses in its database had left the electronic PHI (ePHI) of 612,402 individuals susceptible to unauthorized online access. WellPoint may have disclosed ePHI including names, birth dates, addresses, Social Security numbers, telephone numbers, and health information. The Office of Civil Rights (OCR) investigation pointed to inadequate policies and procedures for authorizing access to an online database, failure to appropriately evaluate a software upgrade, and lack of safeguards to verify who is seeking access to the PHI database. Program Integrity

Contractor may make unreviewable finding of sustained or high level of payment error. A Medicare administrative contractor had been delegated the authority to determine that a home health care provider had a “sustained or high level of payment error” under Soc. Sec. Act. §1893(f)(3), as required to estimate the total payment error through sampling and extrapolation (Gentiva Healthcare Corp. v Sebelius, July 23, 2013, Garland, M). Soc. Sec. Act §1874(b) permits the Secretary to contract with private entities to perform any function necessary to administer the Medicare program. Although §1893(f)(3)(A) provides that the Secretary’s determination of a sustained or high level of payment error is not reviewable, nothing in the statute suggests that this determination is excepted from the general authority to delegate. Because the Secretary’s interpretation of §1893 is reasonable, the court must defer to it even if there are other reasonable interpretations. The trial court’s judgment upholding the determination was affirmed.

CMS properly revokes billing privileges , denies enrollment applications of DMEPOS suppliers. CMS appropriately revoked a durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) supplier’s Medicare billing privileges for having no personnel present at its location during posted business hours (Advanced Mobility B & G, Inc. v CMS, Docket No. C-13-457, Decision No. CR2790, May 16, 2013). The supplier’s location was closed when a CMS contractor made two separate attempts to conduct on-site, unannounced inspections. The administrative law judge (ALJ) found the evidence that the supplier presented claiming to show that employee(s) were on-site and/or on a lunch break at the time of the attempted inspections was unconvincing. As the supplier did not meet its required supplier standards, the revocation of billing privileges and supplier number was reasonable

CMS properly revoked the billing privileges of A Plus Diabetic Footwear and Supplies because it was not operational at the address in its enrollment application and it failed to notify CMS or its contractor of any change in the location of its business pursuant (see 42 CFR. §§424.535(a)(5) and 424.57(c)(7)) (A Plus Diabetic Footwear and Supplies, Docket No. C-13-146, Decision No. CR2788, May 16, 2013).

2 CMS properly revoked the Medicare billing number of a DMEPOS supplier because it was not operational (Complete Home Care, Inc. v CMS, Docket No. C-13-127, Decision No. CR2783, May 14, 2013). The supplier’s business location was closed when an inspector visited the site on two occasions; therefore, it failed to comply with the requirements of 42 C.F.R. §424.57(c).

CMS properly revoked the billing privileges of Mane Medical Equipment and Supplies, Inc. (Mane), a DME supplier, for failure to maintain accreditation as required by 42 CFR 424.57(c)(22) (Mane Medical Equipment and Supplies, Inc. v CMS, Docket No. C-13-120, Decision No. CR2787, May 15, 2013). In addition to allowing its contract with the accreditation organization to expire by missing an annual survey, the supplier failed to achieve a passing score in two consecutive surveys under its corrective action plan.

Wisconsin Physician Services (WPS), CMS’ contractor, properly denied the application of podiatrist Ronald Belin to enroll as a Medicare supplier because of his 2006 conviction of a felony (Belin v CMS, Docket No. C-13-64, Decision No. CR2768, April 26, 2013). The expiration of the period of exclusion imposed by the Office of Inspector General did not affect the authorization of CMS or its contractor to deny his application under 42 CFR§ 424.530(a)(3) based on a determination that his crime, obtaining controlled substances by fraud, was detrimental to the Medicare program. The misstatement of the date of Belin’s conviction and the incorrect citation of the regulation governing revocation as the basis for the denial did not prejudice Belin because the documents he filed showed that he understood the contractor’s action and the basis for it.

The Medicare enrollment and billing privileges of PSI Premier Specialties, Inc. d/b/a Medical Express PSI (PSI), a DMEPOS supplier, were properly revoked due to failure of facility enrollment, application misstatements, and lack of facility accreditation (PSI Premier Specialties, Inc. d/b/a Medical Express PSI, v CMS, Docket No. C-13-397, Decision No. CR2833, June 18, 2013). The ALJ concluded that there was no genuine issue of material fact with regard to the allegations of noncompliance by PSI.

Health Care Compliance Letter, Volume 16, Issue 4, July 16, 2013 On the Front Lines

Learning from the Past and Building for the Future: Corporate Integrity Agreements in the Life Sciences Industry, Part I: The History and Development of Corporate Integrity Agreements by Jeffrey B. Miller, Esq.

EXCERPT: While [Office of Inspector General] OIG Guidance documents are perhaps the industry’s most recognized sources of standards and information on compliance programs, there is another important source of guidance, perhaps just as important and influential: OIG’s corporate integrity agreements (“CIAs”). CIAs are agreements that OIG negotiates as part of civil settlements with providers and organizations accused of violating health care related laws and requirements. Similar to OIG’s Compliance Program Guidance documents, their purpose is to ensure that specific providers and organizations implement and maintain effective compliance programs to adequately ensure compliance with U.S. federal health care program requirements, laws and regulations; individualized instead of conceptual, required rather than voluntary. With such similarities with the OIG Guidance documents, these detailed agreements are in many ways OIG’s embodiment of its Guidance to individual companies. Through its Guidance documents, OIG states conceptually what it believes is important for effective compliance programs in industry; through its CIAs OIG actualizes those beliefs in specific companies and circumstances.

Because CIAs are fashioned through civil (and sometimes criminal) settlements, CIAs have often been viewed by organizations primarily as enforcement tools and, therefore, not applicable to their voluntary compliance program efforts. The terms of CIAs are only required of the parties to these settlements, and their terms, tailored for each participant and circumstance, may not always be appropriate for other organizations. Moreover, because they are fashioned in the context of legal settlements, CIAs may be prone to set higher standards for compliance programs than the industry general; even than OIG’s own Guidance documents would suggest. Still, CIAs do provide insight and information into OIG’s thinking and standards

3 on compliance programs. […] With such a large number of significant and influential organizations entering into CIAs, the effects of CIA’s reach beyond individual companies and into industry practice. In a life sciences industry that has been beset with challenges resulting in CIAs, many also may consider it beneficial to track OIG requirements as a strategy to help to demonstrate the appropriateness of their compliance programs should discussions with OIG become necessary. As result, while their direct effect still remains with those who are parties to the individual agreements, companies across the industry are effected and should be concerned with CIAs. Part II of this article will examine commonalities and trends in CIAs in an effort to discern current OIG requirements and anticipate trends in OIG standards. Jeffrey B. Miller is Vice President, Global Synthes CIA Compliance Officer and Group Leader with DePuy Synthes, Companies of Johnson & Johnson.

Journal of Health Care Compliance The July/August issue of the Journal of Health Care Compliance mailed to subscribers on July 9, 2013. The July/August issue included the following articles: COLUMNS From the Editor—Roy Snell Getting through to Liars Electronic Resources—Catherine M. Boerner Have You Taken a Look at the Medicare Quarterly Provider Compliance Newsletters? Best Practices—Julene Brown Are You Doing Enough to Guard Against Potential Risks in Your SNF? Self Disclosure —Suzanne Dallas Castaldo OIG Releases Revised Provider Self-Disclosure Protocol Hospital Compliance—David Centafont Compliance Professionals Need to Be Involved with ICD-10 Implementation from the Beginning QIO—Harry M. Feder CMS Proposes Restructured QIO Program Auditing and Monitoring—Steven Forman Compliance Program Leveraging of Audit Resources Meaningful Use—David Nilasena Stage 2 of the Electronic Health Record Incentive Programs: Building from Stage 1 Privacy—Lori J. Strauss Direct from the Office for Civil Rights: A HITECH/ HIPAA Privacy Regulatory Update Information Management—Diana Warner Safe De-Identification of Big Data Is Critical to Health Care FEATURES Eliza Andonova / Andrew Furlow The OIG’s Revised and Expanded Self-Disclosure Protocol: Increased Transparency by the Government Thomas E. Herrmann The Compliance Challenge Posed by OIG Program Exclusions Don Hardwick Regulatory Changes Demand an Enterprise-Wide Approach to Disclosure Management of PHI Ralph Levy, Jr. The Good, the Bad, and the Ugly: Addressing Tax and Compliance Issues Posed by Electronic Health Systems Jeffrey B. Miller Learning from the Past and Building for the Future: Corporate Integrity Agreements in the Life Sciences Industry FOR THE RECORD Roy Snell

4 Insight on the Changing Dynamics of Laboratory Compliance