Tag: OIG

OIG advisory opinion approving smartphone initiative

By Clay Brewer, Class of 2020; Caitlyn W. Page, Partner at Waller

An advisory opinion issued recently by the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) provides some insight into the growing relationship between access to technology and access to patient care.

The OIG issued Advisory Opinion No. 19-02 permitting a pharmaceutical manufacturer’s proposal to loan limited capability smartphones to certain financially needy patients in order to assist these patients and their care providers track medication adherence data. In issuing this advisory the OIG provided valuable insight into how it interprets the “promotes access to care” exception to the Beneficiary Inducement Civil Monetary Penalty Statute (the “Beneficiary Inducement CMP”).

According to the requestor, the patient population for an undisclosed drug experiences a high amount of medication nonadherence or partial adherence, which results in higher utilization of healthcare services and increased costs to the healthcare system. In response to this issue, the drug’s manufacturer created a device that detects a signal sent by the drug upon ingestion, which in turn transmits the ingestion time to an app developed by the manufacturer through Bluetooth. However, because some patients do not have a smartphone, they are unable to use the app. As a result, the manufacturer proposed issuing a limited capability smartphone along with the drug to patients who do not have a smartphone and who have a household income below a specified percentage of the federal poverty level. Aside from the preloaded app, all other features of the smartphone would be disabled except the patient would still be able to make domestic telephone calls. The smartphones would be issued by a specialty pharmacy under contract with the manufacturer and each patient would only be permitted to such use the phone for a maximum of two 12-week administrations while receiving the medication.

The OIG concluded that the Beneficiary Inducements CMP would be implicated by this proposal because patients would be receiving the ability to make domestic phone calls, which constitutes remuneration. Additionally, because the patient’s prescribing practitioner would complete the paperwork for the patient to obtain the smartphone, the patient would likely have the impression that he or she must continue receiving care from a particular provider in order to maintain use of the smartphone. The patient may also feel obligated to obtain the drug from the specialty pharmacy issuing the smartphones even if the drug is available at other pharmacies.  The OIG, however, found that the proposal would fall under the “promotes access to care” exception to the Beneficiary Inducements CMP for a number of reasons, most notably because the OIG concluded that there is unlikely to be any possibility of disrupting clinical decision making since the patient only receives a smartphone if he or she falls below a certain income and does not currently have a smartphone device to download the app.

The OIG also concluded the proposal poses a low risk of imposing additional costs upon federal healthcare programs because:

  • there would be no incentive to issue a smartphone to an individual who already has one;
  • there is no advertising of the proposal which would cause individuals to seek treatment for the purposes of receiving a smartphone; and,
  • the smartphone’s limited capabilities and a maximum of two 12-week time periods would limit a patient’s effort to retain the smartphone.

Lastly, the OIG determined that the federal Anti-Kickback Statute could be implicated by this proposal if the requisite intent were present; however, it would not pursue administrative sanctions against the manufacturer because the proposed program contained a number of safeguards, including the fact that the loaner smartphone would be available only on a temporary basis, would only be used by individuals who otherwise would not be able to use the medication, and there would be no advertising of the smartphone so individual patients would not go to a certain provider seeking the medication for the purposes of receiving a smartphone.

While the OIG expressly stated that this opinion is narrowed to the specific facts that the Requestor presented and should not be relied upon for other possible initiatives, this advisory opinion provides useful guidance regarding the OIG’s view on the intersection of technology and the Anti-Kickback Statute and Beneficiary Inducements CMP.

Federal government tightening enforcement for hospice, post-acute care providers

By Curtis Campbell, Class of 2019; Jessie C. Neil, Partner at Waller; J. Logan Wilson, Associate at Waller

The Department of Health and Human Services’ Office of Inspector General (OIG) recently announced that it had found several vulnerabilities in the Medicare hospice program while examining practices between 2006 and 2016.

The number of beneficiaries in the program expanded 53 percent between these dates, growing from 930,000 beneficiaries in 2006 to 1.4 million beneficiaries in 2016. However, spending in the same period grew 81 percent, increasing from $9.2 billion in 2006 to $16.7 billion in 2016. The number of hospices also increased 43 percent, growing from 3,062 in 2006 to 4,374 in 2016.

Beneficiaries of the program forgo curative care for terminal illnesses and instead receive palliative care. Palliative care can be provided in a variety of settings, including the patient’s home, a nursing facility, a hospital or a hospice inpatient unit. Medicare pays hospices for each day a beneficiary receives care, regardless of the quantity or quality of services. Medicare pays a different daily rate for four (4) different levels of hospice care: routine home care, general inpatient care, continuous home care and inpatient respite care.

While conducting its examination, OIG concluded that hospices did not always provide necessary services to beneficiaries. In some cases, hospices did not manage patients’ symptoms or medications effectively, leaving them in pain for many days. Additionally, OIG found that hospices often did a poor job care planning, that hundreds of hospices only offered routine home care, that many hospices did not offer services on the weekend, and that many beneficiaries did not see a physician. Some beneficiaries and their families and caregivers also did not receive critical information needed to make informed decisions about the care the beneficiary received.

OIG also identified issues with hospices inappropriately billing costs and higher-than-appropriate levels of care to Medicare worth hundreds of millions of dollars. OIG noted several fraudulent activities, including enrolling beneficiaries who are not eligible for hospice care and billing for services that were never provided.

Furthermore, OIG found that the current payment system incentivizes hospices to minimize patient services and seek beneficiaries who have uncomplicated needs. The Centers for Medicare & Medicaid Services (CMS) has made some changes to the payment system, but the underlying structure remains unchanged.

As a result, OIG made several recommendations to CMS about how to improve the hospice program, including:

  • Strengthening the survey process to better ensure that hospices provide beneficiaries with needed services and quality care;
  • Seeking statutory authority to establish remedies for hospices with poor performance;
  • Developing and disseminating additional information on hospices to help beneficiaries and their families and caregivers make informed choices about their care;
  • Educating beneficiaries and their families and caregivers about the hospice benefit;
  • Promoting physician involvement and accountability to ensure that beneficiaries get appropriate care;
  • Strengthening oversight of hospices to reduce inappropriate billing; and
  • Taking steps to tie payment to beneficiary care needs and quality of care to ensure that services rendered adequately serve beneficiaries’ needs, seeking statutory authority if needed.

OIG is telegraphing its intent to focus enforcement efforts around hospice care in particular and post-acute care in general. Companies with a proactive compliance program will wisely adapt their processes to reflect these new government priorities.

OIG Gives Green Light to Gainsharing Arrangement

By Brandon Huber, Class of 2019; Kim Harvey Looney, Partner at Waller; Justin Hickerson, Associate at Waller

A gainsharing arrangement between a non-profit hospital and members of a multi-specialty physician group has been authorized by the Office of Inspector General for the first time since the 2015 enactment of MACRA removed certain roadblocks from the expanded use of gainsharing in the healthcare industry.

An OIG advisory opinion issued earlier this month involves a proposed arrangement in which a non-profit medical center will pay certain neurosurgeons a share of cost savings realized by the selection and use of certain products during spinal fusion surgeries. Thirty-four cost-reduction measures were identified by the medical center based upon considerations of costs, quality of patient care, and utilization on a national level. Thirty-one recommendations involved standardizing certain devices and supplies used in spinal fusion surgeries. The remaining three suggested that the neurosurgeons use Bone Morphogenetic Protein for spine surgeries only on an as-needed basis.

The proposed arrangement established a three-year term, whereby the neurosurgeons would receive 50 percent of the annual cost savings, paid each year over the term of the arrangement. The compensation paid to the neurosurgeons would then be divided on a per capita basis, with the remainder being allocated towards paying the practice group’s administrative expenses. Other safeguards implemented under the arrangement included an oversight committee and a requirement that all patients be given written notice of the arrangement and an ability to review the details prior to the performance of their procedure.

In assessing the legality of the arrangement, the OIG examined the application of both the CMP and the Anti-kickback Statute. Regarding the CMP, although the OIG could not opine as to whether the arrangement would reduce medically necessary services, it found that, based on the methodology for development and payment of the cost savings, along with the monitoring and safeguards put in place, it would not impose sanctions.

Likewise, the OIG concluded that it would not impose sanctions under the Anti-kickback Statute because the arrangement presented a sufficiently low risk of fraud and abuse. The OIG based its decision on several factors:

  • the majority of the money received pursuant to the cost-sharing arrangement would be divided per capita amongst the four neurosurgeons, thereby reducing the risk that any particular physician would be incentivized to generate disproportionate cost savings;
  • there was no prohibition on using nonstandardized products, despite the product standardization recommendations; and
  • no other neurosurgeons from outside groups were allowed to participate, reducing the likelihood that the medical center would use the arrangement to attract neurosurgeons from competing hospitals to perform surgeries at its facility.

Although the opinion only applies to the parties who requested it, the opinion can serve as a valuable reference tool for those wanting to ensure future gainsharing arrangements are legally appropriate. Furthermore, this opinion highlights the OIG’s willingness to support gainsharing arrangements as the healthcare industry transitions from a fee-for-service model of care to a system which emphasizes value-based payments.