Archives for September 1, 2016

Kusserow on Compliance: OIG advisory opinion relating to hospice

The HHS Office of Inspector General (OIG) released Advisory Opinion No. 16-08, which involves an arrangement “in which a hospice would make a supplemental payment to the nursing facilities in which the hospice’s dually eligible patients reside when the nursing facilities–instead of the hospice–receive payment for their patients’ room and board expenses.”  The OIG concluded that while this arrangement could potentially generate prohibited remuneration under the Anti-Kickback Statute (AKS), it would not impose administrative sanctions under that statute.

The facts presented to the OIG related to a “Proposed Arrangement” in which a hospice would make a supplemental payment to the nursing facilities in which the hospice’s dually eligible patients reside when the nursing facilities—instead of the hospice—receive payment for their patients’ room and board expenses.  The “Requestor” was a non-profit corporation licensed by the state to provide hospice care and the state has developed a “Demonstration Program” to test a fully integrated care system that manages the continuum of benefits for dually eligible beneficiaries. The state selected several “Participating MCOs” to provide services to dually eligible beneficiaries in the Demonstration Program. Under the Proposed Arrangement, Requestor would require a nursing facility to provide evidence of the amounts the Participating MCO pays the nursing facility for patients who have, and patients who have not, elected hospice. For a Dually Eligible Hospice Patient, Requestor would pay the nursing facility a standalone amount that, when combined with the payment the nursing facility would receive from the Participating MCO for the Dually Eligible Hospice Patient, would result in the nursing facility receiving the same amount as it would have received if the patient had not elected hospice.   Requestor certified that these steps would prevent the nursing facility from being reimbursed more than the Participating MCO pays for a patient who has not elected hospice.

The OIG found the Proposed Arrangement would involve the transfer of remuneration by Requestor to potential referral sources, the nursing facilities, in the form of the supplemental payment.  It cited its 1998 Special Fraud Alert that covered a situation in which a hospice remits payment to nursing facilities for Dually Eligible Hospice Patients’ room and board expenses only after first receiving payment for such expenses from a state’s Medicaid program and found the Requestor’s prior arrangement to that situation. The Proposed Arrangement was found to be consistent with that Special Fraud and it would help to ensure that the nursing facility has no incentive to provide a lower level of room and board services to Requestor’s Dually Eligible Hospice Patients or to discourage patients from electing hospice.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

Mylan and Congress agree: the epinephrine auto-injector market needs a generic

Lawmakers are concerned about a lack of generic competition in the epinephrine auto-injector market after news broke that the cost of the EpiPen® auto-injector increased over 400 percent since the product’s manufacturer—Mylan—purchased the allergy medication device in 2007. Members of the House Committee on Energy and Commerce sent a letter to FDA Commissioner Robert Califf, on August 29, 2016, seeking answers to questions regarding the FDA’s prioritization and review of competitor products for EpiPen, inquiring specifically as to the agency’s review of abbreviated new drug applications (ANDAs) for generic epinephrine auto-injectors. On the same day, Mylan announced the release of its own generic EpiPen® Auto-Injector, which the manufacturer plans to sell for $300—a 50 percent discount off of its branded product.


The EpiPen is the primary epinephrine auto-injector available in the U.S. for the emergency treatment of life-threatening allergic reactions. In 2007 when Mylan acquired the drug-device combination, the list price for a single EpiPen was $57. The list price for the Epi-Pen 2-Pak® is now $608 (see Mylan attempts to mitigate EpiPen® cost hike controversy, Health Law Daily, August 25, 2016). When news of the price hike spread, Mylan announced it would double eligibility for its patient-access program. The manufacturer is attempting to further increase access through its generic product. With the release of a generic EpiPen, Mylan is offering a product identical to the branded product in terms of functionality and drug formulation. Mylan expects to release the product in several weeks, after labeling revisions are finalized.


The letter from lawmakers to the FDA raises concerns that federal laws and regulations are not adequately tailored to promote a competitive prescription drug market—a fact made apparent by the Mylan EpiPen controversy. The letter asked the FDA Commissioner to answer: (1) how many ANDAs have been submitted to the FDA relying on Mylan’s EpiPen?; (2) has the FDA prioritized review of those ANDAs?; (3) what are the factors the FDA considers when deciding whether to approve an ANDA which references a drug-device combination like EpiPen?; and (4) has the agency issued any guidance documents that would be of interest to a company seeking approval of a generic epinephrine auto-injector?