Omnicare Accused of Anti-Kickback Violations for Promoting Abbott’s Depakote®

A federal False Claims Act (FCA) lawsuit has been filed by the U.S. Department of Justice (DOJ) against Omnicare Inc., the nation’s largest provider of pharmaceuticals and pharmacy consulting services to nursing homes. The DOJ’s complaint alleges that Omnicare solicited and accepted millions of dollars in kickbacks from Abbott Laboratories to promote Abbott’s anti-epileptic drug, Depakote®, for controlling behavioral disturbances exhibited by dementia patients residing in nursing homes serviced by Omnicare.

Prior Settlement by Abbott

In May 2012, the United States, numerous individual states, and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s civil liability under the FCA for its unlawful promotion of Depakote for uses not approved as safe and effective by the FDA. The resolution, the second largest payment by a drug company, included a criminal fine and forfeiture totaling $700 million and civil settlements with the federal government and the states totaling $800 million. Abbott also was made subject to court-supervised probation and reporting obligations for Abbott’s Chief Executive Officer and Board of Directors.

The DOJ’s Complaint

Federal regulations designed to protect nursing home residents from unnecessary drugs require nursing homes to retain consulting pharmacists. According to the DOJ’s complaint, Omnicare’s consulting pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients. The complaint alleges that Omnicare used its influence over physicians in the nursing homes they serviced to secure kickbacks from pharmaceutical companies such as Abbott. The complaint further alleges that Omnicare:

  • disguised the kickbacks it received by accepting payments from Abbott described as “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend Depakote;
  • solicited contributions from Abbott and other pharmaceutical manufacturers to its Re*View program, which was not a “health management” or “educational” program as claimed by Omnicare, but simply a means by which Omnicare solicited kickbacks; and
  • entered into agreements with Abbott by which Omnicare was entitled to increasing levels of rebates based on the number of nursing home residents serviced and the amount of Depakote prescribed per resident.

Finally, the complaint alleges that Abbott funded Omnicare management meetings on Amelia Island, Florida, offered tickets to sporting events to Omnicare management, and made other payments to local Omnicare pharmacies.

Previous Omnicare Settlement

In June, 2014, Omnicare agreed to pay $124.24 million for allegedly offering improper financial incentives to skilled nursing facilities in return for their continued selection of Omnicare to supply drugs to elderly Medicare and Medicaid beneficiaries. The settlement resolved allegations that Omnicare submitted false claims by entering into below-cost contracts to supply prescription medication and other pharmaceutical drugs to skilled nursing facilities and their resident patients to induce the facilities to select Omnicare as their pharmacy provider.

Whistleblower Suits

The DOJ filed its current complaint against Omnicare in two consolidated whistleblower lawsuits filed under the FCA in the Western District of Virginia. The cases are U.S. ex rel. Spetter v. Abbott Labs, Case No. 10-cv-00006 and U.S. ex rel. McCoyd v. Abbott Labs, Case No. 07-cv-00081.

The government’s complaint contains allegations only. There has been no determination of liability against Omnicare.

Medicaid and CHIP Services Director to Leave CMS

CMS has announced that Cindy Mann, J.D., Director of the Center for Medicaid and CHIP Services (CMCS) within CMS since June 2009 will be leaving her position in late January 2015. As CMS’ Deputy Administrator and Director of CMCS, Mann was responsible for the development and implementation of national policies governing Medicaid and the Children’s Health Insurance Program (CHIP) and worked closely with states as they designed and administered their Medicaid and CHIP programs.

Since the U.S. Supreme Court held that the Medicaid expansion contained in the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) was optional in June 2012, Mann has been largely responsible for encouraging states to extend Medicaid coverage to more low-income residents and for negotiating tough terms for those state programs.

The Wall Street Journal (WSJ) reports that CMS administrator Marilyn Tavenner sent an email to agency staff on December 19 describing Mann as “an open and trustworthy partner to state leaders” and a “passionate advocate for beneficiaries.” According to the WSJ, while some states have attempted to obtain concessions from the Medicaid expansion requirements, Mann has “been seen as a formidable defender and expert of the traditional Medicaid program during those battles and states won few significant concessions.”

Modern Healthcare reports that Mann’s departure surprised healthcare stakeholders who expected her to stay through the end of the Obama Administration. Joan Alker, executive director of the Center for Children and Families at the Georgetown University Health Policy Institute, is quoted in Modern Healthcare as saying, “It’s a tremendous loss for the Medicaid program. Cindy Mann has been an incredible public servant who has worked tirelessly and is brilliant, passionate and committed to making government work for vulnerable people.”

Tavenner’s email to CMS staff states that Mann’s deputy, Vikki Wachino, will serve as acting director until a permanent replacement is appointed.

CMS Publishes FY 2015 Hospital Value-Based Purchasing Updates

CMS has updated its Hospital Value-Based Purchasing (VBP) Program website to include fiscal year (FY) 2015 updates, including the value-based incentive payment adjustment factor. The Hospital VBP Program is part of CMS’ effort to link Medicare’s Inpatient Prospective Payment System (IPPS) to a value-based system to improve healthcare quality, including the quality of care provided to inpatients. Under the Hospital VBP Program, authorized by Congress in Section 3001(a) of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), participating hospitals are paid for inpatient acute care services based on the quality of care, not just quantity of the services they provide.

2015 IPPS Final Rule

In its FY 2015 IPPS Final rule (79 FR 49854, August 22, 2014), CMS calculated the value-based incentive payment adjustment factor and the portion of Medicare’s IPPS payments that will be subject to the adjustment factor. CMS also updated the applicable percent for the FY 2015 Program, which is 1.50 percent. Table 16B of the FY 2015 IPPS Final rule contains the actual payment adjustment factors for FY 2015. These actual factors are based on the finalized baseline and performance period for FY 2015 and will be used to adjust base operating diagnosis-related group (DRG) payments to eligible hospitals for discharges occurring in FY 2015.

The Final rule included a number of policies related to the Hospital VBP Program. Specifically, CMS finalized payment and operational details for FY 2015, and some new policies for FY 2017, including: (1) new measures; (2) performance periods; (3) performance standards; (4) domain weighting; and (5) domain structure based on the National Quality Strategy and its priorities of better patient outcomes, quality, safety, and lower cost for Medicare payments.

The Final rule also included policies related to certain measures for FY 2018 through FY 2020, including select performance periods and performance standards for those program years.

Future Measures

In its FY 2015 IPPS Proposed Rule (79 FR 27978), CMS discussed six potential future hospital-based episode measures to supplement the Medicare Spending per Beneficiary (MSPB) measure in the Efficiency domain of the Total Performance Score (TPS).

A document prepared by Acumen LLC, in partnership with CMS, details the method used to construct these potential hospital-based episode payment measures. Specifically, the document: (1) explains the criteria used to select conditions for episode development; (2) outlines the methodology for constructing the episodes from Medicare administrative claims; (3) details the calculation of the episode-based measures; (4) describes the attribution rules; and (5) presents the results of the six hospital-based episode measures using calendar year 2012 Medicare Parts A and B claims data.

Should You Harness “Crowd Wisdom” to Solve Your Medical Mystery?

A new medical website is harnessing “crowd wisdom” to diagnose the medical conditions of patients that have eluded their personal physicians for years. “Crowd wisdom” is a concept that states that large groups of non-experts can often be smarter than individual experts, as long as the right mechanisms are in place to aggregate their collective wisdom. In fact, “crowd wisdom” has been used by Wikipedia to build their encyclopedia, and by Google to create their search engine. The concept was written about in detail by James Surowiecki in his book The Wisdom of Crowds.

The website, CrowdMed, was founded by Jared Heyman, who reportedly nearly lost his sister to a medical mystery that took three years, 24 doctors, and over $100,000 in medical bills to diagnose. Her condition was finally diagnosed by the collaboration of a large, interdisciplinary team of experts who reached a consensus-based diagnosis. This collaborative approach led to the development of CrowdMed, which connects patients to medical detectives who work together to solve these hard-to-diagnose medical mysteries.

According to CrowdMed, its medical detectives include medical students, retired physicians, nurses, physician assistants, chiropractors, scientists, naturopaths, and regular folks who enjoy solving medical mysteries. As of December 2014, CrowdMed’s medical detective community had the following characteristics: 52 percent male and 48 percent female; 66 percent work or study in medicine (across 32 job titles or specialties); an average age of 36; represent 22 countries; and 69 percent are from the United States.

The average CrowdMed patient has been sick more than eight years, has consulted at least eight doctors, and has incurred over $55,000 in medical bills. CrowdMed claims to bring these patients closer to a correct diagnosis in less than two months through the use of its patented prediction market algorithm which assigns probabilities to each diagnostic or solution suggestion offered by its medical detectives, based on their previous performance. CrowdMed contends that approximately 80 percent of their patients reported their top diagnostic or solution suggestion to be accurate, and over 50 percent say that CrowdMed results have brought them closer to correct diagnosis or cure. Compared to the traditional medical practice, CrowdMed claims that, on average, it produces helpful diagnostic or solution insights up to 50 times faster, and at 300 times less cost.

There are various reasons for its success, but CrowdMed believes that the success of their prediction market algorithm comes down a simple matter of incentives and engagement. Because their medical detectives have something to win or lose depending on their performance, this causes them to be more engaged and invested in their choices.

Here is how it works. When patients submit their case to CrowdMed, they can choose a free case submission option, or one of three pre-paid packages: Lite ($99), Standard ($299), or Premium ($499). Patients can also offer additional compensation to help attract the interest of more and higher quality medical detectives. The packages provide for 30, 60, or 90 days on the site, respectively. CrowdMed sends notifications to their patients at the end of the 30 to 90 day period, giving the patient the chance to extend the case for $99 per month.

Then, once their case is closed, the patient has 30 days to consult with his or her physician to select the best diagnostic and solution suggestions received from CrowdMed. CrowdMed then divides the compensation to those medical detectives who contributed to the best diagnosis or solution suggestion, as determined by the patient or their physician.