FDA needs more strategic planning to coordinate centers and guide scientific initiatives

Two recent Government Accountability Office (GAO) reports concluded that (1) the FDA lacks measureable goals to assess its progress in advancing the regulatory science that supports the medical products it oversees, and (2) the FDA’s 2013 strategic integrated management plan (SIMP) for its three centers (drugs, biologics, and medical devices) does not incorporate leading practices for strategic planning or document a comprehensive strategy for the centers.

Regulatory science efforts

The FDA Safety and Innovation Act of 2012 (FDASIA) (P.L. 112-144) required the FDA to establish a plan for measuring its progress in its regulatory science efforts. As a result, the FDA issued strategic planning documents in 2011 and 2013 to guide its regulatory science efforts and identify priority areas for conducting work. However, according to the GAO (Report No. GAO-16-432), these documents  do not specify the targets and time frames necessary for the FDA to measure progress overall or within each of the priority areas related to medical products. In addition, while the FDA cited examples of its achievements in regulatory science in a 2015 report, the GAO found that the FDA is unable to assess how those achievements constitute progress towards its goals. In addition, the FDA lacks information about how funding targeted at regulatory science is distributed across the priority areas.

According to the GAO, standards for internal control in the federal government state that complete and accurate data are needed to make operating decisions and allocate resources. Furthermore, multiple centers or offices fund projects toward a given priority area and leading practices for strategic planning encourage agencies to manage efforts that cut across the agency. The GAO concluded that the lack of consistent information limits the FDA’s ability to examine obligations across, or progress within, specific priority areas.

To improve its strategic planning for regulatory science efforts, the GAO recommended that the FDA: (1) develop and document measurable goals, including targets and time frames: and (2) systematically track funding across its regulatory science priority areas.

The HHS agreed with the importance of strategic planning for regulatory science. It concurred with the GAO recommendation that the FDA should develop and document measureable goals. HHS suggested, however, that the FDA documents with a targeted focus, such as user fee commitment letters and specific planning documents, are a more appropriate place for such goals than an agency-level strategic plan. HHS also concurred with the GAO’s recommendation to systematically track funding across the FDA’s regulatory science priority areas. In its response, HHS also identified recent and planned activities of specific centers to improve such tracking.

Coordination between centers

In 2012, the FDASIA required the FDA to develop a SIMP for the three centers overseeing medical products. The SIMP was to identify initiatives for improving efficiency, initiatives for workforce development, and measures for assessing the progress of these initiatives. FDA issued the SIMP in July 2013.

In the  SIMP, the FDA compiled mostly preexisting initiatives to improve the efficiency of each center’s activities and develop its workforce. The GAO found (Report No. GAO-16-500) that the SIMP did not incorporate leading practices for strategic planning or document a comprehensive strategy for the centers. In response, the FDA officials explained that circumstances at the time of the SIMP’s development, including leadership gaps, limited its ability to structure the plan into an effective strategic planning document. The FDA officials told the GAO that they use a variety of other key documents for strategic planning—such as agency-level and initiative-specific plans. According to the GAO, however, these other plans do not describe a long-term strategy for addressing key issues that cut across medical product centers. The FDA officials acknowledged to the GAO that there is a growing need for strategic planning across the medical product centers to improve center collaboration and address emerging issues.

The GAO found that an absence of a comprehensive long-term plan for medical product oversight could hinder the FDA’s efforts to address emerging issues that require center collaboration, such as access to quality data. The GAO concluded that fully documenting such a strategy, either in a separate plan or through existing documents, would help the FDA identify measurable goals and objectives for their centers that align with its mission and help communicate its priorities to key stakeholders.

The GAO recommended that the FDA engage in a strategic planning process to identify challenges that cut across the medical product centers, and document how it will achieve measurable goals and objectives in these areas. The HHS agreed with the recommendation. It indicated that the FDA has already started a process to identify key crosscutting themes for the medical products centers, which it will use to develop an overarching strategic planning framework to guide the work of these centers.

DEA has much to do to fully address recent GAO recommendations

Recent testimony before the Senate Judiciary Committee by Diana C. Maurer, Director of Homeland Security and Justice at the Government Accountability Office (GAO), indicated that while the Drug Enforcement Administration (DEA) has taken some steps to address 2015 GAO recommendations, it still has work to do regarding its administration of the controlled substance quota process, efforts to address controlled substance drug shortages, providing information and guidance to DEA registrants, and complying with guidelines for overseeing confidential informants.

The Controlled Substance Act (CSA) requires the DEA to set quotas that limit the amount of certain controlled substances that are available in the United States. The CSA also requires those handling controlled substances to register with the DEA. In addition, the DEA works to disrupt and dismantle major drug trafficking organizations and uses confidential informants to help facilitate its investigative efforts.

On February 2, June 25, and September 15, 2015, the GAO issued reports related to these DEA practices. In those reports, the GAO made 11 recommendations to the DEA. Maurer testified that, to date, the DEA has taken some actions to address these recommendations but has fully implemented only two of them.

Quota process

The GAO made four recommendations regarding the DEA’s administration of the controlled substance quota process: (1) strengthen its internal controls of its Year-End Reporting and Quota Management System (YERS/QMS), (2) establish performance measures related to quotas, (3) monitor and analyze YERS/QMS data, and (4) develop internal policies for processing quota applications and setting quotas.

Maurer testified that the DEA has implemented the first recommendation but has not been fully responsive to the second recommendation. She further testified that the GAO is awaiting further documentation from the DEA regarding the third and fourth recommendations and will update the status of these recommendations at that time.

The GAO also made three recommendations regarding barriers to effective coordination between the DEA and the FDA to prevent future shortages of controlled substances: (1) that the DEA and FDA promptly update the memorandum of understanding (MOU) between the two agencies; (2) that either in the MOU or a separate agreement, the DEA and the FDA specifically outline what information they will share and the time frames for sharing such information in response to a potential or existing drug shortage; and (3) that the DEA expeditiously establish formal policies and procedures to coordinate with the FDA with respect to expediting shortage-related quota applications.

Maurer testified that, in March 2015, the FDA and DEA updated the MOU; however, the second and third recommendations still remain open.

Information to DEA registrants

The GAO reported that the DEA has provided information to its registrants regarding their roles and responsibilities for preventing abuse and diversion through conferences, training, and other initiatives. The GAO also reported that the DEA provided additional resources, such as manuals for specific registrant groups and the DEA’s Know Your Customer guidance for distributors. However, Maurer testified that many registrants are not aware of these resources or they would like additional guidance, information, or communication from the DEA to better understand their roles under the CSA. The GAO recommended three actions to address registrants’ concerns.

First, the GAO recommended the DEA identify and implement means of regular, cost-effective communication with distributor, pharmacy, and practitioner registrants, such as through listservs or web-based training. As of April 2016, the DEA reported that it was in the process of developing web-based training modules for all of its registrant population, and was considering the best way to implement a listserv to disseminate information to its various registrant types. Maurer testified that the GAO plans to continue to monitor the DEA’s efforts in this area, and this recommendation remains open.

Second, to help address the concerns raised by some distributor and pharmacy registrants, the GAO recommended that the DEA solicit input from distributors, or associations representing distributors, and develop additional guidance for distributors regarding their roles and responsibilities for suspicious orders monitoring and reporting. Thirdly, the GAO recommended that the DEA solicit input from pharmacists, or associations representing pharmacists, about updates and additions needed to existing guidance for pharmacists, and revise or issue guidance accordingly. With regards to the second and third recommendations, Maurer testified that some efforts have been make by the DEA, however, the GAO plans to continue monitoring the DEA’s efforts in these areas, and these recommendations remain open.

Confidential informants policy

The GAO reported that the DEA’s confidential informants policy required agents to consider most of the factors identified in the Attorney General’s Guidelines for conducting initial suitability reviews prior to using a person as an informant. The GAO also reported that the DEA’s policy was partially consistent with the Guidelines’ requirements to provide written instructions to an informant regarding the parameters of the authorized, but otherwise illegal, activity and to have the informant sign an acknowledgment of these instructions. Additionally, the GAO found that the DEA’s policy was consistent with the provision for revoking authorization in cases where DEA has reason to believe that an informant is not in compliance with the authorization. However, the GAO found that the DEA’s policy did not address circumstances unrelated to the informant’s conduct in which the DEA may, for legitimate reasons, be unable to comply with precautionary measures necessary for overseeing otherwise illegal activity.

In response, DEA officials told the GAO that they did not authorize informants to participate in otherwise illegal activity without agent supervision, and, therefore, this requirement would not be applicable to the DEA. In response, the GAO pointed out that the DEA’s policy did not explicitly state that direct supervision of an agent is required for all instances of an informant’s participation in otherwise illegal activity. Additionally, the GAO noted that the DEA’s policy did not require the informant to sign a written acknowledgment that the authorization had been suspended or revoked.

As a result, the GAO recommended that the DEA, with assistance and oversight from the Department of Justice (DOJ) Criminal Division, update its policy and corresponding monitoring procedures to explicitly address the Guidelines’ provisions on oversight of informants’ illegal activities. According to Maurer, the DOJ Criminal Division has reviewed a revised version of the DEA’s agents manual and has determined that the revised manual is fully consistent with the Guidelines policy regarding confidential informants. Maurer noted in her testimony that the GAO plans to review the updated DEA policy when finalized to determine if the DEA has fully implemented its recommendation.



Uncompensated hospital care falls in Medicaid expansion states, but hospitals still worry

Medicaid expansion and other changes related to Medicaid payments are very important to the financial viability of hospitals. For example, according to a Kaiser Family Foundation (KFF) analysis, the expansion of Medicaid coverage under section 2001 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) helped hospitals by producing a nationwide decline in uncompensated care from $34.9 billion in 2013 to $28.9 billion in 2014, the year the expansion took place. At the same time, however, KFF found that despite the financial gains from declining uncompensated care, hospitals fear that these gains may be offset by a higher volume of Medicaid payments that may be lower than the actual hospital costs.

The KFF analysis confirms that most of the reduction in uncompensated care occurred in Medicaid expansion states. Specifically, in expansion states uncompensated care declined from $16.7 billion in 2013, to $11 billion in 2014, a 35 percent reduction. In non-expansion states, uncompensated care dropped from $18.1 billion in 2013, to $17.9 billion in 2014, a reduction of less than one percent.

KFF points out that the federal disproportionate share hospital (DSH) allotments, totaling $11.7 billion in 2014, will drop by $2 billion in fiscal year (FY) 2018 and by a total of $43 billion between FY’s 2018 and 2025. As a result, KFF’s survey of hospitals and their associations found a growing concern that the increase in revenue from Medicaid expansion will not fully offset the reduction in federal Medicaid DSH payments.

KFF notes that the coming reduction in DSH payments may affect safety net hospitals, in particular, due to their (1) high dependence on Medicaid DSH funds, (2) high numbers of uninsured patients, (2) few privately-insured or Medicare patients, and (4) generally weaker financial condition.

In addition to the effect of reduced DSH payments, KFF warns that hospitals may also be hurt if CMS limits Medicaid supplemental payments to hospitals in the future. This is because many hospitals rely on supplemental payments to increase payments above their actual costs. KFF believes that the impact of reductions in supplemental payments will ultimately depend on whether states will offset reductions with increases to their Medicaid base rates paid to hospitals.

DME supplier sentenced to 37 months in $2.6M health care fraud scheme

A Cuban national was sentenced to 37 months in prison for his role in a health care fraud scheme in the greater Tampa, Florida, area. The 47-year-old man was charged by indictment, returned on July 31, 2013, with 14 counts of health care fraud. He had been a fugitive since his 2013 indictment until his arrest on October 9, 2015, when he arrived in Miami on a flight from Cuba. 

The president and owner of G.R. Services Equipment & Supplies Inc., a Largo, Florida, company that purported to provide durable medical equipment (DME) to Medicare beneficiaries pleaded guilty to conspiracy to commit health care fraud in March 2016 and was sentenced on June 13, 2016. In his plea agreement, the DME company owner admitted that from May 2013 through July 2013, his company submitted approximately $2,579,695 in false and fraudulent claims to Medicare seeking reimbursement for DME not legitimately prescribed by doctors and not provided to beneficiaries.

In addition to his sentence the judge also ordered the owner to pay $918,402 in restitution and to forfeit the same amount. federal law enforcement agents previously executed a seizure warrant on the company’s bank account, resulting in the seizure of approximately $243,339 in proceeds of the health care fraud scheme.

Specifically, the company sought reimbursement for thousands of dollars of negative pressure wound therapy electrical pumps and sterile collagen dressings purportedly provided to Medicare beneficiaries in May and June 2013 that were not legitimately prescribed by doctors or provided to beneficiaries.