Kusserow on Compliance: Whistleblowers receive $98M in $784.6M FCA settlement

Pharmaceutical companies Wyeth and Pfizer Inc., agreed to pay $784.6 million to resolve allegations that Wyeth knowingly reported to the government false and fraudulent prices on two of its proton pump inhibitor (PPI) drugs, Protonix Oral® and Protonix IV®. The case was brought under the qui tam provisions of the federal False Claims Act (FCA) (31 U.S.C. § 3729 et seq.) by two relators, a former hospital sales representative for AstraZeneca Pharmaceuticals and a practicing physician. They will receive $98,058,190.00 as their share from the settlement. This amount ranks among the largest award for whistleblowers ever.

Pfizer acquired New Jersey-based Wyeth in 2009, approximately three years after Wyeth had ended the conduct that gave rise to the settlement. The Department of Justice (DOJ) alleged that Wyeth failed to report deep discounts on Protonix Oral and Protonix IV that it made available to thousands of hospitals nationwide through a bundled sales arrangement in which a hospital could earn deep discounts on both drugs, if it placed them on formulary and made them “available” within the hospital. Through this bundled arrangement, Wyeth sought to induce hospitals to buy and use Protonix Oral, which hospitals otherwise would have had little incentive to use, because other pre-existing oral PPI drugs were priced competitively and were considered to be as safe and effective. Wyeth wanted to control the hospital market because patients discharged from the hospital on Protonix Oral were likely to stay on the drug for long periods of time, rather than switch to competing PPIs, during which time payers, including Medicaid, would pay nearly full price for the drug.

All this resulted in their wrongfully avoiding paying hundreds of millions of dollars in rebates to Medicaid. Under the terms of the settlement, Wyeth will pay $413,248,820 to the federal government and $371,351,180 to state Medicaid programs.

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.


Highlight on North Carolina: State entities join to build mental health workforce

North Carolina local management entities (LMEs) and managed care organizations (MCOs) announced a joint workforce-development initiative to offer training resources to professionals on the front lines of providing services to individuals with disabilities. Cardinal Innovations Healthcare, Smoky Mountain LME/MCO, and Trillium Health Resources will offer both raining and evidence-based curricula to direct support professionals through DirectCourse.

Workforce development

CMS standards for direct support professionals focus on improving the quality of services for individuals with intellectual and developmental disabilities. The curricula offered by the initiative were created to align with the CMS competencies adopted in the NC Innovations Waiver. The waiver was created to help the state’s Medicaid beneficiaries with intellectual or developmental disabilities live a more independent lifestyle. Under the waiver, LME/MCOs receive a set amount of money each year to help these individuals get specialized services. The curricula offered through the initiative includes: College of Direct Support & College of Frontline Supervision and Management; College of Employment Services; College of Personal Assistance and Caregiving; and College of Recovery Community and Inclusion.

Increasing mental health workforce

Recent recommendations from members of the state’s Task Force on Mental Health and Substance Abuse focus on increasing the number of mental health providers in the state. The Task Force noted that about 60 counties in North Carolina have no psychiatric provider and suggested expanding the scope of practices for nurses, as well as education loan-repayment programs to make mental health treatment more accessible. The issue reflected in the governor’s budget, with $30 million directed toward enhancing case management for those with mental health disabilities and creating transitional housing.

Provider-based billing moratorium concerns? CMS wants to hear them

Hospitals wondering about their off-campus provider-based departments will soon have some clarification on their ability to expand or relocate and how the departments that are under construction will be treated by CMS. The proposals for implementing the moratorium will soon be presented through the 2017 Outpatient Prospective Payment System (OPPS) Proposed rule expected to be published in July of this year, CMS announced.

Section 603

Congress amended the Medicare statute to provide special payment treatment for off-campus outpatient departments of hospitals the Bipartisan Budget Act of 2015 (P.L. 114-74) at section 603 (see Congress’s new provider-based provision—hospitals face significant changes and many unanswered questions, Health Law Daily, December 10, 2015). Per the new law, as of January 1, 2017, OPPS payments to hospitals will not be available for the vast majority of services furnished by “new” off-campus outpatient departments of a hospital. There are exceptions to this ban, including items and services furnished by dedicated emergency departments, as defined in 42 C.F.R. sec. 489.24(b), as well as off-campus departments of a hospital that were billing Medicare under the OPPS system prior to the date of the new law’s enactment, November 2, 2015, which are “grandfathered” under the new law.

Items or services furnished at off-campus locations failing to meet the requirements for OPPS reimbursement will be reimbursed in accordance with the otherwise applicable payment systems as long as the requirements for reimbursement under those systems are met. The statute states that each hospital will be required to provide CMS with such information as the Secretary deems necessary to implement the new provision. There will be no administrative or judicial review of: (1) the determination of the particular items or services subject to the new rule; (2) the payment systems that will be applied in the absence of OPPS; and (3) the “determination of whether a department of a provider” satisfies the definition of off-campus outpatient department of provider in the statute.


Facilities affected by this Proposed rule may submit comments and questions prior to the release of the Proposed rule to CMS at Provider-BasedDepartments@cms.hhs.gov. Although CMS cannot provide guidance prior to the release of the Proposed rule, it invited interested parties to submit scenarios and areas of concern. Following the issuance of the Proposed rule, there will also be the standard notice and comment period as part of the rule-making process prior to the issuing of the Final rule.

Bipartisan group asks CMS for data on seniors’ mental health conditions

Although CMS’ performance releasing Medicare data in many areas has been “commendable,” very little information is available about the mental and behavioral health conditions of seniors. House Ways and Means Committee Chairman Kevin Brady (R-Texas), Ranking Member Sander Levin (D-Mich), Health Subcommittee Chairman Pat Tiberi (R-Ohio), and Health Subcommittee Ranking Member Jim McDermott (D-Wash) sent a letter to CMS Acting Administrator Andy Slavitt, asking the agency to collect, analyze, and publish additional data on Medicare beneficiaries’ mental and behavioral health.

The bipartisan letter seeks more robust data about the extent and nature of mental and behavioral health conditions among Medicare beneficiaries. In current data releases, information about depression and psychosis/schizophrenia is included; however, data about mood or personality disorders is not, leaving the public and policymakers without access to valuable information. The letter also refers to the ongoing opioid epidemic, which the legislators note affects seniors just like Americans of other ages, and urges ensuring seniors’ privacy when such data is released.

Mental and behavioral health conditions are often not given as much attention as other health conditions; this omission is particularly egregious when taking into consideration that depression accompanies senior health conditions like diabetes and coronary artery disease, leading to significantly higher health costs. The legislators asked CMS for more detailed data, specifically about anxiety disorders, bipolar disorder, personality disorders, and traumatic brain injury, to allow Medicare to meet the needs of seniors. Substance abuse data should also be made more widely available, with privacy measures such as de-identifying the data.