Kusserow on Compliance: New anti-kickback law for clinical labs

– Law creates new compliance risk areas for 2019

– Compensation of sales personnel affected

– Not limited to federal health care programs

For the new year, compliance officers should recall Congress passing into law the Eliminating Kickbacks in Recovery Act of 2018 (EKRA), which became effective October 24, 2018. It applies to Medicare and Medicaid, as well as many commercial health insurance plans. It has the effect of eliminating “safe harbors” used by clinical labs in marketing services. The law was intended to be part of the effort to target the national opioid crisis. It makes it a criminal offense to solicit or receive any remuneration, directly or indirectly, in return for referring a patient or patronage to a recovery home, clinical treatment facility or clinical laboratory; or to offer or pay a kickback to “induce” a referral of an individual to a recovery home, clinical treatment facility or clinical laboratory, or in exchange for an individual using the services of a recovery home, clinical treatment facility or clinical laboratory. Penalties for each violation can include a fine of up to $200,000 and imprisonment of up to 10 years. The law has seven “safe harbors,” some of which are similar to the safe harbors under the federal Anti-Kickback Statute that is generally applicable to Medicare and Medicaid services, however the safe harbor for employees and independent contractors under the law expressly excludes from safe harbor protection any payment made to an employee or independent contractor that is determined or varies by:

  • the number of individuals referred;
  • the number of tests or procedures performed; or
  • the amount billed or received.

The EKRA adds an all payor (public and private) provision that enables the federal government to monitor provider arrangements intended to generate business for any laboratory services, not only those related to individuals in treatment for substance abuse disorders, payable by a federal health care program or commercial health insurer.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

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Copyright © 2018 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Federal court extends the clearing of Medicare backlog out to 2022

Last year, the U.S. District Court for the District of Columbia ordered HHS to eliminate pending Medicare claims appeals and outlined a schedule for reducing the backlog that was to be completed by 2020. The court has been frustrated with HHS’ inability to process appeals. HHS has made repeated court appearances where it pleaded for additional time to eliminate the backlog, citing the impossibility of complying with the court’s order. After considering all the appeals by HHS, the court extended its mandate to 2022 after noting that Congress appropriated $182.3 million for addressing the appeals backlog earlier this year. HHS reported that this additional funding “has made compliance possible within four years” and agreed that the new deadline makes it possible for HHS to comply with the order requiring that the backlog be reduced and then eliminated on the precise timeline that HHS projected. This eliminates any future claim by HHS of not being able to meet the deadline that was established by its own projections. The court refused to order a reduction of interest charged on funds that HHS has yet to recoup from providers while appeals are pending or to allow providers to “rebill” claims for six months following the decision.

 

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2018 Strategic Management Services, LLC. Published with permission.

U.S. pays nearly twice as much for drugs compared to other countries

A recent HHS analysis revealed that prices charged by drug manufacturers to wholesalers and distributors in the United States are 1.8 times higher than in other countries for the top drugs by total expenditures separately paid under Medicare Part B. U.S. prices were higher for most of the drugs included in the analysis, and U.S. prices were more likely to be the highest prices paid among the countries in the study (ASPE Report, October 25, 2018).

Medicare Part B

Drugs typically administered to patients by healthcare practitioners are covered and paid under Medicare Part B, which is part of the fee for service traditional Medicare benefit. Under Part B, providers buy and bill for these drugs. Medicare pays suppliers and providers based upon the Average Sales Price (ASP) for each product, as reported by manufacturers to CMS. Physician offices that buy and bill Part B drugs are paid 106 percent of the drug’s ASP, and hospitals are reimbursed either at 106 percent or 77.5 percent of ASP, depending on the hospital outpatient department’s participation in a safety net drug pricing program. Spending on Part B drugs has doubled since 2006.

The analysis and results

Data was compiled on the top drugs based on total Medicare reimbursement to either physician offices, hospital outpatient departments, or overall under Medicare Part B in 2016. Countries included in the analysis included: the United States, Austria, Belgium, Canada, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden, and the United Kingdom. The analysis identified thirty two Medicare Part B drugs among the top twenty drugs in spending for each setting. These thirty two drugs accounted for $18 billion in spending, out of a total $27 billion on Part B drugs across these settings. The main analysis reports on twenty seven Part B Drugs.

Across the twenty seven drugs in the study, the U.S. ex-manufacturer prices were 1.8 times than average international ex-manufacturer price. There was not any one country that consistently had the highest or lowest prices compared to the U.S. for twenty of the drug products; U.S. prices exceeded the average international price by more than twenty percent. In addition, for nineteen of the twenty seven products the U.S. prices were higher than any other country. Excluding the U.S., Germany and Canada had the highest prices for six drugs and Japan for five drugs. France and the United Kingdom had the lowest prices for four drug products. Japan, Sweden and Slovakia had the lowest prices for three drug products each. Finally, the analysis calculated that the Medicare program and its beneficiaries spent an additional $8.1 billion (47 percent more) on these twenty seven products that it would have, if payments based upon ASP were scaled by the international price ratios.

Overall, prices and reimbursement rates for Part B drugs are significantly higher for the U.S. providers than purchasers outside the U.S., except for a few outlier cases. The amount by which U.S. prices exceeded those of international comparators varied significantly by product, and there was no clear pattern as to which countries were consistently paying lower prices. The analysis suggests that Medicare Part B could achieve significant savings if prices in the U.S. were similar to those of other large market based economies.

Kusserow on compliance: OIG report on Medicare payments for clinical diagnostic lab tests

The OIG analyzed claims data for lab tests that CMS paid under Medicare’s Clinical Laboratory Fee Schedule, under Medicare Part B. Effective this year, CMS replaced payment rates with new rates for clinical diagnostic laboratory tests. This was the first reform in three decades to Medicare’s payment system for lab tests. Congress mandated that the OIG monitor Medicare payments for lab tests and the implementation and effect of the new payment system for those tests. The OIG concluded the new payment system for lab tests took for this year has resulted in significant changes to the Medicare payment rates for lab tests. The OIG used the data collected to date as a benchmark against which to measure the effects of changes to the payment system when new data from 2018 become available. The OIG report provided the fourth set of annual baseline analyses of the top 25 lab tests. The OIG identified the top 25 tests based on Medicare payments in 2017 and found:

  • In 2017, Medicare paid $7.1 billion for Part B lab tests, at about the same level for last 4-years.
  • The top 25 tests totaled $4.5 billion, 64 percent of the total and about the same rate for prior years.
  • A total of 50,000 labs received payment in 2017 and three labs received $1.1 billion, 15 percent of the total payments.
  • The top 25 tests were similarly concentrated among a few labs: 1 percent of labs received 55 percent of all Medicare payments for the top 25 lab tests in 2017.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2018 Strategic Management Services, LLC. Published with permission.