Kusserow on Compliance: August update on OIG Work Plan—four new projects added

The OIG Work Plans set forth various audits and evaluations that are underway or planned during the fiscal year and beyond. In June this year, the OIG announced the adjusting of its Work Plan on a monthly basis, rather than semi-annually as has been done previously to ensure that it more closely align with the work planning process. The updates include the addition of newly initiated Work Plan items and the removal of completed items. In conducting its work, the OIG assesses relative risks in HHS programs and operations to identify those areas most in need of attention, including responding mandates set forth in laws, regulations, or other directives; and requests by Congress, HHS management, or the Office of Management and Budget.  The following are four new work plan projects added for this year:

  1. Review of the Patient Safety Organization Program (PSO) [OEI-01-17-00420]. The PSO program established federally to work with health care providers to improve the safety and quality of patient care; and created the first and only comprehensive, nationwide patient safety reporting and learning system in the United States. The OIG plans to determine the reach and value of the PSO program among hospitals and will also oversight and challenges of the PSO program.
  2. Duplicate Drug Claims for Hospice Beneficiaries [W-00-17-35802; A-06-17-xxxxx]. Hospice providers are required to render all services necessary for the palliation and management of a beneficiary’s terminal illness and related conditions, including prescription drugs. Medicare Part A pays providers a daily per diem amount for each individual who elects hospice coverage, and part of the per diem rate is designed to cover the cost of drugs related to the terminal illness. The OIG auditors plan to determine whether Part D continues to pay for prescription drugs that should have been covered under the per diem payments made to hospice organizations, following up on previous work performed in this area related to Part D drug claims for hospice benefits under Part A.
  3. Medicare Part B Payments for Psychotherapy Services [W-00-17-35801; A-09-17-xxxxx]. Medicare Part B covers the treatment of mental illness and behavioral disturbances in which a physician or other qualified health care professional establishes professional contact with a patient.  In calendar year 2016, Part B allowed approximately $1.2 billion for these psychotherapy services. The OIG will review Part B payments for psychotherapy services to determine whether they were allowable in accord with Medicare documentation requirements.
  4. Ventilation Devices: Reasonableness of Medicare Payments Compared to Amounts Paid in the Open Market [W-00-17-35803; A-05-xx-xxxxx]. Medicare reimbursement for ventilation devices has risen from $51 million in 2011 to $72 million in 2015. OIG auditors plan to determine the reasonableness of the fee schedule prices that Medicare and beneficiaries pay for ventilation devices compared to prices on the open market to identify potential wasteful spending in the Medicare program.

 

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 © 2017 Strategic Management Services, LLC. Published with permission.

FDA delays routine regulatory inspections for large animal food facilities

The FDA has announced that routine regulatory inspections for large animal food facilities to ensure compliance with regulations under the FDA’s Preventive Controls for Animal Food rule (80 FR 56170) will not begin until the fall of 2018. Effective September 18, 2017, large animal food facilities must comply with preventive controls requirements mandated by the Food Safety Modernization Act (FSMA) (P.L. 111-353).

Education and flexibility

Large animal food facilities, those with 500 or more full-time equivalent employees, also had to comply with the current Good Manufacturing Practice (cGMP) requirements by September 2016. Based on feedback from animal food producers, the FDA has decided that although the new preventive control regulations will take effect as announced in the final rule as of September 18, 2017, the FDA will first focus on education before regulation. The agency noted that the industry needs additional time and technical assistance to fully understand the requirements of the new regulations for preventive controls. Jenny Murphy, a consumer safety officer with the FDA’s Center for Veterinary Medicine, said in a recent interview that the FDA will allow larger facilities some flexibility to further develop their plans and ensure that their system is operating correctly as guidance from FDA and other resources are put in place.

Increased inspections

While the FDA announced a delay in the routine regulatory inspections for the prevent controls requirements, the FDA will increase oversight of cGMPs with more routine inspections. Effective September 18, 2017, both large and small animal food facilities must meet the cGMP requirements. The cGMPs establish a foundation before establishing preventive controls. “CGMPs establish a base to make sure you don’t contaminate the animal food and the preventive controls take it a step further by making you really concentrate on things that, if they’re found in animal food, could be a public health concern,” said Murphy. “Once you have CGMPs in place, you can see where you need extra layers of protection.”

The FDA adopted the Final rule in an effort to improve public health, and established for the first time cGMPs for food for animals, which are akin to the cGMPs that have long applied to human food. Along with the cGMPs, facilities must establish and implement a food safety system that includes an analysis of hazards and risk-based preventive controls. The rule also mandates that animal food facilities establish a supply chain program.

Compounding pharmacy enjoined from manufacturing until remedial measures are implemented

Isomeric Pharmacy Solutions LLC (Isomeric) and three executives are permanently enjoined from manufacturing and distributing drugs considered adulterated in violation of the federal Food, Drug and Cosmetic Act (FDC Act) (21 U.S.C. §301 et seq.). The injunction was entered in the Utah district court following a complaint entered by the Department of Justice (DOJ) after finding that Isomeric, a compounding pharmacy, was producing drugs under insanitary conditions.

Isomeric

Isomeric manufactures, labels, and distributes drugs, particularly injectable hormones and corticosteroids, as well as ophthalmic drops. Most of the drugs are directly distributed to physicians. The company initiated three recalls in 2016 involving three types of injectable drugs. In April 2017, Isomeric recalled all lots of non-expired drug products that should have been sterile and were compounded between October 4, 2016 and February 7, 2017.

Complaint

According to the complaint, the FDA found that Isomeric repeatedly found several types of microorganisms in the air and on surfaces that should have been sterile. Products that were manufactured in these areas were prepared in insanitary conditions. The FDA found that Isomeric deviated from current good manufacturing practice requirements, and failed to thoroughly review discrepancies or failures found in batches of drugs.

The injunction was entered through a consent decree as part of a settlement. Isomeric and its chief executive officer, chief sales officer, and chief operating officer will not resume manufacturing, holding, or distributing drugs until proper remedial measures have been taken.

FDA user fees reauthorized by House vote

In a bipartisan action, the House of Representatives today passed H.R. 2430, the FDA Reauthorization Act (FDARA) of 2017, by voice vote. FDARA reauthorizes the FDA’s user fee programs for prescription drug, medical device, generic drug, and biosimilar biological products. The current user fee programs are set to expire in September 2017 and account for almost a quarter of the FDA’s funding.

In April 2017, the House Energy and Commerce Committee, along with the Senate Health, Education, Labor and Pensions (HELP) Committee, released a discussion draft of the Food and Drug Administration (FDA) Reauthorization Act of 2017, reauthorizing the FDA’s user fee agreements (see Discussion draft of FDA user fee amendments is on the table, Health Law Daily, April 18, 2017). The draft followed a series of hearings examining the four individual user fee programs – the Generic Drug User Fee Amendments (GDUFA) and the Biosimilar User Fee Act (BsUFA), the Prescription Drug User Fee Act (PDUFA), and the Medical Device User Fee Amendments (MDUFA) (see HELP Committee hears ardent support for next round of user fee agreements, Health Law Daily, April 4, 2017 Committee holds optimistic hearing on medical device fees, Health Law Daily, March 29, 2017; PDUFA VI reauthorization would aid 21st Century Cures Act implementation, Health Law Daily, March 23, 2017; and User fee program reauthorizations necessary for product development, Health Law Daily, March 3, 2017).

FDARA is currently before the Senate (see HELP committee advances FDA user fee agreements to Senate floor, Health Law Daily, May 12, 2017).