SZD Health Law Scan

Hospital-based eligible professionals are excluded from ARRA EHR incentives

Kiana Russell — Wed, 10 Feb 2010 10:12:50 -0600

Does this reach hospital employed-physicians and physicians employed by hospital-affiliated practices?

On December 30^th, the Centers for Medicare and Medicaid Services released its proposed rule for the American Recovery and Reinvestment Act (ARRA) of 2009 electronic health record incentive program. This Interim Final Rule represents the first step in an incremental approach to adopt standards, implementation specifications, and certification criteria to enhance the functionality, utility, and security of health information technology and to support its meaningful use. Among the issues that will impact providers is which physicians will qualify for the Medicare eligible professional EHR incentive payments.

ARRA provides that no Medicare incentive payments for meaningful use of certified EHR technology may be made to hospital-based eligible professionals. ARRA defines a “hospital-based professional” as an otherwise eligible professional, such as a pathologist, anesthesiologist, or emergency physician, who furnishes substantially all of his or her covered professional services in a hospital setting (whether inpatient or outpatient) and through the use of the facilities and equipment, including qualified electronic health records, of the hospital.

Under the propose rules, the determination of whether an eligible professional is a hospital-based eligible physician is to be made on the basis of the site of service (as defined by the DHHS Secretary). Based on the language in ARRA and the proposed rule, it appears the EHR incentive payments will not be made to physicians who:

furnish “substantially all” (quantified by CMS as at least 90% of a physician’s services)
of their “covered professional services”
in a “hospital setting” (including place of service codes 21 – Inpatient Hospital, 22 – Outpatient Hospital, and 23 – Emergency Room)
that is either “inpatient or outpatient” and
through the use of the facilities and equipment of the hospital, including the qualified EHR of the hospital.

It is important to point out under these proposed rules that “hospital-based” does not focus on the employment or billing arrangement, but rather on the site of service. The foregoing may mean that in situations where a hospital employs a physician and handles the physician’s billing, this arrangement in and of itself does not make a physician “hospital-based.” If the physician’s practice is not conducted in a facility that is part of the site “licensed” as a hospital, then under the proposed rules the physician may not be practicing in a “hospital setting” and therefore not considered “hospital based,” assuming of course the physician does not exceed the 90% threshold “site of service” test. Remember, however, that the EHR rules are only proposed at this time. These situations may be addressed more clearly in the final rule scheduled to be published in March 2010. Stay tuned.

This post was co-authored by Anthony Shaffer.

CMS Annual Report on National Health Spending

David Kopans — Tue, 05 Jan 2010 12:35:06 -0600

The Centers for Medicare and Medicaid (CMS) released its annual report on national health spending. According to the CMS press release, 2008 had the "the slowest rate of growth since [CMS] started officially tracking expenditures in 1960." The rate slowed to 4.4 percent down from 6.0 percent in 2007.

However, despite the decelerated growth, health spending's share of the gross domestic product increased from 15.9 percent in 2007 to 16.2 percent in 2008.

CMS also reports the following statistics:

Hospital spending in 2008 grew 4.5 percent to $718.4 billion, compared to 5.9 percent in 2007, the slowest rate of increase since 1998.
Physician and clinical services’ spending increased 5.0 percent in 2008, a deceleration from 5.8 percent in 2007.
Retail prescription drug spending growth also decelerated to 3.2 percent in 2008 as per capita use of prescription medications declined slightly, mainly due to impacts of the recession, a low number of new product introductions, and safety and efficacy concerns.
Spending growth for both nursing home and home health services decelerated in 2008. For nursing homes, spending grew 4.6 percent in 2008 compared to 5.8 percent in 2007.
Total health care spending by public programs, such as Medicare and Medicaid, grew 6.5 percent in 2008, the same rate as in 2007.
Health care spending by private sources of funds grew only 2.6 percent in 2008 compared to 5.6 percent in 2007.
Private health insurance premiums grew 3.1 percent in 2008, a deceleration from 4.4 percent in 2007.

NIH Approves First Human Embryonic Stem Cell Lines under New NIH Guidelines

David Kopans — Fri, 04 Dec 2009 07:50:12 -0600

The National Institutes of Health, a component of the U.S. Department of Health and Human Services, approved the first human embryonic stem cell lines under the new NIH Guidelines for Human Stem Cell Research. According to the NIH's press release, the NIH has approved 13 lines and an additional 92 lines are awaiting the NIH's review.

The NIH Guidelines were released on July 7, 2009 to implement President Barack Obama's executive order issued earlier in the year that removed the limitations on the use of federal funds for human stem cell research. The limitations had been established through an executive order issued by President George W. Bush in 2001.

For more information on President Obama's executive order and its impact on stem cell research, please see SZD's article "Campaign ‘08 and the Obama Administration’s Rejuvenation of Stem Cell Research" as published in Life Sciences, A Publication of the American Health Lawyers Association.

In their own words...

Kevin Hilvert — Tue, 24 Nov 2009 13:53:11 -0600

On October 27, SZD held its Symposium on Health Care Policy Reform in Columbus, Ohio. Guest speakers from across the health care industry confronted today’s toughest reform questions and concerns, including those issues specific to employers, payors, providers and consumers. During the event, we asked panel members to weigh in on those aspects of reform that are the most critical to their particular workplace.

SZD: What elements of health care reform are most important to your company/organization?

Dennis Hicks
Director of Compensation and Benefits
Chiquita Brands International Inc.

A: A big benefit to our company will be the shift to electronic health records and exchange of information. Because we employ so many people in different parts of the globe, there is a tremendous amount of staffing involved in simply having people filling out health insurance forms.

Another important aspect is wellness. The government can play a big role in promoting wellness by paying for vaccines, preventive and more pediatric treatments. Government should also be more involved in financial support of medical education. Doctors need to make so much in order to pay off expensive school loans and get out of debt.

I’d also like to see costs reduced. Historically, government involvement typically doesn’t lead to lower costs and greater efficiency. Take Medicare for instance. For 40 years the government has been talking about Medicare’s waste, fraud and abuse. They’ve had 40 years and they haven’t been able to fix it yet. And I see nothing in the bill right now that breaks the cost curve.

John Popa
President & CEO
Marlite Inc.

A: I’d like to see incentives for doctors that will encourage quality of care, not just for how many procedures or tests are done, as is the case now. One idea would be to have physicians become salaried employees of hospitals with strict quality controls in place enabling patients to get only the care they need and not unnecessary tests and other procedures. What I want for my employees is that they be allowed to go to the provider who can give them the best care, not someone they are seeing under a mandate.

Whatever ultimately happens with health care reform, it should not place an unfair burden on businesses. We feel we have an obligation to provide insurance to our employees. As an American I also feel strongly that I want to do my share to help the uninsured. But I have an issue with other employers who do not feel the same obligation.

I also doubt that increased government involvement will help solve the problems we have in health care; it may just lead to more inefficiency which leads to greater costs. It seems that only 20 percent of the system needs work and the government is trying to get involved in 100 percent.

Steven Gabbe
Senior Vice President for Health Services & CEO
Ohio State University Medical Center

A: Physician reimbursement is a huge issue. Doctors are needed throughout the country in primary care, and unless they are reimbursed enough to repay their school loans, fewer of them will go into primary care medicine. If you cut back on Medicaid and Medicare reimbursements, doctors may be forced to drop those patients and they will be left with fewer choices for care.

For OSU, the residency positions at the medical center are funded through Medicare, and every year we’re faced with uncertainty over whether the residency program will continue to be funded. Doctors should be paid for what they do and paid well. We need to move toward a reimbursement system based on outcomes, but we must define those outcomes clearly or you will have doctors denying service to potentially very sick people who by the very nature of their illness may not have ideal outcomes.

Electronic medical records will certainly go a long way to increase efficiency, reduce waste and improve patient care. At OSU patients can access their records; they can see outcomes of tests and see all the medications they are taking. The response from patients has been very positive.

Erin Hoeflinger
President
Anthem Blue Cross and Blue Shield in Ohio

A: The ultimate goal of health care reform must be to build a sustainable health care system. At Anthem Blue Cross and Blue Shield, we provide health insurance to 3.3 million Ohioans. Along with our members, providers, customers and employees, we have a significant stake in the outcome of this process. It’s not enough to just implement insurance reform; we have to get it right. And getting health care reform right means addressing the underlying problems of quality and cost so that more people can be covered.

Perhaps the most central issue in the health care debate is access to coverage. Establishing an effective, enforceable mandate to have everyone covered is one significant way to reform the system. Anthem supports health care reform – but without threatening those who already have quality medical benefits through the employer-based, private sector model that right now covers 170 million Americans – 7 million in Ohio.

George Stadtlander
Executive Vice President & Chief Managed Care officer
Medical Mutual of Ohio

A: All citizens should have access to a core set of health care benefits, in other words, guaranteed access. Everyone should participate according to their means in the healthcare benefits system. This eliminates the need for pre-existing condition exclusions.

The cost of the core set of health care benefits needs to be controlled such that the annual increase of such benefits equals the overall inflation rate. Quality improvements in the health care delivery system will result in greater value and in time reduced total cost. Administrative simplification and efficiency will lower overall costs.

The role of the government should be as the regulator, not the regulated. The regulators can not regulate themselves.

Martin Hauser
President
SummaCare Inc.

A: Although there is still a fair amount of uncertainty about the final design of health care reform, it appears as if several key elements are emerging. Of the components that we are assuming will make it into the final reform bill, we support things such as the desire to ensure that all Americans have access to health insurance coverage and the elimination of pre-existing conditions.

However, these changes cannot occur without a corresponding commitment that there will be some type of requirement that employers offer and individuals acquire health insurance. In addition, we have significant concerns about the lack of details surrounding the proposed Public Option and whether it can be funded and administered in a way that creates an equitable, level playing field.

House Passes SGR Reform Bill

David Kopans — Mon, 23 Nov 2009 09:50:56 -0600

On November 19, 2009, the House of Representatives passed the Medicare Physician Payment Reform Act of 2009 ("H.R. 3961"). The bill reforms the Medicare physician payment formula, called the Sustainable Growth Rate ("SGR"). Under the current formula, Medicare payment rates for physicians' services will be cut by about 21 percent in 2010 and additional cuts would occur annually.

The Congressional Budget Office ("CBO") summarized H.R. 3961's changes to the SGR as follows:

The update for 2010 would be the percentage increase in the Medicare economic index (MEI), which is 1.2 percent, as specified in the final rule.
Beginning in 2011, there would be separate target growth rates and conversion factor updates for two categories of service: evaluation, management, and preventive services, and all other services.
The new SGR formula would take into account spending for each category of service since 2009 or—beginning in 2014—for the past five years. (The current SGR formula takes into account spending since 1996.)
Finally, only physician services, and not other services provided incident to the physician visit (such as laboratory services), would be counted in each category.

As noted above, consistent with the Centers for Medicare and Medicaid final rule for the 2010 physician fee schedule (publication date: November 25, 2009), H.R. 3961 amends 42 U.S.C. 1395w–4(d)(4)(A) to eliminate the discretion of the Secretary of the Department of Health and Human Services to include physician-administered drugs within the definition of "physicians' services" for the purposes of SGR calculations. Physicians' services are currently defined to include:

"other items and services (such as clinical diagnostic laboratory tests and radiology services), specified by the Secretary, that are commonly performed or furnished by a physician or in a physician's office, but does not include services furnished to a Medicare+Choice plan enrollee." (emphasis added)

Under the proposed definition, such services would be defined to include only:

"other items and services for which payment under this part is made under the fee schedule under this section, for services for practitioners described in section 1842(b)(18)(C) on a basis related to such fee schedule, or for services described in section 1861(p) (other than such services when furnished in the facility of a provider of services), but does not include services furnished to a Medicare+Choice plan enrollee." (emphasis added)

The CBO estimated that H.R. 3961 would increase physician payments over the next 10 years by about $195 billion.

H.R. 3961 was received in the Senate on November 20, 2009.

Senate Releases a Health Insurance Reform Bill

David Kopans — Thu, 19 Nov 2009 08:53:47 -0600

On November 18, 2009, the Senate released a draft health insurance reform bill, entitled the "Patient Protection and Affordable Care Act." Like the House bill, the Senate's bill proposes to establish Exchanges, or marketplaces for individuals to shop for insurance when insurance is not available through their employers. The bill contains a public option (referred to in the Senate's bill as the "community health insurance option") but differs from the House bill in that it permits states to "opt out" or prohibit that state's Exchange from offering a community health insurance option. This bill will expand Medicaid coverage for those people earning less than 133% of the federal poverty line and will provide subsidies for the purchase of health insurance for people earning less than 400% of the FPL.

The Senate's bill stops short of the House's proposed ban on public health insurance options providing coverage of abortion services but it does prohibit the use of federal funds for abortion services.

To pay for some of the costs of the bill, the bill proposes an excise tax on high cost employer-sponsored health coverage (i.e., plans worth $8,500 for individuals and $23,000 for families). The bill also proposes a tax on elective cosmetic surgeries and an increased hospital insurance tax on high-income taxpayers that would increase the Medicare deduction from 1.45% to 1.95% for incomes over $200,000 for individuals and $250,000 for couples.

Poll results and presentations from the Symposium on Health Care Policy Reform

Kevin Hilvert — Thu, 05 Nov 2009 14:38:37 -0600

From running real-time texting polls, to coordinating a live video feed from Washington, the Symposium on Health Care Policy Reform made an impression on the 400 people in attendance.

The results are in from the texting polls during the Symposium on Health Care Policy Reform. Surprisingly, the media has influenced over 30 percent of attendees view’s of health reform, while only 18 percent are very optimistic on the likelihood of health care reform legislation to be enacted.

In addition, we have also made the symposium’s presentations available. Participants have been emailed the password to download files. In the coming weeks, we will also release podcasts of each presentation and panel discussion. Check back frequently or sign up via RSS feed for updates.

Click on slides or audio next to the presenter’s name to download their power point slides and audio recording of their presentation.

Mary Jo Hudson, slides, audio
Jeff Biehl, slides, audio
Panel discussion – Employer perspective, audio
Panel discussion – Provider perspective, audio
Panel discussion – Payor perspective, audio
Jennifer Chubinski, slides, audio

Symposium on Health Care Policy Reform at capacity - follow us on Twitter for the latest updates

Kevin Hilvert — Fri, 23 Oct 2009 15:28:45 -0600

Schottenstein Zox & Dunn Co., LPA, the Health Policy Institute of Ohio and the Employers Health Coalition of Ohio’s Health Care Reform symposium is now at capacity. However, those who are unable to attend on Oct. 27 can follow us on Twitter at @szdlaw or #hcrsymposium to get live updates about the discussions during the conference.

The symposium will address the impact of federal and state health care policy reform efforts among key Ohio stakeholders in the health care industry. In addition to obtaining an overview of the current state of health care policy reform, attendees will benefit from the views and opinions of Ohio policymakers and leaders in the provider, payor and employer communities on health care policy reform through informative panel discussions and interactive question and answer sessions. Key questions to be addressed include:

What is the current status and substance of the federal government's health policy reform efforts?
What is the status and substance of any Ohio health policy reform initiatives?
How will adopted (or proposed) reform legislation impact the provider, payor and employer communities?
What are these stakeholders' key concerns about health care reform?
What opportunities does health care reform present for these stakeholders?

RAC Update from the American Hospital Association

Robert Cochran — Fri, 16 Oct 2009 09:54:17 -0600

The American Hospital Association released a helpful Recovery Audit Contractor Program Update dated October 5, 2009. There is a password required.

The report is also available on the Ohio Hospital Asssociation website as well.

A few highlights:

To date, CMS has approved only automated audits, which rely on software analysis to find technical errors such as coding errors.
CMS has delayed approval of complex audits, including medical necessity reviews, in order to finalize processes and policies related to requesting and auditing medical records.
DRG and coding validations are likely to begin in November 2009 at the earliest, with medical necessity reviews delayed until 2010.AHA has made available to all hospitals a free claim-level Excel tool to assist in tracking RAC audits.

Senate Finance Committee Approves Health Care Reform Legislation

David Kopans — Wed, 14 Oct 2009 08:30:23 -0600

The Senate Finance Committee has approved its health care reform legislation, entitled "America's Healthy Future Act." This legislation will now have to be merged with the version approved by the Senate Committee on Health, Education, Labor and Pensions (the "HELP Committee").

The two bills share many common concepts, such as penalties for individuals who fail to obtain health insurance, expansion of Medicare and requirements for insurance plans that, for example, include prohibitions on exclusions for pre-existing conditions.

However, the Finance Committee's version differs from the HELP Committee's in some significant ways. First, the Finance Committee's version does not establish a government-run health insurance plan, commonly referred to as a "public option," that would compete in the health insurance exchanges with private health insurance plans. Second, it does not mandate employers to provide health insurance. Third, it proposes different methods for financing the cost of the legislation. For example, the Finance Committee's version proposes assessing fees on pharmaceutical manufacturing companies ($2.3 billion), medical device manufacturers ($4 billion), health insurance providers ($6 billion), and clinical laboratories ($750 million).

Comment Period Opens on Proposed GINA Health Insurance Rules

David Ball — Fri, 02 Oct 2009 09:50:37 -0600

The October 7, 2009 edition of the Federal Register will publish interim rules implementing the Genetic Information Nondiscrimination Act’s prohibition against discrimination in the administration of health insurance coverage and group health plans. The federal agencies involved (Labor; Health and Human Services; IRS) are requesting comment on the interim rules, which will take effect 60 days after their publication (December 6, 2009).

The interim rules implement GINA’s prohibition against health benefit plans and health insurance companies increasing rates based on genetic information; requesting or requiring genetic tests; and requesting, requiring or purchasing genetic information for use in connection with enrollment or underwriting. These interim rules follow upon the EEOC’s proposed rules regarding GINA’s application to employment practices, which were issued earlier this year.

In our prior article, “The Surprising Breadth of GINA’s Protections,” we noted that the definition of “genetic information” in the EEOC’s regulations includes family medical history information. This information may not itself be genetic in nature but may reveal the occurrence of a genetically-based disease in the individual’s family. That same broad definition is incorporated into the interim regulations for health insurance coverage and group health plans.

Comments on these interim rules may be submitted through the federal eRulemaking portal. Comments are due 90 days following the publication of the interim rules, or by January 5, 2010. For questions regarding the application of these interim rules to health insurance coverage and group health plans, please contact David Ball or any member of SZD’s Health Law Practice Group.

DOJ Official calls health care fraud "particularly severe."

Robert Cochran — Fri, 02 Oct 2009 06:58:41 -0600

The White Collar Crime Prof Blog is posting information from the National Association of Criminal Defense Lawyer's Annual Defending the White Collar Case Seminar. A keynote address was given by Lanny A. Breuer, Assistant Attorney General, Criminal Division, Department of Justice.

Breuer had the following to say about health care fraud:

"On the topic of health care fraud, which he called 'particularly severe,' Breuer said that much of the $800 billion dollars per annum that the government spends on Medicare and Medicaid is lost to 'waste, fraud and abuse,' which he estimated at a minimum of 3% of those expenditures. In this context, interagency efforts are being pursued in what he characterized as an 'innovative, data driven approach.' For example, pointing to multiple recent indictments in Detroit, Mich., he said that government investigation is driven by data such as information about which geographic areas have higher Medicare billing. He promised that such enforcement action will be spreading to new cities, explaining that government data shows that Medicare billings go down after the strike force goes into cities. "

The White Collar Crime Prof Blog is edited by Ellen S. Podgor, Professor of Law, Stetson University College of Law. The Breuer post was written by Guest Blogger Ivan J. Dominguez, Assistant Director of Public Affairs & Communications, National Association of Criminal Defense Lawyers.

OIG Releases Work Plan for Fiscal Year 2010

Robert Cochran — Fri, 02 Oct 2009 06:50:12 -0600

The Office of Inspector General ("OIG"), Department of Health & Human Services, released its Work Plan for fiscal year 2010. The Work Plan describes the work the OIG plans to initiate or continue in the coming year.

A copy of the Plan is here oig.hhs.gov/publications/workplan.asp

Senate Finance Committee Edges Closer to Passing Health Care Reform Legislation

David Kopans — Thu, 17 Sep 2009 09:19:23 -0600

On September 16, 2009, Senate Finance Committee Chairman Max Baucus released the Chairman's Mark for the committee's health care reform legislation, entitled America's Healthy Future Act.

The Chairman's Mark differs from the legislation passed by the Senate Committee on Health, Education, Labor and Pensions (the "HELP Committee") on July 15, 2009, in a number of ways such as:

Does not include a public insurance plan option. Rather, The Chairman's Mark proposes a Consumer Operated and Oriented Plan (CO-OP) program to create non-profit, member-run health insurance companies. These companies will be limited to competing in the individual and small group insurance markets.
Does not include an employer mandate. However, the Chairman's Mark provides for a fee capped at $400 per employee for certain employers who do not provide health insurance.
Expands Medicaid to non-elderly, non-pregnant (childless adults) with incomes up to 133% of the federal poverty line. The HELP Committee's bill expands Medicaid to such individuals up to 150% of the federal poverty line.
Provides tax credits (on a sliding scale basis) for individuals and families with incomes between 134-300% of the federal poverty line to offset the cost of private health insurance premiums. The HELP Committee's bill provides such credits for individuals and families up to 400% of the federal poverty line.

The Chairman's Mark is scheduled for markup at the committee's open executive session on September 22, 2009.

Expect RAC Audits in Ohio Before Year-End

Robert Cochran — Thu, 10 Sep 2009 12:36:18 -0600

CGI Technologies and Solutions, Inc. is the RAC contractor for Region B, which includes Ohio. Provider outreach started in September and, according to CGI's website, will be done by the end of September. CGI is already operational in Indiana, Michigan, and Minnesota, so expect RAC audits to start in Ohio before the end of the year. CGI's RAC website is located at racb.cgi.com/Default.aspx

Senate Finance Committee's Proposals for Health Care Reform

David Kopans — Wed, 09 Sep 2009 08:23:16 -0600

Senate Finance Committee Chairman Max Baucus has been reported as circulating to members of the committee a document entitled "Framework for Comprehensive Health Reform."

The Framework represents "many of the policies" discussed by the committee but is "not a final product . . . and does not include everything that might be in the [Chairman's Mark]." It most notably does not include a public insurance option. Rather, it proposes a Consumer Operated and Orientated Plan (CO-OP) program to create nonprofit, member-run health insurance companies that service individuals in one or more states.

Also, it does not propose an employer mandate. However, as discussed below, while there is no employer mandate, certain employers may be fined for not providing health insurance coverage.

Some other highlights of the document include:

Penalizing US citizens and legal residents who fail to obtain health insurance coverage up to $3,800 per year.
Fining employers with more than 50 full-time employees (30 hours and above) that do not offer health insurance coverage to their employees up to $400 annually for each employee who receives a tax credit for health insurance through an exchange.
Establishing state-based exchanges to assist individuals and small groups to more easily compare health insurance plan benefits and premium costs for four benefit options that would be available.
Permitting health insurance premiums to vary based on only four factors: tobacco use, age, family composition and geographic differences.
Prohibiting health insurance plans in the individual market from excluding coverage for pre-existing health conditions or rescinding health coverage.
Levying an excise tax of 35% on insurance companies and insurance administrators for any health insurance plan that is above $8,000 for singles and $21,000 for family plans.
Assessing fees that would be generally allocated by market share on pharmaceutical manufacturing companies ($2.3 billion), medical device manufacturers ($4 billion), health insurance providers ($6 billion), and clinical laboratories ($750 million).
Permitting states to form "health care choice compacts" between two or more states to allow the purchase of non-group health insurance across state lines.
Expanding Medicaid coverage to include individuals who are not currently eligible (e.g., non-elderly individuals (childless adults) at or below 133% of poverty).
Reducing a state's allotment for Medicaid Disproportionate Share Hospital Payments by 50% once the number of uninsured individuals in the state is reduced by 50%.

Settlement Agreement and Corporate Integrity Agreement with Pfizer

Robert Cochran — Thu, 03 Sep 2009 11:07:29 -0600

The Settlement Agreement and Corporate Integrity Agreement ("CIA") between the government and Pfizer are available.

The Settlement Agreement is available at http://op.bna.com/hl.nsf/r?Open=jthn-7vhqr9 .

The CIA is available at http://www.oig.hhs.gov/fraud/cia/agreements/pfizer_inc.pdf.

DOJ Announces Largest Health Care Fraud Settlement in Its History

Robert Cochran — Thu, 03 Sep 2009 10:41:36 -0600

In a combination of civil and criminal settlements, Pfizer, Inc. and its subsidiary Pharmacia & Upjohn Company, Inc. (collectively “Pfizer”) agreed to pay $2.3 billion, the largest health care fraud settlement in the history of the Department of Justice (“DOJ”). The settlement with Pfizer arises out of civil and criminal allegations relating to Pfizer’s allegedly illegal promotion of certain drugs, most notably Bextra.

Pharmacia & Upjohn Company, Inc. agreed to plead guilty to a felony violation of the Food, Drug, and Cosmetic Act for misbranding Bextra with the intent to defraud or mislead. Bextra is an anti-inflammatory drug that Pfizer pulled from the market in 2005. Under the provisions of the Food, Drug and Cosmetic Act, a company must specify the intended uses of a product in its new drug application to FDA. Once approved, the drug may not be marketed or promoted for so-called “off-label” uses – i.e., any use not specified in an application and approved by FDA. Pfizer promoted the sale of Bextra for several uses and dosages that the FDA specifically declined to approve due to safety concerns. The company will pay a criminal fine of $1.195 billion, the largest criminal fine ever imposed in the United States for any matter according to DOJ.

In addition, Pfizer agreed to pay $1 billion to resolve allegations under the civil False Claims Act that the company illegally promoted four drugs – Bextra; Geodon, an anti-psychotic drug, Zyvox, an antibiotic; and Lyrica, an anti-epileptic drug – and caused false claims to be submitted to government health care programs for uses that were not medically accepted indications and therefore not covered by those programs. The civil settlement also resolves allegations that Pfizer paid kickbacks to health care providers to induce them to prescribe these, as well as, other drugs.

Pfizer also agree to enter into an expansive corporate integrity agreement with the Office of Inspector General and the Department of Health & Human Services.

The DOJ press release is here: www.usdoj.gov/opa/pr/2009/September/09-aag-900.html

Settlement Agreement between DOJ and Covenant Medical Center

Robert Cochran — Wed, 02 Sep 2009 12:03:48 -0600

The Settlement Agreement between the Department of Justice and Covenant Medical Center of Waterloo, Iowa is now available. On August 25, 2009, DOJ announced Covenant agreed to pay the United States $4.5 million to resolve allegations that it violated the False Claims Act. The government accused Covenant of submitting false claims to Medicare by having financial relationships with five physicians that violated the Stark Law. The government alleged that Covenant violated the Stark Law by paying commercially unreasonable compensation, far above market value, to five employed physicians. According to the government, these physicians were among the highest paid hospital-employed physicians not just in Iowa, but in the entire United States.

In the Settlement Agreement, the government claimed Covenant paid compensation to five physician employees that exceeded the fair market value of the services provided by those physicians. Covenant denied the allegations of wrongful conduct and claimed the compensation paid was consistent with the fair market value of the services provided by the physicians. The Settlement Agreement did not have any other details concerning the compensation.

The Settlement Agreement is here www.szdhealthlawscan.com/uploads/file/Settlement Agreement (H1627730).PDF

Hospital Pays $4.5 Million to Resolve False Claims Allegations

Robert Cochran — Sun, 30 Aug 2009 14:19:17 -0600

On August 25, 2009, the Department of Justice announced Covenant Medical Center in Waterloo, Iowa agreed to pay the United States $4.5 million to resolve allegations that it violated the False Claims Act. The settlement resolves allegations that Covenant submitted false claims to Medicare by having financial relationships with five physicians that violated the Stark Law. The government alleged that Covenant violated the Stark Law by paying commercially unreasonable compensation, far above market value, to five employed physicians. According to the government, these physicians were among the highest paid hospital-employed physicians not just in Iowa, but in the entire United States.

Covenant issued a press release denying any wrongdoing or illegal conduct. Covenant maintained the physician compensation was consistent with the approved compensation plan, was based on work personally performed by the physicians, and reflected their exceptionally high level or productivity. Covenant said it made a business decision to settle to avoid the uncertainty of litigation, disruption, and high expense associated with protracted litigation with the government.

An article in the Des Moines Register on May 26, 2005 provides some information about the compensation. The paper reported that Covenant paid one orthopedic surgeon more than $2.1 million and a second orthopedic surgeon more than $1 million. A gastroenterologist was paid nearly $2.1 million. These figures were for the budget year ending in June 2003.

DOJ's press release is here www.justice.gov/opa/pr/2009/August/09-civ-849.html