Fraud, Abuse, and The AdvaMed Code

Transcription

1 Fraud, Abuse, and The AdvaMed Code Essentials of Medical Device Regulations Bethesda, Maryland May 14, 2008 Elizabeth Carder-Thompson Washington DC

2 Agenda Introduction and Goals Recent Enforcement -- Current Environment Legal Standards: Fraud and Abuse Authorities Codes of Ethics What Steps Should You Take to Protect Yourself and Your Company?

3 Environmental Check The prohibitions are multiple and confusing The statutes are broad The case law is broader Health care fraud is hot The recoveries are staggering Participants are in jail

4 Government s Concerns Increased/distorted costs to Medicare/Medicaid Over/mis-utilization Improper shaping of decision Quality of care, access to care Safety and effectiveness

5 Today s Goals Conduct a line-by-line analysis of pertinent portions of the Social Security Act and related legislative amendments (just kidding) Ensure basic understanding of health care fraud and abuse authorities and compliance standards Learn how the AdvaMed Code intersects with legal requirements Apply the legal standards and Code to the device business

6 Different Prohibitions Confront Device Companies Today Anti-kickback statutes False claims statutes Industry codes OIG Compliance Guidance Stark

7 Enforcement - Drugs and Devices Abbott/Ross $615 million Abbott/TAP $875 million Pfizer/Parke-Davis $430 million Guidant/EVT $100 million AstraZeneca $355 million Bayer $257 million Serono $704 million Merck $650 million Orthopedic manufacturers $311 million

8 The Life & Times of John Smith, Medical Device Rep

9 Case Study John Smith is a Senior Account Executive with ABC Tech, a manufacturer of cardiac devices, surgical supplies and related diagnostic products. The upcoming week promises to be a busy one for John.

10 Monday John visits the offices of Cardiac Associates, a large group practice. He brings pizza for the staff, a multi-volume textbook set on bypass surgery for each of the practice s physicians, and a fleece jacket with the ABC Tech insignia for the practice s administrator, who just had a birthday. He leaves them with 4 sample Cath-O-Matics to try out.

11 Tuesday John flies to the company s headquarters in San Diego with Drs. Abbott and Costello. The three of them fly first class, and are picked up by limo. At headquarters, John and the clinical staff show Drs. Abbott and Costello the latest developments in Cath-O-Matics. Drs. Abbott and Costello (who are spouses) are told they can stay over a few extra days at company expense.

12 Wednesday John meets with members of the senior medical staff and administration at Boston Hospital. The hospital decides to buy ABC s new drug eluting stent, and John in turn agrees to provide four things: 1. A long term loaner diagnostic instrument used to determine if the patient needs treatment, and 2. Training for the surgeons in use of the device.

13 Wednesday (cont d) 3. A $3,000 grant so that the OR nursing staff can fulfill their CE requirements, 4. A $50,000 donation to Boston Hospital s Non-Profit Foundation

14 Thursday Boston Hospital loves the stents, and John negotiates a 3 year deal under which they purchase stents at full price, and he throws in 100 Cath-O-Matics, and four diagnostic instruments at no additional charge.

15 Friday John meets with Dr. Johnson who has conducted research for ABC Tech. John and Dr. Johnson fly to San Francisco for an all-day meeting, followed by an Oakland A s baseball game that evening.

16 Regulatory Compliance Environment State Laws FDA Anti-Kickback Law Stark Law PHS/VA/FSS Antitrust FTC/R-P HIPAA Research Marketing Promotion Sales Product Liability/ Consumer Protection Codes of Conduct False Claims Act

17 Distinguish Legal Prohibitions: Federal antikickback statute State anti-kickback statutes OIG Compliance Guidance (2003) Voluntary Guidelines: AMA Guidelines on Gifts to Physicians from Industry (1990) PhRMA Code (2002) AdvaMed Code (2003)

18 Anti-Kickback Issues

19 Elements of the Federal Anti-Kickback Statute Knowingly and willfully Offer/pay solicit/receive Any remuneration, direct or indirect, in cash or in kind To induce or in return for Referring patients Purchasing or ordering/recommending Arranging purchasing or ordering Items or services covered under federal healthcare programs

20 Penalties Criminal statute Five years in jail Criminal fines of $25,000, potentially more Civil fines up to $50,000 and 3 times the amount claimed, per violation Exclusion (criminal or civil)

21 Key Exceptions to the Statute (Safe Harbors) Personal services contracts Leases of space Discounts (includes rebates) Employment contracts GPO fees Warranties Shared risk arrangements

22 State Anti-Kickback Statutes Many similar to federal statutes, apply to Medicaid Some broader (eg, Massachusetts) Practices may implicate state fee-splitting prohibitions

23 Selected Anti-Kickback Issues Free goods/samples Discounts/rebates/credits/volume incentives Bundling equipment with supplies (different reimbursement methodologies) Conversion/signing bonus

24 More selected issues Grants to physicians/hospitals - educational, research, training Consulting arrangements, speaker programs, focus groups Preceptorships Travel, entertainment, hospitality for customers (e.g., sports tickets, golf, meals) Charitable contributions

25 And still more selected issues Value added services Physician office support (that eliminate an otherwise incurred expense by purchaser) Billing assistance/reimbursement support

26 False Claims Issues

27 Multiple Statutory Provisions Medicare/Medicaid-specific criminal false claims Federal Health Care Offenses Scheme to defraud, false statements, obstruction Conspiracy Mail/wire fraud RICO

28 Civil False Claims Act Prohibits: Filing or causing to be filed False or fraudulent claims Using false statements to conceal, avoid or decrease a government obligation No intent to defraud required filing claims with reckless disregard is enough

29 Civil False Claims Act Damage Calculation: 3 X Damages + $5,500-$11,000/claim Example: $100K damages x 3 = $300, claims x $11,000/claim = $22 million Total liability = $22,300,000

30 Qui Tam Provisions of FCA Relator = private attorney general Can pursue claim if government decides not to intervene Can receive up to 30% of recovery

31 Emerging FCA Theories Kickbacks = False Claims Poor quality/unnecessary care Improper coding advice Improper off-label promotion Adulterated devices into interstate commerce

32

33 Industry Codes

34 Industry Codes AMA Guidelines on Gifts to Professionals (1990) PhRMA Code (2002) AdvaMed Code (2004) Legal Guidance OIG Compliance Guidance (2003)

35 OIG Treatment of PhRMA Code & Devices in the OIG Compliance Guidance: PhRMA Code: adherence will substantially reduce the risk of fraud and abuse and help demonstrate a good faith effort to comply. PhRMA Code = minimum standard Footnote 5: Compliance program elements and risk areas may also have application to manufacturers of medical devices. NEMA correspondence confirms application

36 Next. Analyze specific sections of AdvaMed Code Go back to see what s up with John Smith

37 What s the Point of the Code? Facilitate AdvaMed members ethical interactions with individuals or entities that purchase, lease, recommend, use, arrange for the purchase or lease of, or prescribe medical technology products in the US ( health care professionals ) ( HCPs )

38 Overview: Categories for Interactions with Healthcare Professionals Member-sponsored product training and education Third-party educational conferences Sales/promotional meetings Consultant arrangements Gifts Providing reimbursement/economic info Grants & charitable donations

39 Overview (Stated Differently): Gifts Providing reimbursement/economic info Grants & charitable donations Use of consultants Four types of HCP meetings Member-sponsored product training and education Third-party educational conferences Sales/promotional meetings Consultants

40 Member-Sponsored Training and Education Location Setting Modest meals and receptions Reasonable travel and lodging if necessary No payment for guests without a bona fide professional interest

41 Third-Party Educational Conferences Educational grants to conference sponsor or training institution only Modest meals and hospitality per guidelines of sponsor, or directly providing meals/receptions Faculty support Advertisements/demonstrations

42 Sales and Promotional Meetings Modest meals and receptions Travel when necessary (e.g., plant tours) No payment for guests without a bona fide professional interest

43 Use of Consultants Must be bona fide consulting arrangement : Contract FMV + reasonable expenses Legitimate need identified in advance Selection criteria Appropriate venue Modest hospitality Written research protocol

44 Gifts Items To Benefit Physician s Patients or Serve Educational Function Must be <$100 Exception: anatomical models or textbooks No cash/cash equivalents Items For Physician s Practice or Patient Benefit Branded promotional items Must be of minimal value

45 Provision of Reimbursement and Economic Information Accurate and responsible reimbursement information Technical support for appropriate and efficient use/installation of products But no support as inappropriate inducement

46 Grants and Charitable Donations For charitable purpose To charitable organizations (or individuals on missions) Examples: Advancing medical education Supporting research with scientific merit Public education

47 Additional OIG Cautions from Compliance Program Guidance Compensation arrangements with physician consultants attending meetings or conferences in primarily passive capacity Physician sales and marketing: speaking, certain research, preceptor or shadowing agreements Paying physicians to detail them, or have them access website, is highly suspect Criteria to evaluate grants

48 So, is John Smith in trouble?

49 Case Study John Smith is a Senior Account Executive with ABC Tech, a manufacturer of cardiac devices, surgical supplies and related diagnostic products. The upcoming week promises to be a busy one for John.

50 Monday John visits the offices of Cardiac Associates, a large group practice. He brings pizza for the staff, a multi-volume textbook set on bypass surgery for each of the practice s physicians, and a fleece jacket with the ABC Tech insignia for the practice s administrator, who just had a birthday. He leaves them with 4 sample Cath-O-Matics to try out.

51 Tuesday John flies to the company s headquarters in San Diego with Drs. Abbott and Costello. The three of them fly first class, and are picked up by limo. At headquarters, John and the clinical staff show Drs. Abbott and Costello the latest developments in Cath-O-Matics. Drs. Abbott and Costello (who are spouses) are told they can stay over a few extra days at company expense.

52 Wednesday John meets with members of the senior medical staff and administration at Boston Hospital. The hospital decides to buy ABC s new drug eluting stent, and John in turn agrees to provide four things: 1. A long term loaner diagnostic instrument used to determine if the patient needs treatment, and 2. Training for the surgeons in use of the device.

53 Wednesday (cont d) 3. A $3,000 grant so that the OR nursing staff can fulfill their CE requirements, 4. A $50,000 donation to Boston Hospital s Non-Profit Foundation

54 Thursday Boston Hospital loves the stents, and John negotiates a 3 year deal under which they purchase stents at full price, and he throws in 100 Cath-O-Matics, and four diagnostic instruments at no additional charge.

55 Friday John meets with Dr. Johnson who has conducted research for ABC Tech. John and Dr. Johnson fly to San Francisco for an all-day meeting, followed by an Oakland A s baseball game that evening.

56

57 What steps should you take now to protect yourself and your company?

58 12 Steps to Consider 1. Read the AdvaMed Code and FAQs 2. Read the OIG Compliance Program Guidance 3. Publicly adopt the AdvaMed Code 4. Appoint compliance officer/committee 5. Adopt procedures/safeguards involving any payments to referral sources (e.g. grant request forms) 6. Conduct employee training

59 More Steps to Consider 7. Create hotline or other anonymous reporting 8. Obtain employee certifications 9. Plan/conduct internal auditing/monitoring 10. Put your money where your mouth is: respond to problems & take disciplinary guidelines/actions 11. Beware off-label warning flags

60 12. Finally: Stay tuned.