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In entering into these types of arrangements with physicians, the pharmacy must avoid violating the Medicare anti-kickback statute (“AKS”) and the federal Stark physician self-referral statute (“Stark”).
Within certain legal parameters, a pharmacy can make payments to physicians. For example, if the pharmacy and physician enter into a legitimate Medical Director Agreement, then the pharmacy can make payments to the physician. Likewise, if a physician will provide bona fide education services for the pharmacy, then the pharmacy can pay fair market value (“FMV”) compensation to the physician. In entering into these types of arrangements with physicians, the pharmacy must avoid violating the Medicare anti-kickback statute (“AKS”) and the federal Stark physician self-referral statute (“Stark”).
Now let’s talk about the 2 cases. In the first case, a federal grand jury in Connecticut indicted Jeffrey Pearlman, a former sales manager for Insys Therapeutics, Inc. According to a Department of Justice (“DOJ”) statement, Mr. Pearlman allegedly used bogus educational events as a “cover” for paying kickbacks to physicians in exchange for their increased prescriptions of Subsys, a spray version of the opioid fentanyl.
The DOJ alleges that Mr. Pearlman and Insys sales representatives arranged sham “speaker programs,” which were billed as gatherings of physicians to educate them about Subsys. In reality, according to the DOJ, the events — usually held at high-end restaurants – mostly consisted of friends and co-workers who lacked the ability to prescribe the drug, and there was no educational component. According to the DOJ, the “speakers” were physicians who were paid fees ranging from $1000 to several thousand dollars to attend the dinners. The indictment says that these payments were kickbacks to the speakers “who were prescribing large amounts of Subsys and to incentivize those [physicians] to continue to prescribe Subsys in the future.” According to the indictment, one “speaker” was paid approximately $83,500 in order to induce more prescriptions of Subsys over similar (competing) products.
In the second case, University Behavioral Health of El Paso, LLC (“UBH”) has agreed to pay $860,000 to the federal government to settle allegations of False Claims Act (“FCA”) violations relating to the payment of kickbacks to a physician. UBH agreed to settle after the DOJ alleged that UBH had violated the AKS and Stark by improperly paying a physician who made referrals to UBH during a three year period. According to the DOJ, claims submitted by UBH to Medicare were “tainted by the payment of kickbacks to a physician under the guise of a professional services agreement, in return for the physician’s referral of patients to UBH.” The physician allegedly received payments that were either above FMV or were for services not rendered. In announcing the settlement, the DOJ stated: “Federal law, including the Anti-Kickback Act and the Stark Law, seeks to ensure that services reimbursable by federal healthcare programs are based on the best interests of patients rather than the personal financial interests of referring physicians.”
Here are the “takeaways” from these 2 cases for the pharmacy:
Reference
Casady M. El Paso Hospital Pays $860K to Settle FCA Kickback Claims. Law360. February 10, 2017.
Bishop S. Ex-Insys Sales Boss INdicted in Fentanyl Kickback Scheme. Law360. February 10, 2017.
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Jeffrey S. Baird, Esq. is Chairman of the Health Care Group at Brown & Fortunato, P.C., a law firm based in Amarillo, Texas. He represents pharmacies, home medical equipment companies, and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization. He can be reached at (806) 345-6320 or jbaird@bf-law.com.
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