Regulatory Developments

The requestor is a “Fire Protection District,” organized as a municipal corporation under the laws of the state, and the exclusive provider of emergency medical services (EMS) for residents in its service area, providing such services every hour and day of the week, but not transportation services. While the EMS services are currently being funded primarily from real estate taxes, an ordinance has been adopted to allow the Fire Protection District to bill residents or their insurers, including federal programs, to the extent of their coverage (so that there will be no out-of-pocket charges), and treat revenues received from local taxes as payment for any otherwise applicable co-payments and deductibles. Implementation of this ordinance was delayed pending the resolution of the advisory opinion request.

OIG's Analysis

The OIG first noted the broad scope of the federal Anti-kickback Statute, which has been interpreted by some federal appeals courts — see United States v. Greber, 760 F.2d 68 (3d. Cir.), cert. denied, 474 U.S. 988 (1985) (“one-purpose” test) — to cover any arrangements where a purpose of the remuneration involved obtaining money for the referral of services or to induce other referrals. The OIG then observed that the “insurance only” billing under the proposal could implicate the Statute since it constitutes a limited waiver of co-payments and deductibles, and cited to its Special Fraud Alert issued in 1994 warning that providers who routinely waive Medicare co-payments or deductibles may violate the Anti-kickback Statute. But, the OIG next pointed out, there is a special rule involved for providers and suppliers owned and operated by a state or political subdivision, as in this instance, referring to the Centers for Medicare and Medicaid Services (CMS) Carrier Manual, Section 2309.4 and also to the CMS Intermediary Manual, Section 3153A. As a result, the OIG found that the transaction at issue would not generate prohibited remuneration under the Anti-kickback Statute, and therefore the agency would not impose sanctions.

Compliance Program Guidance for Pharmaceutical Manufacturers

On May 5, 2003, the OIG published the above-described document in the Federal Register. See 68 Fed. Reg. 23731- 43. As the agency explains, this publication is meant to set forth its views concerning the value of compliance programs for this component of the industry, as well as specific elements that pharmaceutical manufacturers should consider when they develop and implement their programs.

In addition to the basic seven elements that have been listed in each proposed guidance, which are drawn from Chapter Eight of the Federal Sentencing Guidelines, the OIG noted a number of general risk areas:

The integrity of reported price and sales data

The OIG explained that because of the importance of the Medicaid Rebate Program and other programs that rely on its benchmarks, manufacturers need to be careful to ensure that they are calculating Average Manufacturer Price and Best Price accurately and that they are also paying appropriate rebate amounts for their drugs (citing to 42 U.S.C. ' 8(k)(1) and 8(c)(1), defining Average Manufacturer Price and Best Price, respectively).

Kickbacks and illegal remuneration

The OIG explained that among those who are in a position to generate federal health care business are buyers, benefit managers, formulary committee members, group purchasing organizations (GPOs), physicians and certain allied health professionals, and pharmacists. The agency suggested that manufacturers ask whether any arrangement or practice may have the potential to skew or interfere with clinical decision-making, undermine the integrity of the formulary process, and if information is being provided to others, whether the information is complete and accurate. In addition, manufacturers should consider if the arrangement has the potential to increase costs to Federal health care programs, beneficiaries, or enrollees, provide disguised discounts or circumvent the Medicaid Rebate Program Best Price calculation, increase the risk of over utilization or inappropriate utilization, or raise patient safety considerations.

OIG: Another Advisory Opinion on Ambulances

On April 25, 2003, the Office of the Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS) posted OIG Advisory Opinion No. 03-09 to the agency's Web site: http://oig.hhs.gov/. In this advisory opinion, the OIG was once again asked to provide advice about whether it may seek to impose sanctions under the agency's exclusion authority or civil monetary penalties for illegal remuneration being provided to beneficiaries. The OIG answered by indicating that, under the facts provided, it would not seek to impose such sanctions.

Facts Involved

The requestor is a “Fire Protection District,” organized as a municipal corporation under the laws of the state, and the exclusive provider of emergency medical services (EMS) for residents in its service area, providing such services every hour and day of the week, but not transportation services. While the EMS services are currently being funded primarily from real estate taxes, an ordinance has been adopted to allow the Fire Protection District to bill residents or their insurers, including federal programs, to the extent of their coverage (so that there will be no out-of-pocket charges), and treat revenues received from local taxes as payment for any otherwise applicable co-payments and deductibles. Implementation of this ordinance was delayed pending the resolution of the advisory opinion request.

OIG's Analysis

The OIG first noted the broad scope of the federal Anti-kickback Statute, which has been interpreted by some federal appeals courts — see United States v. Greber , 760 F.2d 68 (3d. Cir.), cert. denied, 474 U.S. 988 (1985) (“one-purpose” test) — to cover any arrangements where a purpose of the remuneration involved obtaining money for the referral of services or to induce other referrals. The OIG then observed that the “insurance only” billing under the proposal could implicate the Statute since it constitutes a limited waiver of co-payments and deductibles, and cited to its Special Fraud Alert issued in 1994 warning that providers who routinely waive Medicare co-payments or deductibles may violate the Anti-kickback Statute. But, the OIG next pointed out, there is a special rule involved for providers and suppliers owned and operated by a state or political subdivision, as in this instance, referring to the Centers for Medicare and Medicaid Services (CMS) Carrier Manual, Section 2309.4 and also to the CMS Intermediary Manual, Section 3153A. As a result, the OIG found that the transaction at issue would not generate prohibited remuneration under the Anti-kickback Statute, and therefore the agency would not impose sanctions.

Compliance Program Guidance for Pharmaceutical Manufacturers

On May 5, 2003, the OIG published the above-described document in the Federal Register. See 68 Fed. Reg. 23731- 43. As the agency explains, this publication is meant to set forth its views concerning the value of compliance programs for this component of the industry, as well as specific elements that pharmaceutical manufacturers should consider when they develop and implement their programs.

In addition to the basic seven elements that have been listed in each proposed guidance, which are drawn from Chapter Eight of the Federal Sentencing Guidelines, the OIG noted a number of general risk areas:

The integrity of reported price and sales data

The OIG explained that because of the importance of the Medicaid Rebate Program and other programs that rely on its benchmarks, manufacturers need to be careful to ensure that they are calculating Average Manufacturer Price and Best Price accurately and that they are also paying appropriate rebate amounts for their drugs (citing to 42 U.S.C. ' 8(k)(1) and 8(c)(1), defining Average Manufacturer Price and Best Price, respectively).

Kickbacks and illegal remuneration

The OIG explained that among those who are in a position to generate federal health care business are buyers, benefit managers, formulary committee members, group purchasing organizations (GPOs), physicians and certain allied health professionals, and pharmacists. The agency suggested that manufacturers ask whether any arrangement or practice may have the potential to skew or interfere with clinical decision-making, undermine the integrity of the formulary process, and if information is being provided to others, whether the information is complete and accurate. In addition, manufacturers should consider if the arrangement has the potential to increase costs to Federal health care programs, beneficiaries, or enrollees, provide disguised discounts or circumvent the Medicaid Rebate Program Best Price calculation, increase the risk of over utilization or inappropriate utilization, or raise patient safety considerations.