Life Science Compliance Update

May 27, 2015

Doctor Involved in Physician-Owned Distributorship Pleads Guilty To Kickback Violations and Unnecessary Surgeries; Marks First POD-Specific Enforcement Action

Spinal implants

Physician-owned distributorships (PODs), which are medical device distributors owned, at least in part, by physicians who use the devices, have attracted scrutiny from Congress and the HHS-OIG for several years. However, it was not until September of 2014 when the Department of Justice got involved by suing Reliance Medical Systems over an alleged kickback scheme involving PODs, whereby physician investors would be paid essentially based on the number of Reliance spinal implants they used. On May 22, one of the neurosurgeons named in the complaint, Dr. Aria Sabit, admitted that the financial incentives provided by the PODs "caused him to compromise his medical judgment and cause serious bodily injury to his patients by performing medically unnecessary spine surgeries on some of the patients in whom he implanted [the] spinal implant devices," states DOJ

A 2011 Congressional report entitled Physician Owned Distributors (PODs): An Overview of Key Issues and Potential Areas for Congressional Oversight stated that “[t]he very nature of PODs seem to create financial incentives for physician investors to use those devices that give them the greatest financial return and that, in the process, patient treatment decisions may be based on personal financial gain." In 2013, the HHS-OIG issued a Special Fraud Alert specifically targeting physician-owned entities as well, stating that PODs “are inherently suspicious under the anti-kickback statute.” 

Thus, the industry has been on alert that PODs are an area of enforcement interest, and last year spinal implant company Reliance Medical Systems was the first to be hit with a complaint from the Department of Justice. The DOJ alleged that Reliance's owners created more than a dozen physician-owned distributorships that sold Reliance's spinal implants to physician-owners for use in surgery. The government alleged that Reliance used one of its distributorships, Apex Medical, to funnel improper payments to Dr. Sabit for using Reliance spinal implants in his surgeries.

"Apex was owned by another neurosurgeon and three non-physicians who operated Apex as a physician-owned distributorship and paid neurosurgeons lucrative illegal kickbacks tied directly to the volume and complexity of the surgeries that the surgeons performed, and the number of Apex spinal implant devices the surgeons used in their spine surgeries," states DOJ. "In exchange for the opportunity to invest in Apex and share in its profits, Sabit admitted that he agreed to convince his hospital to buy spinal implant devices from Apex and use a sufficient number of Apex spinal implant devices in his spine surgeries."

Specific facts in this case also put Reliance in a bad light, including recorded statements by the company’s owners telling potential physician investors that Reliance was formed as part of a plan to “get around” the federal Anti-Kickback statute, and that Reliance pays its physician-investors enough in the first month or two to “put their kids through college.”

According to the DOJ, Sabit began using Reliance implants on his patients only after he acquired an ownership interest in Apex and started receiving payments from the sale of Reliance’s spinal implants.  Apex allegedly paid Sabit $438,570 between May 2010 and July 2012, during which time Sabit used Reliance implants in approximately 90 percent of his spinal fusion surgeries.  The government also alleged that these payments caused Sabit to perform medically unnecessary or excessive surgeries on certain patients who did not need the spinal implants. 

Sabit admitted that his involvement with the POD, Apex, led him to compromise his medical judgment and harm patients by performing medically unnecessary spine surgeries and using more implant devices than needed. The DOJ states that he also admitted to referring patients for more complex surgeries, such as multi-level spine fusion, that they did not need.

Reliance and Dr. Sabit have been a target for a number of year now. CBS News ran a story in 2013 that focused on a wrongful death suit against Sabit, and scrutinized his financial relationship with Apex--the supplier of the device that allegedly caused the patient harm. 

On November 5, 2014, the District Court of California denied Reliance Medical’s motion to dismiss the DOJ’s complaint. Download Reliance's Motion to Dismiss Denied

In addition to the charges related to Apex and Reliance, Sabit admitted to a number of fraudulent billing patterns. "Sabit admitted that he derived significant profits by convincing patients to undergo spinal fusion surgeries with instrumentation (meaning specific medical devices designed to stabilize and strengthen the spine), which he never rendered, and subsequently billing public and private healthcare benefit programs for those fraudulent services," DOJ states. "Sabit further admitted he operated on patients and dictated in his operative reports—that he knew would later be used to support his fraudulent insurance claims—that he had performed spinal fusion with instrumentation, which he never performed."

A sentencing hearing is scheduled for Sabit on Sept. 15, 2015.

 

May 26, 2015

Continuing Medical Education: ACCME Offers New Guidance On The Role of Commercial Interest Employees In CME

Accme

The Accreditation Council for Continuing Medical Education recently provided clarity on the roles of industry employees in planning and delivering CME activities. ACCME’s Standards for Commercial Support require that accredited continuing medical education be independent and free of control of commercial interests, and employees of industry have been prohibited from participating in accredited CME. ACCME now makes clear that employees of industry can be engaged in a “specific, limited role” in certain aspects of continuing education. Murray Kopelow, President and CEO of the ACCME, notes that the new guidance fulfills ACCME’s mission to “support the free flow of scientific exchange while safeguarding accredited CME from commercial influence."

ACCME defines a commercial interest as any entity producing, marketing, re-selling, or distributing healthcare goods or services consumed by, or used on, patients. Specifically, under Standard 1 of the ACCME’s Standards for Commercial Support, an accredited CME provider may not allow a commercial interest to control or influence:

  • (a) Identification of CME needs;
  • (b) Determination of educational objectives;
  • (c) Selection and presentation of content;
  • (d) Selection of all persons and organizations that will be in a position to control the content of the CME;
  • (e) Selection of educational methods;
  • (f) Evaluation of the activity.

“The use of employees of ACCME-defined commercial interests as faculty and planners or in other roles where they are in a position to control the content of accredited CME is prohibited, except in the specific situations specified here,” states the ACCME in its new guidance, released last week.

The ACCME identified three “special-use cases where employees of ACCME-defined commercial interests can have a specific, limited role in accredited CME activities.” ACCME notes that there are circumstances where an employee of an ACCME-defined commercial interest can make a scientific presentation within accredited CME about their company’s research and still be compliant with the ACCME Standards for Commercial Support.

  • (1) Employees of ACCME-defined commercial interests can control the content of accredited CME activities when the content of the CME activity is not related to the business lines or products of their employer.

  • (2) Employees of ACCME-defined commercial interests can control the content of accredited CME activities (e.g., as planners, authors, or speakers [including poster presentations]) when the content of the accredited CME activity is limited to basic science research (e.g., pre-clinical research, drug discovery) or the processes/methodologies of research, themselves unrelated to a specific disease or compound/drug. In these circumstances, the accredited provider must be able to demonstrate that it has implemented processes to ensure employees of ACCME-defined commercial interests have no control of CME activity content that is related to clinical applications of the research/discovery or clinical recommendations concerning the business lines or products of their employer.

  • (3) Employees of ACCME-defined commercial interests can participate as technicians in accredited CME activities that teach the safe and proper use of medical devices. In this circumstance, the accredited provider must demonstrate that it implements processes to ensure that employees of ACCME-defined commercial interests have no control of CME activity content that is related to clinical recommendations concerning the business lines or products of their employer. 

ACCME also makes clear that, as in every accredited CME activity, the expectations of ACCME’s Standards for Commercial Support for the three situations must be met.

The new guidance included FAQ-type scenarios that show how ACCME's new policies would play out in the workplace. See "Examples of Compliance and Noncompliance" here

An accredited provider would be in compliance, for example, with ACCME standards where:

  • An employee of an ACCME-defined commercial interest participates as a teacher in an accredited CME activity whose content is about the drug discovery process, itself, and is not about treatment or diagnostics. The activity is targeted to scientists whose research is focused on drug discovery.

  • An employee of an ACCME-defined commercial interest participates as an author and presenter in an accredited CME “Scientific Poster Session” where the content of their presentation is limited to reporting research results (e.g., biology, physiology, physics) early in the drug discovery process so as to not include any discussion of product development. The provider demonstrates that the CME activity does not include any discussion or clinical recommendations concerning the use of products or devices of ACCME-defined commercial interests that could be used or prescribed for patients.

  • An employee of an ACCME-defined commercial interest participates as a planning committee member, author, and trainer in an accredited CME activity on disaster management preparedness. In its Performance-in-Practice evidence, the provider demonstrates that the content of the CME activity (“disaster management”) is not related to the business lines or products of the employer, a medical device manufacturer.

  • The accredited provider plans an intensive hands-on course to train physicians to perform vascular interventions using new FDA-approved medical devices and equipment. The course director asks several ACCME-defined commercial interests to provide equipment and medical devices for use in the CME activity and also to provide technicians (i.e., employees of the commercial interest) to operate the equipment during the CME activity. The accredited provider tracks the loaned equipment as in-kind commercial support. The course director plans the CME activity independent of the control of ACCME-defined commercial interests; she determines what procedures will be taught, instructs the commercial interest employees on their limited roles, and is present to oversee and participate in the instruction. The course director monitors the CME activity to ensure that demonstration and comments provided by the device technologists are technical only (i.e., about the safe and proper use of the equipment) and do not include clinical recommendations about the medical devices/equipment of the manufacturer(s).

A provider would NOT be in compliance where:

  • The accredited provider uses an employee of an ACCME-defined commercial interest—a company that distributes pharmaceuticals—as faculty for a CME activity. From its Performance-in-Practice materials and subsequent accreditation Interview, it is determined that the provider failed to identify a pharmaceutical distributor as an ACCME-defined commercial interest because the forms it used to identify relevant financial relationships included language that did not accurately reflect all of the types of organizations included in the ACCME’s definition of a commercial interest.

  • The accredited provider uses employees of ACCME-defined commercial interests as members of a CME committee that determines topics and speakers for accredited CME activities related to the products of their employer(s). In its Performance-in-Practice materials, the provider shows that it identifies relevant financial relationships for members of the CME committee and manages conflicts of interest using several strategies (e.g., peer-review of content, recusal from discussions related to their financial relationships). The identification and resolution of conflicts of interest (Standard 2 of the ACCME Standards for Commercial Support) is not a valid mechanism to ensure independence, as employees of ACCME-defined commercial interests cannot control the content of CME activities related to the business lines and products of their employer, per Standard 1.

  • The accredited provider uses employees of ACCME-defined commercial interests as authors and speakers in CME activities related to the business lines and products of their employer(s). In its Self-Study Report and Interview at reaccreditation, the provider describes that it ensures the independence of its CME activities by having commercial employees attest that the content they present about commercial products is ”fair and balanced.” This is not an acceptable mechanism to ensure independence, as employees of ACCME-defined commercial interests cannot control the content of accredited CME that is related to the business lines and products of their employer.

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ACCME's latest guidance and accompanying FAQs are welcomed instruction. The policies that ACCME sets forth here can be traced to a 2010 controversy involving whether industry scientists would be able to present CME at an American Heart Association conference. The ACCME and AHA eventually reached an agreement, and ACCME released guidance that closely parallels what they have now released, five years later.  

 

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