Life Science Compliance Update

July 08, 2015

AstraZeneca and Cephalon Agree to Pay $46.5 Million and $7.5 Million, Respectively, for Allegedly Underpaying Rebates Owed Under Medicaid Drug Rebate Program

DOJ

The Department of Justice announced recently that AstraZeneca agreed to pay the United States and participating states a total of $46.5 million, plus interest, to resolve allegations that it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program.  In a separate settlement arising out of the same case, Cephalon Inc. agreed to pay the United States and participating states a total of $7.5 million, plus interest, to resolve similar allegations. 

Pursuant to the Medicaid Drug Rebate Program, manufacturers are required to pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the manufacturers’ drugs. The quarterly rebates are based, in part, on the Average Manufacturer Prices (AMPs) that the manufacturers report to the government for each of their covered drugs.  The AMP is the average price paid by wholesalers to manufacturers for drugs distributed to retail pharmacies. “Generally, the higher the reported AMP for a drug, the greater the rebate the manufacturer pays to state Medicaid programs for the drug,” notes DOJ.

The whistleblower lawsuit was initially filed in 2008 by Ronald J. Streck, a pharmacist and lawyer who operated a network of regional pharmacy wholesaler and retailers. According to his complaint, through this position he became “thoroughly familiar with the distribution agreements that manufacturers [ ] execute with wholesalers.” He alleged that the defendants treated fees to wholesalers as price reductions in calculating and reporting quarterly AMPS, which had the effect of reducing the prices for the drugs.

"These settlements resolve allegations that AstraZeneca and Cephalon underreported AMPs for a number of their drugs by improperly reducing the reported AMPs for service fees they paid to wholesalers," states DOJ. "As a result, the government contends that AstraZeneca and Cephalon underpaid quarterly rebates owed to the states and caused the United States to be overcharged for its payments to the states for the Medicaid program." 

“The Medicaid Drug Rebate Program relies on drug manufacturers reporting accurate pricing information used in the rebate calculations,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division.  “These settlements demonstrate the Department of Justice’s commitment to ensuring that state Medicaid programs receive the full amount of rebates from manufacturers that Congress intended.”

“We will continue to police the pharmaceutical industry when the Medicaid program overpays for drugs,” said First Assistant U.S. Attorney Louis D. Lappen of the Eastern District of Pennsylvania.  “As these settlements demonstrate, it is critical for pharmaceutical manufacturers to comply with requirements of programs such as the Medicaid Drug Rebate Program to ensure that the government and the taxpayers are treated fairly in the reimbursement process.”

Life Science Compliance Update will include an in-depth discussion of this settlement and discount-related enforcement information in the coming issue.

June 19, 2015

Big Day For Enforcement: DOJ Announces the Agency’s Largest Criminal Healthcare Fraud Takedown

  Silverman

Attorney General Loretta Lynch and Department of Health and Human Services (HHS) Secretary Sylvia Burwell announced yesterday an unprecedented nationwide sweep led by the Medicare Fraud Strike Force in 17 districts, resulting in charges against 243 individuals, including 46 doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $712 million in false billings.  In addition, the Centers for Medicare & Medicaid Services (CMS) also suspended a number of providers using its suspension authority as provided in the Affordable Care Act.  “This coordinated takedown is the largest in Strike Force history, both in terms of the number of defendants charged and loss amount,” DOJ wrote.

The defendants are charged with various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of the anti-kickback statutes, money laundering and aggravated identity theft.  Notably, more than 44 of the defendants arrested were charged with fraud related to the Medicare prescription drug benefit program known as Part D, which the DOJ states is the fastest-growing component of the Medicare program overall.”

Interestingly, the announcement comes about a month after CMS released the Medicare Part D database listing individual physicians' prescribing habits

The charges are also based on alleged fraud schemes involving various medical treatments and services, including home health care, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and pharmacy fraud. 

According to court documents, the defendants participated in alleged schemes to submit claims to Medicare and Medicaid for treatments that were medically unnecessary and often never provided.  In many cases, patient recruiters, Medicare beneficiaries and other co-conspirators allegedly were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare for services that were medically unnecessary or never performed.  Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $712 million in fraudulent billing.

This action represents the largest criminal health care fraud takedown in the history of the Department of Justice, and it adds to an already remarkable record of enforcement,” said Attorney General Lynch.  “The defendants...billed for equipment that wasn’t provided, for care that wasn’t needed, and for services that weren’t rendered." (emphasis added)

“This Administration is committed to fighting fraud and protecting taxpayer dollars in Medicare and Medicaid,” said Secretary Burwell.  “This takedown adds to the hundreds of millions we have saved through fraud prevention since the Affordable Care Act was passed.  With increased resources that have allowed the Strike Force to expand and new tools, like enhanced screening and enrollment requirements, tough new rules and sentences for criminals, and advanced predictive modeling technology, we have managed to better find and fight fraud as well as stop it before it starts.”

“Every day, the Criminal Division is more strategic in our approach to prosecuting Medicare Fraud,” said Assistant Attorney General Caldwell.  “We obtain and analyze billing data in real-time.  We target hot spots – areas of the country and the types of health care services where the billing data shows the potential for a high volume of fraud – and we are speeding up our investigations.  By doing this, we are increasingly able to stop schemes at the developmental stage, and to prevent them from spreading to other parts of the country.” (emphasis added)

The press release also broke down the various state hot spots:

In Miami, a total of 73 defendants were charged with offenses relating to their participation in various fraud schemes involving approximately $263 million in false billings for home health care, mental health services and pharmacy fraud.  In one case, administrators in a mental health center billed close to $64 million between 2006 and 2012 for purported intensive mental health treatment to beneficiaries and allegedly paid kickbacks to patient recruiters and assisted living facility owners throughout the Southern District of Florida.  Medicare paid approximately half of the claimed amount. 

In Houston and McAllen, Texas, 22 individuals were charged in cases involving over $38 million in alleged fraud.  One of these defendants allegedly coached beneficiaries on what to tell doctors to make them appear eligible for Medicare services and treatments and then received payment for those who qualified.  The company that paid the defendant for patients submitted close to $16 million in claims to Medicare, over $4 million of which was paid.     

In Dallas, seven people were charged in connection with home health care schemes.  In one scheme, six owners and operators of a physician house call company submitted nearly $43 million in billings under the name of a single doctor, regardless of who actually provided the service.  The company also significantly exaggerated the length of physician visits, often times billing for 90 minutes or more for an appointment that lasted only 15 or 20 minutes.   

In Los Angeles, eight defendants were charged for their roles in schemes to defraud Medicare of approximately $66 million.  In one case, a doctor is charged with causing almost $23 million in losses to Medicare through his own fraudulent billing and referrals for DME, including over 1000 expensive power wheelchairs and home health services that were not medically necessary and often not provided.  

In Detroit, 16 defendants face charges for their alleged roles in fraud, kickback and money laundering schemes involving approximately $122 million in false claims for services that were medically unnecessary or never rendered, including home health care, physician visits, and psychotherapy, as well as pharmaceuticals that were billed but not dispensed.  Among these are three owners of a hospice service who allegedly paid kickbacks for referrals made by two doctors who defrauded Medicare Part D by issuing medically unnecessary prescriptions. 

In Tampa, five individuals were charged with participating in a variety of schemes, ranging from fraudulent physical therapy billings to a scheme involving millions in physician services and tests that never occurred.  In one case, a licensed pain management physician sought reimbursement for nerve conduction studies and other services that he allegedly never performed.  Medicare paid the defendant over $1 million for these purported services.  

In Brooklyn, N.Y., nine individuals were charged in two separate criminal schemes involving physical and occupational therapy.  In one case, three individuals face charges for their roles in a previously charged $50 million physical therapy scheme.  In the second case, six defendants were charged for their roles in a $8 million physical and occupational therapy scheme.

In New Orleans, 11 people were charged in connection with $110 million in home health care and psychotherapy schemes.  In one case, four individuals who operated two companies – one in Louisiana and one in California – that mass-marketed talking glucose monitors (TGMs) across the country allegedly sent TGMs to Medicare beneficiaries regardless of whether they were needed or requested.  The companies billed Medicare approximately $38 million for the devices and Medicare paid the companies over $22 million.

Here is a link to the court documents from each defendant. 

 

Newsletter


Preview | Powered by FeedBlitz

Search


 
Sponsors
August 2015
Sun Mon Tue Wed Thu Fri Sat
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31