Life Science Compliance Update

May 04, 2015

Owner Of Durable Medical Supply Company Sentenced to 6 ½ Years In Prison

Power wheelchair

Last week, the owner of a durable medical equipment (DME) supply company was sentenced to 6 ½ years in prison for her role in submitting more than $7 million in fraudulent claims to Medicare.  Adeline Ekwebelem’s Los Angeles-based DME company, Adelco Medical Distributors, Inc., billed Medicare for medically unnecessary power wheelchairs “for beneficiaries often recruited off the street,” notes the government press release. Ekwebelem’s scheme, according to the prosecutors, implicated a “handful of complicit doctors,” who would write fraudulent prescriptions for wheelchairs in exchange for kickbacks.

One such doctor, Charles Okoye, last August pled guilty to conspiring with Ekwebelem to commit health care fraud. Between November 2008 and November 2011, Ekwebelem used “marketers” to recruit Medicare beneficiaries and then take them to see Dr. Okoye. According to the plea agreement, Okoye would issue DME prescriptions— primarily for power wheelchairs—“after giving the ‘patients’ a single, cursory examination.” Okoye’s referrals led Adelco to submit approximately $1.7 million in fraudulent claims to Medicare, and Medicare paid Adelco more than $820,000, the government notes.

Another doctor implicated in the DME scheme, Dr. Uche Chukwudi, fled a month before trial and remains a fugitive.  Three of Adelco’s marketers – Romie Tucker, Cindy Santana and Maritza Hernandez – have also received sentences of up to two years in prison for their roles in the scheme.

Government’s Focus on Durable Medical Equipment

Earlier this year, the FBI announced a $5 million settlement with the former owner of a DME company called Quick Solutions Medical Supplies Inc. The owner admitted that from April 2010 through July 2013, he and his co-conspirators operated Quick Solutions for the purpose of billing the Medicare program for expensive durable medical equipment that was medically unnecessary and in many instances not actually provided to the Medicare beneficiaries. “Indeed, many of the beneficiaries who purportedly received the DME resided hundreds of miles away in Miami,” stated the government.

The government’s interest in DME fraud is not a new phenomenon, and extends back before the days of multi-million and sometimes billion dollar settlements based on False Claims Act liability. U.S. attorneys have shown continued interest in DME suppliers through the years. The Office of Inspector General recently noted: "Fraud schemes shift over time, but certain Medicare services have been consistent targets.” For example, OIG continues to “uncover fraud schemes and questionable billing patterns by durable medical equipment (DME) suppliershome health agencies, community mental health centers, clinical laboratories, ambulance transportation suppliers, and outpatient therapy providers.”

OIG has released a number of fraud alerts concerning DME suppliers. In 2010, they sent out a notice specifically addressing DME suppliers' marketing practices to Medicare beneficiaries. Specifically, the Special Fraud Alert brought attention to suppliers using independent marketing firms to make unsolicited phone calls to market DME to Medicare beneficiaries. OIG forbids such practices, unless the supplier meets a number of strict safe harbors intended to limit a cold-call approach. OIG warned DME suppliers and telemarketers that they may both be liable for engaging in prohibited marketing activities. OIG enforced this fraud alert in January of 2014 against a diabetes supply company.


April 24, 2015

Kickback Concerns Shouldn't Prohibit Manufacturers From Offering Assistance For Drugs Without Cheaper Alternatives

Infusion Association Asks For Kickback Safe Harbor For Expensive Biologics


Drug manufacturers routinely offer copayment coupons to reduce or eliminate the cost of patients' out-of-pocket payment for certain drugs. This financial assistance can be especially beneficial for patients who require expensive biologic therapies with large co-pays. Last year, the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) released a report that such coupons may run afoul of the federal anti-kickback statute if they encourage the purchase of drugs paid for by government funded programs. Essentially, the OIG is worried that companies will offer Medicare patients co-pay reimbursement or other financial assistance to entice them to choose expensive brand-name drugs that the government will have to pay for, instead of readily available generics.

The National Infusion Center Association (NICA) recently released a position paper arguing against the government’s prohibition of such financial assistance for certain revolutionary biologic therapies. “The problem with the government’s well‐intentioned statute,” the Association argues, “is that it only works when there IS a cheaper generic alternative medication available.”

Indeed, “biologic specialty medications and IVIG [Intravenous Immune Globulin] have no cheaper generic alternative options, leaving many government funded patients backed into a financial corner with limited treatment options,” states the paper.     

NICA provides an illustration of how copayment assistance can help a person who takes Remicade for Crohn’s disease, for example. Remicade currently is not available in a generic (or “biosimilar”) form—the alternatives are “much older standby therapies,” notes the article.

A Medicare Patient receiving an every 8 week infusion of Remicade 600mg for a chronic condition known as Crohn’s disease.   At the time of this article, the Medicare reimbursement for this medication is approx: $4,590 per treatment or $32,132 per year (7 Treatments) for the medication alone. For a Medicare patient without a secondary insurance or supplemental coverage, the out of pocket cost for the medication (20%) is: $918 per treatment, or about $6,426 per year.  

“The majority of government payer patients who cannot afford the premiums for the secondary or supplemental coverage they need, will also not be able to afford the $6,000‐10,000 annual out of pocket cost for biologic or IVIG medications,” NICA states.

While NICA agrees that co-pay reimbursement or financial assistance programs could result in shifting patients to more expensive branded drugs, that risk simply doesn’t exist for biologics like Remicade. Thus, as a solution, NICA recommends that the OIG, HHS, CMS and other governing authorities should develop a clear cut safe harbor for manufacturers that allows patients with government funded health insurance to participate in manufacturer copayment financial assistance programs when there is not a cheaper generic alternative medication option available to the patient.

View the National Infusion Center Association’s full position paper here


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