Life Science Compliance Update

August 24, 2015

Purdue Pharma Settles With New York AG Over Oxycontin Promotion; Agrees To Long List of Requirements To Ensure “Responsible and Transparent Marketing”



New York’s Attorney General recently announced an agreement with Purdue Pharma, the manufacturer of OxyContin, that holds the company to a long list of requirements aimed at stemming the recent increase in opioid addiction and opioid-related deaths. The settlement resolves an investigation launched in December 2013 where the government found Purdue may have “failed to take the necessary steps” to ensure their sales reps properly flagged prescribers who may abuse or divert the medication. Further, the settlement resolves the government’s investigation into Purdue’s unbranded pain advocacy website. While “the site creates the impression that it is neutral and unbiased,” notes the government, it failed to disclose that a number of the healthcare providers providing testimonials had financial relationships with Purdue.  

In addition to a fine of $75,000, the settlement requires Purdue to modify its business practices in a number of significant ways. First, it adds to Purdue’s pre-existing “Abuse and Diversion Detection” (ADD) program. Under the ADD program, if a Purdue sales rep learns of or observes any of a variety of activities that suggest an HCP (or his or her patients) may be involved in the abuse and diversion of opioids, the rep must report it to Purdue. The company may then add those HCPs to a “No Call List.” (See page 4 of the settlement for the list of potentially suspicious behavior, which includes “An HCP who has a disproportionate number of patients who pay cash for office visits and dispensed medication “ and “An allegation that individuals from a particular HCP’s practice have overdosed.”)

Despite Purdue’s ADD program, the Attorney General’s investigation found that sales reps continued to detail certain suspicious HCPs, and some reps continued to call doctors on the “No-Call List.” Under the terms of the agreement, Purdue must continue to implement the ADD program in New York for so long as it markets OxyContin in the state. It also adds measures that Purdue must adopt to ensure it does not promote its opioid products to providers who may prescribe inappropriately or illegally. Such measures include adding new “red flags” that will trigger an internal investigation by Purdue. Further, sales reps “must now file reports about providers who may not be abiding by I-STOP, New York’s signature law requiring New York health care providers to consult a database of a patient’s prescription history before prescribing a controlled substance, including narcotic painkillers,” states the AG press release. The agreement further ensures that reps do not contact providers on the “no call” list by imposing such safeguards as: (a) requiring representatives to check the “no-call” list before contacting a provider, (b) subjecting representatives to potential disciplinary action for contacting such providers, and (c) not counting prescriptions of Purdue opioid products by such providers towards sales representatives’ bonuses.

Second, a condition of the settlement requires Purdue to disclose any financial arrangements with health care providers that appear on websites endorsing pain treatments like OxyContin. The Attorney General investigated Purdue’s website ( that, prior to the settlement, contained a number of HCP testimonials advocating for patients with chronic pain. While the website indicated it was the product of Purdue Pharma, it did not reveal that some of the HCP “advocates” were paid speakers or consultant. Thus, the settlement requires that the company reveal the existence of payments it has made to any such person on the website, going back three years. Interestingly, Purdue is required to use the information based on CMS Open Payments reports as the financial disclosures for any HCPs. 

Third, the government’s investigation pointed to “deficiencies in certain HCPs’ knowledge of appropriate opioid prescribing practices.” Thus, the settlement requires that the first time a Purdue sales rep visits a New York HCP each year, the rep must ask whether the HCP completed a training program for the appropriate prescribing of opioids. If not, the rep must provide the HCP information about training that is compliant with the Food and Drug Administration’s “REMS for Extended Release/Long Acting Opioids.” The information on ER-LA REMS CME courses are available here.

Finally, the government highlighted the need for patients undergoing opioid therapy to receive information about the risks of addiction and addiction treatment resources. 


The government has been focused on stemming opioid abuse, and diligent in its enforcement of healthcare providers who facilitate this abuse. The Office of Inspector General has targeted several HCPs with questionable opioid prescribing habits, and also recently released a report entitled “Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D,” which focuses on commonly abused opioids.

This settlement shows that the government is not stopping their inquiry at prescribers. Here, New York is holding Purdue responsible for curtailing the misuse of the company’s products through a long list of required measures. With the government's increased focus on the opioid abuse epidemic, it seemed like only a matter of time before improper prescribing habits were traced back up the chain to the manufacturer. Indeed, New York’s Attorney General, Eric Schneiderman, announced that his office is “Committed to Preventing Opioid Abuse [and] Holding Drug Companies Accountable.” It will be interesting to see whether other states follow suit.

Another interesting aspect of the case is the government's recognition of required opioid-related continuing medical education as a beneficial tool to ensure safe prescribing. 

 View the NY Attorney General Press Release here.

August 21, 2015

CMS Proposed Fee Schedule for 2016 Overview


As we previously published, on July 15, 2015, the Centers for Medicare & Medicaid Services (CMS) published its proposed rule to update the Medicare physician fee schedule for 2016. Among the many proposals, CMS seeks comment on whether to add Open Payments data to its “Physician Compare” website. Additionally, the proposal includes funding previously controversial advance care planning codes, the first regulations implementing the post-SGR legislation, Stark Law exceptions, and more.

Comments are due no later than 5 p.m. on September 8, 2015. You may submit electronic comments on this regulation to Follow the instructions for ‘‘submitting a comment.’’ In commenting, refer to file code CMS–1631–P.

Download the 2016 Fee Schedule Proposed Rule

Open Payments

In our previous article, we wrote that CMS continues its support of the Physician Compare website, stating that it supports the agency’s “overarching goals of providing consumers with quality of care information that will help them make informed decisions about their health care, while encouraging clinicians to improve the quality of care they provide to their patients.” In the proposal, CMS is seeking comment about including Open Payments data on individual physician pages. “Although these data are already publicly available, consumer testing has also indicated that additional context, wording, and data display considerations can help consumers better understand the information,” the agency states.

Our concern is that including Open Payments data in a program that CMS identifies as indicating “quality” serves only to further obscure the benefits that industry-physician collaborations bring to patients. CMS’s proposal indicates that they are interested in establishing the proper context around these payments; thus it will be important to provide comments. It should also be noted that CMS is seeking to add utilization data to the Physician Compare downloadable database. Utilization data is information generated from Medicare Part B claims on services and procedures provided to Medicare beneficiaries by physicians and other healthcare professionals. CMS has recently made this data available in a searchable file. We highlighted how easy this utilization data is to misinterpret earlier this year. CMS seeks comment on this proposal as well.

Advance Care Planning

Advance care planning is a service that includes early conversations between patients and their practitioners, both before an illness progresses and during the course of treatment, to decide on the type of care that is right for the patient. CMS proposes to establish payment for two advance care planning services provided to Medicare beneficiaries by physicians and other practitioners. The statute currently provides coverage for these codes under the “Welcome to Medicare” visit available to all Medicare beneficiaries, but they may not need these services when first enrolling. By creating a separate payment for these codes, CMS hopes to provide beneficiaries and practitioners more opportunities to use these planning sessions at the most appropriate time for patients and their families. These codes nearly derailed the Affordable Care Action, giving rise to the much talked about “death panels” debate.

Medicare Access and CHIP Reauthorization Act of 2015 (MACRA)

In the proposal, CMS discusses the implementation of major MACRA reforms that link physician payment updates to quality, value, and participation in alternative payment models. In particular, MACRA mandates the development of the Merit-based Incentive Payment System (MIPS) to replace existing physician quality programs starting on January 1, 2019. MACRA encourages providers to also participate in alternative payment models that focus on coordinating care, improving quality, and reducing costs. CMS seeks comments on defining a “low-volume threshold” to exclude eligible professionals from MIPS, the definition of clinical practice improvement areas to guide the development of MIPS, and feedback on alternative payment model policies in advance of future rulemaking and requests for information.

Stark Law Regulations

The proposed rule includes a number of technical revisions to the regulations implementing the Stark law. These revisions appear to be designed to provide clarity and flexibility regarding the burden of technical requirements, including written agreements, extended holdover provisions, new time share lease exceptions, and update definitions. CMS believes these changes will not create a greater risk of fraud or abuse and will reduce the number of self-disclosures of conduct that is substantively compliant with Stark requirements.

Writing, Term, and Missing Signature Requirements: According to CMS, the requirement of many Star exceptions for “writing or “written agreement” need not be satisfied by evidence of a single formal contract. Instead, depending on the facts, a collection of contemporaneous documents, including evidence of the course of the parties’ conduct, may be sufficient. The agency also proposes to clarify that Stark exceptions conditioned on a term of at least on year do not require a formal written contact or other document with an explicit provision identifying the term of the agreement. Rather an arrangement that lasts at least one year satisfies these requirements.

Timeshare Arrangements: Under so-called “timeshare arrangements,” a hospital or practice group will make available to a visiting independent physician the “space, equipment and services necessary to treat patients.” Under such arrangements the physician “does not need to make any improvements to the space or to bring any medical or office supplies in order to begin seeing patients.” Often, a “timeshare arrangement does not transfer dominion and control over the premises, equipment, personnel, items, supplies, and services of the licensor to the licensee, but rather confers a privilege to use the premises, equipment, personnel, items, supplies, and services that are the subject of the license.”

Because such arrangements may not qualify for protection under any combination of existing Stark Law exceptions (such as those for space, equipment, and personal services) and because such arrangements are often necessary “to ensure adequate access to needed specialty care,” CMS proposes a new exception to protect such arrangements. Among other things, in order to be protected under the new exception (1) the arrangement would have to be set out in writing, signed by the parties, and specify the premises, equipment, personnel, items, supplies, and services covered by the arrangement, (2) the ‘licensed premises, equipment, personnel, items, supplies, and services would have to be used predominantly to furnish evaluation and management services to patients of the licensee,” (3) the arrangement could not be ‘conditioned on the licensee’s referral of patients to the licensor,” and (4) the compensation over the term of the arrangement would have to be “set in advance, consistent with fair market value, and not determined in a manner that takes into account the volume or value of referrals or other business generated between the parties.”

Broadening of Holdover Allowances and the Fair Market Value Exception: CMS proposed to amend the six-month holdover provisions within the Stark Law exceptions for the rental of office space, rental of equipment and personal service arrangements, to permit either indefinite holdovers, or, in the alternative, to extend permitted holdovers to a definite period that is greater than six 6 months, provided that additional safeguards are met. As it considers how to modify the holdover provision, CMS intends to safeguard against two potential sources of program or patients abuse: (a) frequent renegotiation of short-term arrangements based on a physician’s referrals, and (b) compensation or rental charges that become inconsistent with fair market value over time.

To prevent frequent renegotiating of short-term arrangements, the holdover must continue on the same term and conditions as the original arrangement. If the parties change the original terms and conditions of the arrangement, the agency considers this a new arrangement that would need to satisfy an applicable exception. To ensure the compensation is consistent with or does not exceed fair market value, as applicable, the proposed holdover provision requires that the holdover arrangement satisfy all of the elements of the applicable exception when the arrangement expires, and that it continue to satisfy the elements of the applicable exception on an ongoing basis during the holdover as well.

In conjunction it its proposed amendment of the holdover provisions, Cams has proposed amending the exception for fair market value compensation arrangements. The current exception allows arrangements for less than one year to be renewed any number of times, provided that the terms of the arrangement and the compensation for the same items or services do not change. CMS now proposes to amendment the except to permit arrangements of any timeframe, including those for more than one year, provided that the terms of the arrangement and the compensation for the same items or services do not change. CMS is seeking comment as to whether the proposed revision of the fair market value compensation exception would be necessary if the proposed revisions allow indefinitive holdovers are finalized as president in the proposal.

Taking into Account: Many Stark regulatory exceptions have so-called “volume or value” requirements. In some cases, the requirement is that the compensation at issue cannot "take into account" the volume or value of physician referrals. In other cases, the exception provides that the compensation cannot be “based on,” or must be “without regard to,” the volume or value of physician referrals. “Concerned that the use of different phrases pertaining to the volume or value of referrals … may cause some to conclude incorrectly that there are different volume or value standards in the compensation exceptions,” the proposal would amend the law’s regulations to utilize the “take into account” language.

Failure to Obtain Required Signatures: CMS proposes to allow parties 90 days to obtain required signatures to an agreement irrespective of whether the failure to secure a timely signature is knowing or inadvertent. At present, the temporary non-compliance grace period for a late signature lapses after 30 days when the parties are aware that the signature is missing.

Physician-Owned Hospitals: CMS proposes to limit the categories of websites and the forms of advertising and required disclose that a hospital has physician ownership, and to clarify the variety and simplicity of disclosure statements that would be sufficient for a hospital to comply. CMS also proposes to require that, when a hospital calculates its baseline and prospective levels of physician investment, hospitals include all owners who are physicians, whether or not they are referring physicians at the time. While the industry general would welcome implementation of the changes that govern website and advertising disclosures, hospitals that have relied on CMS’s prior guidance to disregard ownership by non-referring physicians may find that the new rules would challenge the compliance of their current equity structures. CMS sought commentary as to the implementation period changes in this category, if the changes are finalized.

Value-Based Purchasing: CMS is asking for comment on a wide range of topics to the agency’s goal of moving from fee-for-service to more value-based healthcare. The agency notes “stakeholders have express concerned that,” with a few exceptions, “the physician self-referral law prohibits financial relationships necessary to achieve the clinical and financial integration required for successful health care delivery and payment reform.” To address this, the proposal solicits comments “regarding perceived barriers to achieving clinical and financial integration posed by the physician self-referral law generally and, in particular, the value or value and other business generated standards set out in our regulations.”

Remuneration: To make it clear that the provision of items, devices, or supplies is not considered “remuneration” if it is used solely for one or more of six purposes: to collect, transport, process, or store specimens for the entity providing the items, devices, or supplies, or to order or communicate the results of tests or procedures for such an entity. CMS took the opportunity to clarify it is position in context of the Third Circuit’s decision in United States ex rel. Kosenske v. Carlisle HMA. In this case, the Court of Appeals held that a physician’s use of a hospital’s resources, like an examination room, when treating hospital patients constitutes remuneration under the Stark Law, when the hospital bills the technical component for services it provides and the physician separately bolls his or her professional fees. Contrary to the court’s ruling, CMS does not believe that such an arrangement involves remuneration between the hospital and the physician, as the parties do not provide items, service, or other benefits to one another. Instead, each party is providing services or items to the patient.

New Recruitment Exception for Non-Physician Practitioners: As a result of primary care workforce shortages and the increasing need for access to primary care services, CMS proposed a limited exception for hospitals to provide remuneration to physician to assist with the recruitment and subsequent employment of non-physician practitioners like nurse practitioners and physician assistants, for fair market value compensation. As proposed, t the exception would apply only where the involved non-physician practitioner is a bona fide employee of the physician receiving the remuneration, and the purpose of such non-physician practitioner’s employment is to provide primary care services to the physician’s patients, like general family practice and general internal medicine.

The amount of remuneration to the physician would be capped utilizing a formula based on the fair market value compensation f the non-physician practitioner. This allowance would be available to a qualifying physician for a period not longer than the first two consecutive years of the non-physician practitioner’s employment. As an additional safeguard, arrangements covered by the exception could not conditioned on the physician’s or the non-physician practitioner’s referral of patients to the entity providing the remuneration. In order to address the practice of non-physician practitioners, CMS proposed modifying the definition of “Referral” for this exception only to include (a) requests by non-physician practitioners that include the provision of any DHS; (b) the establishment of any plan of care by a non-physician practitioner that includes that provision of such DHS; and (c) the certifying or recertifying of the need for such DHS, not including any DHS personally performed or provided by the non-physician practitioner. Although this new exception s not yet finalized, providers may consider its potential utility hen planning recruitment and staffing initiatives for the calendar year 2016.

Agreement vs. Writing: Some regulatory exceptions require that the parties have an "agreement” while others require that the parties’ arrangement be in “writing.” In the preamble to the proposal, CMS states that broadly speaking … there is no substantive difference among the writing requirement of the various compensation exception that require a writing” and,” to emphasize the uniformity of the writing requirement in the compensation exceptions,” CMS proposes to remove the term “Agreement” from virtually every exception in which it appears. CMS emphasizes that the “revised rules would still require a writing,” but not any “particular kind of writing,” such as a formal contract. For example, “depending on the facts and circumstances of the arrangement and the available documentation, a collection of contemporaneous documents evidencing the course of conduct between the parties may satisfy the writing requirement of the exceptions that require that an arrangement be set out in writing.”

Stand in the Shoes: CMS writes that it considers “a physician who is standing in the shoes of his or her physician organization to have satisfied the signature requirement of an applicable exception when the authorized signature of the physician organization has signed the writing evidencing the arrangement.” The agency remains concerned, however, “about the referrals of physicians who are part of a physician organization that has a compensation arrangement with a DHS entity when we analyze whether the compensation between the DHS entity and the physician organization takes into account the volume or value of referrals or other business generated between the parties.”

According to CMS, if it “did not consider the referrals of all the physicians in the physician organization, and instead only considered the referrals of those physicians who stand in the shoes of the physician organization, DHS entitles would be permitted to establish compensation methodologies that take into account the volume or value of referrals or other business generated by no-owner physicians in a physician organization when entering into a compensation arrangement with the physician organization.” CMS thus proposes to clarify that “for all purposes other than the signature requirements, all physicians in a physician organization are considered parties t the compensation arrangements between the physician organization and the DHS entity.”

Exception for Ownership of Publicly Traded Securities: In light of changes in the way that securities s are traded, CMS is proposing to update its exceptions. The exception would apply to trades on electronic stock markets or OTC quotation systems, so long as the systems are “standardized and publicly transparent.” Trades of unlisted stock or that involve decentralized dealer networks will not qualify for protection under the exception. CMS seeks comments on whether fewer, different, or additional restrictions are necessary.

Other proposed changes

Biosimilars: Attracting much criticism from industry, CMS proposes to use one Healthcare Common Procedure Coding System (HCPCS) J-code for all biosimilars. Critics argue this will result in fewer treatment options for patients and providers. A number of Congressional representatives joined together, writing to CMS: "Specifically we are concerned with the agency's proposal .... treat[ing] biosimilars as if they are generic drugs. As a primary matter, it is important to recognize that traditional small-molecule pharmaceutical sand biologics are fundamentally different in their development, manufacture, and chemical makeup. A biologic is a large, complex molecule, which is grown in living system such as a microorganisms, a plant or animal cell.”

Medicare Shared Savings Program (MSSP): The proposed rule would modify the MSSP regulations related to quality measures, health information technology incentives, and the assignment of beneficiaries to accountable care organizations (ACOs).

Health Information Technology: CMS restates its continued belief in the expansion of health IT systems to enhance ACOs’ ability to coordinate care and manage costs. CMS currently requires all ACO participants to report on the percentage of primary care physicians who successfully meet meaningful use requirements. While the agency is not proposing changes to this measure, the agency seeks comments on how this measure may best evolve over time, such that it continues to incentivize the adoption of health information technology.

Additionally, CMS proposes to revise the definition of certified electronic health record technology such that in order to electronically submit clinical quality measures, the technology must be certified according to applicable submission standards issued by the Office of the National Coordinator for Health information Technology.

Potential Expansion of the Comprehensive Primary Care Initiative (CPCI): CMS’s Innovation Center continues to test the impact o collaboration with 38 payers in the private and public sectors to coordinate care for Medicare beneficiaries. Through this project, the collaboration provides population-based care management fee and shared savings opportunities for around 480 primary care practice sites in seven markets. CMS is soliciting comment on issues related to potential expansion of the CPCI. CMS is not proposing an expansion at this time.

Physician Value-Based Payment Modifier: In CY 2018, the value modifier will be applied based on PQRS participation by group practices and individual providers. CMS will continue to use its quality-tiering methodology for upward, neutral, and downward adjustments for all groups and practitioners that successfully report PQRS measures during CY 2016. Beginning with CY 2018, Value Modifiers will be applied to non-physician eligible provider groups like nurse practitioners and physician assistants and solo practitioners. However, the providers will not be subject to downward adjustments. Further, CMS proposes to waive application of the Value Modifier if groups and providers participated in the Pioneer ACO Model, CPCI, or another applicable mode beginning with the CY 2018 adjustment period. Finally, the maximum upward and downward adjustment factors remain at 4 percent for groups of 10 or more eligible providers and 2 percent for groups of fewer than ten as well as solo providers. The Value Modifier Program will end in CY 2018 and be replaced with MIPS beginning in CY 2019.



Preview | Powered by FeedBlitz


August 2015
Sun Mon Tue Wed Thu Fri Sat
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