OIG Offers No Sanctions for Proposed Copay Assistance Program


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OIG Advisory Opinion Offers No Sanctions for Proposed Copay Assistance Program

On January 5, 2015, the Department of Health and Human Services Office of Inspector General released an advisory opinion on a proposed arrangement in which a nonprofit organization could provide assistance with copayments for financially needy patients, including Medicare and Medicaid beneficiaries. The OIG’s advisory opinion states that such an arrangement would not constitute grounds for sanctions or monetary penalties under the law that prohibits inducements to beneficiaries.

The details of the arrangement are as follows:

  • A 501(c)(3) charitable foundation can provide copayment assistance to financially needy patients.
  • A patient must have selected his or her healthcare provider or practitioner and have a treatment regimen in place before applying for assistance.
  • Assistance would be offered on a first-come, first-served basis, and patients receiving copayment assistance would be free to choose their own providers, drugs, and insurance plans.
  • A charitable foundation cannot create a disease fund that would provide copayment assistance for only one drug, or the drugs made or marketed by only one manufacturer or its affiliates.
  • Funding for the copayment assistance would come in the form of donations from individuals, corporations, and foundations, and donors would have no direct or indirect influence over the program.
  • The charitable foundation would use a preset sliding scale to measure the subsidy amount for each patient and financial assistance would be awarded for a specified period of time up to one year, after which patients could reapply.

The OIG said that while the proposed arrangement could potentially lead to prohibited remuneration under the anti-kickback statute, the OIG would not impose sanctions because the risk of fraud is small due to the fact that the charitable foundation and its donors would not be able to influence a patient’s choice of provider, drugs, or insurance plan.

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Blue Shield Sued for Allegedly Overcharging for Prescription Drugs

On December 12, 2014, a complaint filed in the Los Angeles County Superior Court alleged Blue Shield of California of acting in breach of contract and bad faith by knowingly overcharging customers for prescription drugs as a result of a computer glitch. In Hoffman v. California Physicians’ Service dba Blue Shield of California, Blue Shield is accused of operating a computer system that fails to accurately calculate customers’ prescription drug deductibles, charging members hundreds of dollars for drugs that should cost a fraction of that amount.

According to plaintiff David Hoffman, his Blue Shield health insurance plan included a prescription drug benefit with a “calendar year brand drug deductible” of $250 per member and $500 per family. Blue Shield’s computer system malfunctioned with respect to the prescription drug benefit in September 2014. As a result, the computer treated purchases of brand-name prescription drugs as if the prescription drug deductible had been completely unsatisfied. Thereafter, the system failed to allow Hoffman to purchase prescription drugs to accumulate toward the deductible for members.

Hoffman claims Blue Shield discovered the computer problem shortly after it occurred last September but, as of Dec. 12, when the complaint was filed, the company has failed to notify members of the problem and allowed the overcharges to continue. In addition to causes of action for breach of contract and bad faith, the suit asserts claims for fraudulent concealment and violation of California’s unfair-competition law. The suit seeks injunctive relief, damages for all overcharges, exemplary damages and attorney fees.

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No Private Right of Action for Provider under California’s Emergency Care Payment Law

On November 21, 2014, the U.S. District Court for the Northern District of California ruled that doctors do not have a stand-alone cause of action against insurers under a California law that requires health plans to pay for emergency treatment. In John Muir Health v. Global Excel Management, the court said neither the law’s language nor its legislative history evinces an intent to allow providers to sue health plans that fail to pay for emergency treatment, citing federal cases issuing the same ruling.

Plaintiff John Muir Health is a California nonprofit corporation that provides medical care to patients. In July 2012 and March 2013, JMH provided emergency treatment to two patients who were enrolled in a healthcare service plan sponsored by the defendant, Global Excel Management. JMH and GEM did not have a written agreement regarding reimbursement rates for medical care provided by JMH to GEM’s enrollees. JMH submitted to GEM bills totaling over $610,000 for the two patients’ treatment. JMH sued after GEM paid slightly under $150,000 and rejected JMH’s demands for the remaining amount.

Although no California court had previously determined whether a stand-alone private right of action exists in such circumstances, several had said that providers may bring private actions for violations under the state’s unfair-competition law or common-law theories. Alternatively, at least two federal courts had concluded that a provider may not sue an insurer for such a violation. The court adopted the federal courts’ reasoning and granted GEM’s motion to dismiss.

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California Judge Enforces Oral Settlement in Medicaid FCA Suit

On January 12, 2015, U.S. District Court Magistrate Judge Laurel Beeler granted a request from the U.S. and California to enforce an oral settlement in a False Claims Act suit alleging Northeast Medical Services Inc. overbilled Medicaid, rejecting NEMS’s arguments over enforceability and unfulfilled conditions.

NEMS, a 10-center San Francisco Bay Area community health clinic chain, is a federally qualified health center, a licensed “safety net” community clinic that serves poor and underserved populations in the region. As a federally qualified health center, the nonprofit is entitled to special payments under Medi-Cal above typical Medicaid payments but is required to deduct amounts it receives from other sources for treating Medi-Cal enrollees. According to U.S. Health and Human Services, NEMS had received more than $27 million in Medi-Cal patient reimbursements from managed care organizations, but had only reported $13 million of those reimbursements, reaping nearly $15 million in Medi-Cal overpayments from the California Department of Health Care Services.

NEMS, the U.S., and California moved to settle in September 2014, but the agreement was never finalized. NEMS expressed concern that it would be on the hook for other claims and actions, a charge the government denied, saying the nonprofit was told its participation in a state audit process would satisfy HHS’s need for the standard corporate-integrity agreement used in FCA cases. NEMS further argued that it bargained for a comprehensive release from all administrative claims and actions through a contingency to resolve HHS claims and that it only agreed to restitution settlement, rather than an FCA settlement. Both claims were shot down by Judge Beeler.

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CMS Offers Information on Improvements to Open Payments Program

On January 15, 2015, the U.S. Centers for Medicare and Medicaid Services provided new information on the second round of its Open Payments program, promising significant changes to avoid confusion that marred the inaugural disclosure of payments to doctors and teaching hospitals by drug and device makers. CMS officials said their most robust improvements will be aimed at ensuring reported payments are attributed to the correct doctors. In 2014, there were extensive problems with matching names and identification numbers, leading to 40 percent of records being published without identifying information.

The 2015 program will ensure that records are accepted even if they lack a so-called National Provider Identifier, which not all physicians possess. Another change aims at preventing confusion amongst providers with the same names or when a physician’s name is listed differently on a payment record from how it appears on the official online registry for NPIs. CMS is directing manufacturers to check the Open Payments “physician list,” which contains variations on physicians’ names, to ensure the proper physician is identified. Also, to solve for last year’s trouble registering foreign entities, CMS officials said existing registrations will simply require confirmation that identifying information is up to date, but that new registrations will require contacting the Open Payments help desk.

CMS plans to accept payment reports from February 1 to March 31, after which there will be a 45-day “review and dispute” period and then a 15-day correction period. Publication is expected on June 30.

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