kickback

Zimmer plans $50M plus compliance program

Anne Zieger — Wed, 06 Aug 2008 10:24:11 -0400

Orthopedic-device maker Zimmer Holdings is getting serious about compliance with its legal obligations--$50 million to $60 million worth of serious, according to plans outlined in its second-quarter report for this year. The company, which entered into deferred prosecution and corporate-integrity agreements with U.S. prosecutors last September, had been accused of setting up dummy physician-consulting deals to boost sales of its implant products. At the time, it was one of five device makers to ink similar deals.

Now, Zimmer is setting up a program that will oversee relationships between the company's marketing and product development teams and medical providers. The program, which will govern marketing and product development worldwide, will create guidelines for its product development, marketing, surgeon-training, educational and charity funding efforts.

Zimmer executives say that because of the implementation of this program, some new product launches will be delayed. In fact, they say the implementation of the program is likely to slow the adoption across all of its product categories this year. I must admit that this part sounds a bit fishy--unless Zimmer has to more or less remake its marketing and product development departments--but if the previous organizations were geared to bad behavior, a big reorg is probably a good thing.

To learn more about Zimmer's plans:
- read this Modern Healthcare article (reg. req.)

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CoxHealth to pay $60M to settle with feds

Anne Zieger — Tue, 22 Jul 2008 23:23:27 -0400

Springfield, MO-based health system CoxHealth has agreed to pay $60 million to resolve a myriad of charges related to its financial relationships with referring physicians and its Medicare billing practices. According to an announcement by the U.S. Department of Justice, which conducted an investigation, CoxHealth violated the False Claims Act, anti-kickback statute and Stark rules on self-referral between 1996 and 2005.

CoxHealth executives, who do not admit to wrongdoing, have attributed the DoJ's allegations to a disagreement over how to interpret federal regulations regarding billing and medical-director agreements for its Ozarks Dialysis Services. It also concedes that the DoJ didn't like the revenue source used to compensate the medical group staffing its Ferrell-Duncan Clinic. The issues were all identified initially by Cox itself and reported to the government, according to CEO Robert Bezanson.

Under the terms of the settlement, Cox will pay $35 million initially, then make five payments of $5 million per year. It will also enter into a five-year corporate integrity agreement with the HHS Office of the Inspector General.

To learn more about the settlement:
- read this Modern Healthcare piece (reg. req.)

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Trend: Regulators pay more attention to implant firm payments to doctors

Anne Zieger — Mon, 30 Jun 2008 10:43:41 -0400

For years, it's been an accepted practice for hip- and knee-replacement manufacturers to pay surgeons big bucks in the form of royalties, consulting gigs and speaker's fees, sometimes hitting seven-figure levels. Along the way, the industry has grown by leaps and bounds, almost doubling over the past 10 years to about 750,000 operations a year. However, lately these payments have come under much closer scrutiny, with federal regulators and members of Congress raising concerns about these practices.

While payments to surgeons who actually design and patent artificial joints and other medical devices may be legitimate, most other payments are facing harsh criticism--particularly because some of these payments, lush travel arrangements mislabeled as seminars and other fees, are doled to surgeons who do little or no work. Prosecutions are beginning in some cases. For example, last year a U.S. attorney in New Jersey filed criminal complaints arguing that four of the largest artificial-joint makers conspired to violate federal anti-kickback rules by paying surgeons to specify their devices. The companies, Biomet Inc., DePuy Orthopaedics, Smith & Nephew and Zimmer Holdings, paid a total of $310 million to settle the charges.

Now, some members of Congress are working on a bill which would require surgeons to disclose which of these companies are paying them, and how much. Their argument is that if the doctors are genuinely cooperating with device-makers to perfect products, patients would actually be happy to know about their expertise.

To learn more about the growing pressure on the device industry:
- read this Philadelphia Inquirer piece

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Medtronic Spine settles false claims charges for $75M

Fri, 23 May 2008 06:59:56 -0400

A subsidiary of Medtronic Spine agreed this week to pay the federal government $75 million to settle allegations that it caused submission of false claims to Medicare by a subsidiary. The allegations concerned Kyphon Inc., bought by Medtronic Spine in November 2007 for $3.9 billion after whistleblower allegations had already been made. In addition to the settlement,
Kyphon has entered into a Corporate Integrity Agreement with HHS's Office of Inspector General.

Kyphon was accused of submitting fraudulent claims for kyphoplasty procedures, minimally invasive surgeries used to treat compression fractures of the spine caused by osteoporosis, cancer or benign lesions. According to the allegations made by whistleblowers, Kyphon engaged in a marketing scheme that caused some hospitals to bill Medicare for inpatient kyphoplasties when cheaper outpatient procedures would have been clinically appropriate. The allegations came from two former Kyphon employees, who under the False Claims Act will receive a total of $14.9 million for having reported the allegations.

To learn more about the settlement:
- read this article from Business First of Buffalo

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DoJ joins whistle-blower suit against OH MDs, hospital

Wed, 02 Apr 2008 07:59:57 -0400

The U.S. Department of Justice has added its firepower to a whistle-blower lawsuit contending that a hospital in Cincinnati was rewarding cardiologists who generated the most revenue for the hospital. The suit, which originally was filed in 2003 by cardiologist Harry Fry, contends that Cincinnati's Christ Hospital conspired together with a large cardiology group, Ohio Heart & Vascular Center, to make sure that cardiologists had access based only on how much revenue they brought in the previous year. The suit also contends that cardiologists in the group were rewarded for their collusion in this scheme with a kickback, in this case an opportunity to bill patients for diagnostic services, the DoJ says. Lawyers for the 511-bed hospital, of course, say the suit is without merit.

To learn more about the case:
- read this Modern Healthcare article (reg. req.)
- read the DoJ press release

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Senate questions device maker payments to surgeons

Wed, 27 Feb 2008 06:59:58 -0500

Last year, five makers of orthopedic implants paid more than $221 million to surgeon consultants--and some Senate members want to know why. Today, the Senate Special Committee on Aging is holding a hearing to discuss the practice of paying surgeons such consulting fees. This comes as part of a larger effort by the committee's chairman, Sen. Herb Kohl (D-WI), who's filed legislation that would require device makers and drug companies to disclose consulting payments.

The hearing comes on the heels of antikickback settlements by Zimmer Holdings, Biomet, Stryker Corp., Smith & Nephew and DePuy Orthopedics. The companies agreed late last year to disclose consulting payment levels in exchange for a pass on allegations that they violated antikickback laws by paying doctors to use their products exclusively. The Senate will have a lot to chew on with just the information that these companies have already disclosed. Not only did they pay $221 million out to surgeons in 2007, they paid out more than $800 million between 2002 and 2006, investigators found.

To get more details on the investigation, including consulting business arrangements:
- read this Wall Street Journal article

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OIG gives thumbs up to prompt-pay discounts

Mon, 11 Feb 2008 06:59:58 -0500

The HHS Office of the Inspector General has given its approval to a healthcare system's plan to offer prompt-pay discounts to patients who pay their share of their medical bills quickly. The system had asked for the OIG's opinion on whether it would violate the anti-kickback statute for rewarding referrals to offer 10 percent to 15 percent discounts before discharge and 5 percent to 10 percent discounts within 30 days. The system feared that they'd be seen as inducing patient self-referrals by encouraging them to buy medical services that might not be needed.

In its advisory opinion, the OIG noted that a safe harbor already exists to protect waivers of coinsurance and deductibles for inpatient services under some circumstances. Primarily, the government doesn't want hospitals to give a discount and then try to get more money from the government by calling the discounted fees bad debt or otherwise try to collect the discrepancy from payers. It held that outpatient discounts don't add up to patient inducements as long as they merely encourage patients to make smart financial decisions rather than get unnecessary care.

To get more details on the decision:
- read this Modern Healthcare piece (reg. req.)
- read the OIG advisory opinion

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HHS advisories give guidance on doctor gain-sharing

Thu, 07 Feb 2008 06:59:55 -0500

With the release of two new advisory opinions by HHS, it's clearer now how hospitals can share cost savings with doctors without running afoul of regulators. One of the two opinions address address anesthesiologists, and the other a group of cardiac surgeons. In both cases, HHS approved arrangements that rely on clinical and historical data for norms to meet, to make sure physicians aren't shaving costs in a way that could undercut care or get rewards that more or less add up to kickbacks.

For example, in the opinion dealing with the anesthesiologists, the HHS opinion permits the anesthesiologists to use a less-expensive catheter when clinical appropriate during surgeries. Since data suggests that it would be clinically appropriate 90 percent of the time, the HHS plan forbids them from profiting for using them more often than that. HHS has placed a similar importance on historical and clinical data when it accepted prior plans, only 10 of which have been approved since 2001.

That being said, it's still important for hospitals and physicians to get explicit approval for their gain-sharing plans, experts say. If parties go ahead with an arrangement that HHS doesn't like, they're still facing legal problems even if a hospital withholds payments to physicians.

To learn more about this issue:
- read this Modern Physician piece

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HHS Ok's hospital/physician gainsharing

Wed, 16 Jan 2008 06:59:56 -0500

Two gainsharing arrangements between a hospital and physician groups have gotten an OK in advisory opinions from the HHS Inspector General's office. The ruling assures the applicant(s) that they'd be unlikely to face a civil monetary penalty or accusations of violating the anti-kickback statue for making these arrangements. While it's not clear how widespread the influence of these decisions will be--they appear to be advice to one hospital, though the name has been redacted from the documents--they still shed at least some light on an issue which continues to trouble hospitals.

In its advisory opinion, the HHS IG ruled that plans for sharing cost savings with cardiologists and anesthesiologists at the unnamed hospital aren't likely to harm patients or encourage kickbacks, because the hospital had provided well-detailed rules which were tied to measurable clinical measures. For example, the system allows anesthesiologists to use a cheaper type of catheter in 90 percent of cases, but won't allow them to gain when the number of uses goes above 90 percent.

To learn more about the advisory opinion:
- read this Modern Healthcare item
- read the IG opinions

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Readers weigh in on device-maker kickbacks

Fri, 11 Jan 2008 06:59:59 -0500

As some of you will recall, last week I wrote about the ongoing, cyclic nature of medical device-maker kickback schemes. First, it seems, the manufacturers do, indeed, pay kickbacks to physicians--then they get caught. They pay a settlement, apologize, and over time, go right back to doing it again. I'd suggested a few ways to break the cycle, including huge increases in penalties for violations and bans on selling products in the U.S. for companies convicted of kickback schemes.

This topic seemed to touch a nerve. After the editorial appeared, several of you shared some thoughts on slowing the gravy train, including the following:

"I doubt raising the fines will do anything other than increase the cost of business for such players in the device field. They would just pass on the costs to the customers (patients and third party payers). However, banning the manufacturer from selling his product(s) for six months or a year to anyone or any institution that directly or indirectly receives federal dollars should work. The cost of business would now be very high: no revenue for a long period of time. That should be enough to attract the attention of the corporate bean counters and investors." -- Healthcare consultant

"Why not publish the names of doctors who have accepted kickbacks from the device makers? Make it available publicly to all who rely on that doctor. Maybe insurance companies will not want to deal with them because they drive up costs. Maybe patients will not want to go to them because they are crooked. Maybe their colleagues will look down on them for taking kickbacks. Cause the doctors some embarrassment. Perhaps a little transparency there could go a long way to reducing the problem." -- Health IT professional

But then, I also heard from a reader who pointed out that all financial incentives aren't equal:

"As a sales rep for a medical company I will offer that bringing new products through the testing, development, and regulatory phase is not easy and often requires the participation of physicians and other healthcare providers to assure that the product delivers the best possible results for the patients. Physicians will not break from normal routine to assist in these evaluations without some type of incentive to do so. I think regulating on this type of incentive should be held to a different standard than post-market-release incentivizing."

Obviously, the issue of device-maker relationships with doctors is complex--but ultimately, at its core, the question is what we can do to provide manufacturers and doctors with different incentives. As long as pay-for-play makes financial sense (and nobody has a better approach for helping device-makers reach their sales goals) it's never going to go away. - Anne