Government News
of the Week:

8. The Obama administration is considering asking Congress to extend the Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy that was enacted earlier this year, White House Press Secretary Robert Gibbs said Oct. 5. To help involuntarily terminated employees continue their employer-sponsored group health coverage, Congress included a 65% federal subsidy for COBRA coverage — for up to nine months — in the American Recovery and Reinvestment Act of 2009 (ARRA), which was signed into law Feb. 17. Without an extension, employees who lost their jobs earlier this year will lose the COBRA subsidy when it runs out at the end of this year. Between March 1 — when the subsidy first generally became available — and June 30, an average of 38% of those eligible for the subsidy were enrolled in COBRA, according to a Hewitt analysis of COBRA enrollments among 200 large employers. By contrast, the study found that between Sept. 1, 2008, and Feb. 1, 2009, an average of 19% of involuntarily terminated employees were enrolled in COBRA. Visit www.whitehouse.gov.

9. The Arizona Heart Hospital (AHH) agreed to pay $675,000 to settle allegations that it submitted Medicare claims for carotid artery stenting procedures that were not reimbursable, according to the Department of Justice (DOJ).

Between July 2005 and March 2007, the government alleges, the Phoenix hospital billed Medicare for procedures that were not covered, which resulted in false claims.

 

According to Dennis K. Burke, U.S. Attorney for the District of Arizona, the amount of repayment due was calculated as 2.3 times the actual damages caused by the submission of false claims. Prior to the settlement, AHH had already paid CMS $500,000. The hospital agreed to pay the remaining $675,000.

 

AHH did not admit to wrongdoing. Neither the hospital nor its attorney returned AIS ’s phone calls.

 

Arizona Heart Hospital is one of 10 hospitals throughout the country owned in part by MedCath Corporation. In 2007, the hospital paid a much larger settlement — $6.8 million — to resolve allegations it submitted Medicare claims for unapproved procedures. HHS alleged that between June 1998 and October 2002, the hospital billed for the implantation of edoluminal graft devices, used to treat thoracic and abdominal aortic aneurysms, which had not received final FDA approval. Physicians at AHH allegedly implanted the devices either without an investigational device exception or outside the exception protocol, according to the settlement agreement. In addition to paying the settlement amount, the hospital signed a five-year CIA stating it would continue its compliance program and provide annual reports to HHS. AHH did not admit to wrongdoing in this settlement either.

 

Burke emphasizes that the two settlements were “definitely separate cases,” but says that the hospital was under more monitoring as a result of the primary settlement. He would not comment on how the recent alleged false claims for stenting procedures came to the government’s attention.

 

As part of the Sept. 22 settlement, AHH extended the existing CIA by one year. All other conditions of the agreement remained the same.

 

Heidi Sorenson, a former top OIG official and now an attorney with Foley and Lardner LLP, says a five-year CIA is standard “because in the view of the OIG this is the amount of time that is typically required for the compliance requirements imposed by the CIA to become a part of the organization’s culture.” CIAs lasting longer than five years “have been imposed in particularly significant cases.”

 

Recently, HHS IG Daniel Levinson said he will crack down on repeat offenders of Medicare fraud. Extending a CIA is one example of this, says Sorenson, although OIG has also been known to crack down by excluding facilities and individuals associated with them from Medicare and developing “significant new corporate integrity agreement requirements,” such as more extensive reviews and increased board responsibilities.

10. Kahuku Hospital in Hawaii agreed to pay $75,000 to settle a civil monetary penalty (CMP) case involving payments to physicians that were more generous than they were supposed to be according to their written contracts. The physicians were paid for providing on-call coverage for the hospital’s emergency room, according to the CMP settlement, which was announced on the HHS Office of Inspector General’s Web site recently.

Kahuku Hospital’s overpayments were discovered during preparations for its Chapter 11 bankruptcy proceedings, according to the hospital administrator and the OIG. The hospital was renamed Kahuku Medical Center after its March 2008 rescue by Hawaii Health Services Corp. (HHSC), a state entity.

 

The payments to the physicians allegedly implicated the CMP laws barring kickbacks and Stark violations. The 23-bed hospital did not admit liability in the settlement, which alleged that the hospital “entered into arrangements with and made payments to certain physicians to provide emergency room coverage services that were not in writing” and that were in excess of the amount cited in the written agreements.

 

Kahuku Hospital had been in financial straits for years before the state came to its rescue. During the bankruptcy process and subsequent purchase by HHSC, the problems with the physician payments came to light, says Lance Segawa, the new hospital administrator. “The state of Hawaii was completing the purchase of the hospital, and it had concerns about liabilities,” he says. A Stark specialist was brought in, and eventually the hospital entered the OIG Self-Disclosure Protocol.

 

A “good portion” of OIG self-disclosures result from problems discovered during due diligence review in connection with a sale or, less often, a bankruptcy, Tony Maida, the OIG’s deputy chief of the administrative and civil remedies branch, tells AIS. Before a larger hospital buys a smaller hospital, for example, it usually wants to determine whether any violations exist with respect to physician relationships, he notes. The reason this is so important, he says, is that when buyers acquire the seller’s Medicare provider number, they assume its Medicare liabilities. “They want to resolve that before completing the sale,” Maida explains. Sometimes health care organizations enter the Self-Disclosure Protocol after a sale because they inherited excluded employees but it took awhile to realize that, and they have collected Medicare reimbursement indirectly or directly for the excluded employees’ services, which violates a civil monetary penalties law.

11. The U.S. Court of Appeals for the Federal Circuit affirmed the Massachusetts District Court’s decision that Roche Holding AG’s anemia drug Mircera infringes four Amgen Inc. patents, according to a Sept. 15 Amgen announcement. Roche also has agreed not to oppose Amgen’s request for a limited exclusion order that would block the import of Mircera (methoxy polyethylene glycol-epoetin beta) into the U.S. Last year, the Court of Appeals upheld an injunction that prohibited Roche from bringing Mircera onto the U.S. market following an injunction issued by a federal judge in favor of Amgen.

12. The FDA released new draft guidance for industry on Risk Evaluation and Mitigation Strategies (REMS) for certain drugs and biologics. The guidance, published Oct. 1 in the Federal Register, provides the agency’s current thinking on the preferred format and content for proposed REMS submissions, informs industry on who to contact and where to look for REMS documents, and provides examples of what an approved REMS might look like. Comments on the guidance are due Dec. 30.