Filed under: Fraud & Abuse, New Jersey, Prescription Drugs
As this blog has chronicled (see here and here), New Jersey has begun implementing the 2008 legislation that authorized creation of a Prescription Drug Monitoring Program (“PMP” or “PDMP”). Although New Jersey’s PMP database has been collecting data for more than a year, the State has not yet issued implementing regulations to flesh out the details of the program beyond what the statute requires, such as the specific information and in what time frames pharmacies must make reports and the scope of interoperability agreements with other States. The Prescription Drug Monitoring Program Center of Excellence at the Heller School for Social Policy and Management at Brandeis University released “Prescription Drug Monitoring Programs: An Assessment of the Evidence for Best Practices” on September 20, 2012, which provides much for the State to consider as it moves forward.
As its title suggests, this White Paper aims to identify potential PDMP best practices, evaluate the evidence supporting labeling these as best practices, and survey the extent to which PDMPs throughout the country have adopted them.
After tracing PDMP development from its early roots in the 1980s and summarizing evidence suggesting that PDMPs are effective in improving the prescribing, and addressing the abuse, of controlled substances, the report identifies thirty-five potential best practices for these programs, including:
1. Standardizing data fields and formats across PDMPs to improve the comprehensiveness of data, comparability of data across states, and ease of integration with prescription information collected by potential PDMP collaborators, like Medicaid, the Indian Health Service, the Department of Veterans Affairs, and Department of Defense.
2. Reducing data collection intervals and moving toward real-time data collection to improve the utility of information collected for clinical practice and drug diversion investigations.
3. Integrating electronic prescribing with PDMP data collection to facilitate communication with electronic prescribers and facilitate monitoring of prescriptions as they are being issued as well as before and after they are dispensed.
4. Linking records to permit reliable identification of individuals (patients or prescribers), which is necessary for accurate analysis of trends and potential questionable behavior.
5. Determining validated and standardized criteria for possible questionable activity.
6. Conducting epidemiological analyses for use in surveillance, early warning, evaluation, and prevention to identify trends in prescribing and questionable behavior, which may inform public health objectives.
7. Providing continuous online access and automated reports to authorized users to encourage utilization.
8. Integrating PDMP reports with health information exchanges, electronic health records, and pharmacy dispensing systems to make it more efficient to access data.
9. Sending unsolicited reports and alerts to appropriate users based on data suggesting potentially questionable activity, such as doctor shopping or inappropriate prescribing.
10. Enacting and implementing interstate data sharing among PDMPs to address interstate diversion and doctor-shopping.
11. Securing funding independent of economic downturns, conflicts of interest, public policy changes, and changes in PDMP policies, such as from grants, licensing fees, general revenue, board funds, settlements, insurance fees, private donations, and asset forfeiture funds.
12. Conducting periodic review of PDMP performance to ensure efficient operations and to identify opportunities for improvement.
The authors noted, however, that good research evidence is not available to support the value of the vast majority of these potential best practices because “research in this area is scarce to nonexistent.” Thus, they suggested a prioritized research agenda with the goal of strengthening the evidence base for practices they believe have the greatest potential to enhance effectiveness of PMP databases and that can be studied using scientific techniques like randomized controlled trials or observational studies with comparison groups. Specifically, the report recommends focusing research and development on (a) data collection and data quality; (b) linking records to identify unique individuals; (c) unsolicited reporting and alerts; (d) valid and reliable criteria for questionable activity; (e) medical provider education, enrollment, and use of PDMP data, which includes the question of whether to require providers and dispensers to access the database; and (f) extending PDMP linkages to public health and safety.
The report makes valuable recommendations that will help guide policy makers as these programs continue to evolve. Despite its many strengths, however, the report gives short shrift to a critical area for ongoing monitoring — whether PMPs have a chilling effect that makes it more difficult for patients in pain to obtain appropriate, palliative care. Although this concern is mentioned in passing in various places in the report, it is not expressly incorporated into the authors’ conceptualization of how we should evaluate PDMP effectiveness. Indeed, it is dismissed as potentially overblown even though Appendix A to the report notes that twenty-three percent of Virginia doctors in a 2005 survey who believed their prescribing was being more closely monitored because of the PDMP “reported it had a negative impact on their ability to manage patients’ pain.” Admittedly, other studies summarized in the appendix found no chilling effect. But given the article’s critique of most studies as lacking empirical rigor and its call for more scientific study, it seems prudent to encourage empirical research to evaluate this concern. Recognizing that “an explicit goal of PDMPs is supporting access to controlled substances for legitimate medical use,” an August 20, 2012 [fee required to access] report from the Congressional Research Service suggested that “[a]ssessments of effectiveness may also take into consideration potential unintended consequences of PDMPs, such as limiting access to medications for legitimate use . . . .” (Although the August 20, 2012 CRS report does not appear to be available without charge on the internet, a July 10, 2012 version of this report is available here.)
With this caveat in mind, the Brandeis report undoubtedly is a valuable resource to policy makers and academics as they consider how to make the most appropriate and efficient use of PMPs. New Jersey can build on this knowledge base as it decides how to make use of its PMP. As the White Paper’s laundry list of potential best practices makes clear, the State has a plethora of options to research and consider. If New Jersey adopts the proposed regulations permitting electronic prescribing of controlled substances, for example, it should consider how it can integrate electronic CDS prescription records with its PMP. Given the statutory authorization to share data with other States, New Jersey also can learn from the experiences of States that are adopting standardized data formats and implementing interoperability agreements with other States.
The State also should evaluate the evidence that unsolicited reports increase the effectiveness of PMPs and whether legislation and/or regulations would be required to authorize their use in New Jersey. A related issue is what criteria to adopt to define potentially questionable behavior that would trigger an unsolicited report, which must balance the risks of false negative and false positive reports.
Similarly, the State may wish to explore the advantages and costs of moving toward a real-time database rather than its current design that requires dispensers to report at least twice per month. The Alliance of States with Prescription Monitoring Programs’ PMP Model Act 2010 Revision recommends that pharmacies submit data no more than seven days from when the script was dispensed, and Oklahoma is implementing real time reporting. (A recent study published in CMAJ found a 32.8% relative reduction among residents receiving social assistance in inappropriate prescriptions for opioids and a 48.6% reduction in inappropriate prescriptions for benzodiazepines within thirty months of implementation of a Canadian centralized database containing real-time prescription data.)
New Jersey also could study the experiences of various states like New York that are requiring certain prescribers and dispensers to register with the State’s PDMP and, in some cases, to check the database before authorizing or dispensing prescriptions for CDS. A research study underway in Utah may shed some light on whether mandating provider participation in PDMPs improves effectiveness.
In general, the State may wish to research how to strike the appropriate balance between educating prescribers, dispensers, and patients of the risks of prescription abuse and punishing those involved with diversion or abuse.
Because virtually all of these policy choices also involve substantial costs to research and implement, New Jersey might wish to pursue alternative sources of funding, such as grants available through the federal Harold Rogers Prescription Drug Monitoring Program or the National Association of State Controlled Substances Authorities.
First, late last month the Obama administration announced a joint effort between the federal government and major health insurance companies to fight fraud. According to the New York Times, under the partnership – called the National Fraud Prevention Partnership – the federal government and health insurance companies will share data, trends, and tools to find “upcoders” and other fraudulent billers. As the article indicates, it is a partnership that makes much sense from the federal government’s perspective as the financial strain on the federal healthcare programs grows ever-tighter, and the return-on-invest for the governments’ fraud investigations is somewhere between $7-to-$1 and $15-to-$1 – no matter the actual number, a good investment for Uncle Sam.
Second, just last week, the New York Times reported that Hospital Corporation of America (“HCA”) Healthcare, the major for-profit hospital chain that owns 163 hospitals across the country and a party that has been no stranger to fraud settlements in the past, is under investigation for unnecessary cardiac procedures at its hospitals that sometimes resulted in clear patient harm.
With anti-fraud tools built in to the Affordable Care Act, an increase in funding to fight healthcare fraud throughout the country, and intensified focus, expect the anti-fraud efforts of the federal agencies to not only continue, but intensify. Those providers who offer clearly unnecessary procedures will have very little defense. Indeed, in addition to overbilling the federal-government and private insurance payors, causing the costs of healthcare for us all to increase, these providers are harming patients by subjecting them to more (and often dangerous) care – which sometimes results in life-threatening harm for no reason.
However, with these increased resources, the challenge of differentiating which cases reflect clear, intentional, and fraudulent overtreatment from the investigations that reflect poor or inefficient decision-making by the provider will be formidable. And with the blunt, unforgiving False Claims Act in the back pocket of the federal government’s investigators, providers should take extra caution when trying to decide whether or not to order that extra test or procedure.
News of the $1.2 billion verdict against Johnson & Johnson and its subsidiary Janssen Pharmaceuticals Inc. for their roles in marketing Risperdal during the middle of last decade sent reverberations through the industry earlier this week. The award resolved Arkansas’ claims that the companies fraudulently marketed the “second generation” antipsychotic, misleading doctors and deceiving the state’s Medicaid program into paying for 239,000 prescriptions of the drug. Specifically, the state claimed the companies minimized Risperdal’s dangerous side effects by not disclosing the risks on its label, marketed the drug for unapproved uses, and characterized it as more effective than competitors’ drugs.
After the jury found that the companies had misled doctors about the risks associated with Risperdal, Judge Tim Fox awarded $11 million for the violation of the state deceptive trade practices act. Further, Judge Fox turned to the Arkansas’ False Claims Act (FCA) – which carries a minimum $5,000 civil penalty for each violation of the Act (the federal FCA requires a minimum civil penalty of $5,500) – and applied Arkansas’ statutory penalty to the 239,000 prescriptions of Risperdal paid for by Arkansas Medicaid between 2002 and 2006, totaling $1.195 billion in damages. According to Janssen, the state paid only $8.1 million for Risperdal during the 3½ year time period, which amounts to less than 1% of the damages amount. The companies plan to appeal.
Arkansas adds itself to a growing list of states taking legal action relating to Risperdal’s marketing – trials in Louisiana and South Carolina have already resulted in damage awards of $258 million and $327 million, respectively. Earlier this year, the state of Texas settled its allegations for $158 million. And the federal government is also pursuing the companies, reportedly seeking between $1.3 and $1.8 billion to resolve its claims.
The Arkansas award provides an opportunity to engage in serious “Monday morning quarterbacking” as to why the companies did not settle the case, with a settlement estimate perhaps as low as $30 million. In addition to providing an opportunity to second-guess the trial strategy, the court’s award also places the mandatory and stark penalties of state and the federal FCAs – blunt, severe governmental tools – into public discussion. Due to the statutes’ structures, the damages amounts often far exceed the amounts of monetary damages the government initially suffers. Further, as in federal fraud recoveries, the award amount does not go to those who may have been personally harmed by the Risperdal marketing tactics (notably, however, at trial, the state failed to show any patient harm, according to Janssen). Instead, the recovery goes into the Arkansas Medicaid program (which, as pointed out by the Associated Press, is facing a $400 million shortfall for 2013).
The huge damage amount required by the federal FCA prompted one court in a widely publicized non-health-related fraud case in February to refuse rewarding any damages after finding FCA liability. See U.S. ex rel. Bunk v. Birkart Globistics GMBH & Co., 2012 WL 488256 (E.D. Va. Feb. 14, 2012). In Bunk, qui tam relators had brought a lawsuit (in which the government eventually partially intervened) alleging that bidders to a contract with the U.S. military had engaged in price collusion. After the bidder had certified to the government they had independently arrived at their prices and denied collusion, the parties entered into a contract relating to transporting goods belonging to U.S. military members and their families. Once relators found that the bidders had in fact colluded in setting the price, they brought suit. The court found the defendants liable under the federal FCA, and proceeded to determine damages.
The defendants had filed 9,136 invoices under the contract, mandating damages under the FCA of at least $50 million (at least $5,500 per violation). However, the court concluded that the prices under the contract – even if not independently reached – were fair and reasonable. Further, the court found that the government was not financially harmed, and as such, the statutory penalty constituted an excessive penalty under the Eighth Amendment. After finding that it lacked discretion to reduce the statutory penalty, the court refused to award any damages to the relators.
Both cases demonstrate the seriousness and rigidity mandated by both the federal and Arkansas FCAs. Where the Risperdal settlement is staggering in its amount, the Bunk court’s failure to impose any damages is equally stunning. As the government continues to rely on big FCA penalties to combat and deter healthcare fraud, defendants are incentivized to settle before trial, and more courts may be forced into a Bunk-like analysis.
[Ed note: This article was authored by John Barry '13, a second year law student pursuing a Health Care Concentration at Seton Hall Law. A native of New York, he graduated in 2005 from the University of Pennsylvania with a degree is psychology.]
Recently, Professor Zack Buck’s Health Care Fraud and Abuse class was treated to a spirited panel on the current state of health care fraud, prosecution and defense. The panel, meeting again this year to allow students an opportunity to hear details about actual practice from both sides of the bar, was moderated by Chris Zalesky, the Vice President of Global Policy & Guidance for Johnson & Johnson in the Office of Health Care Compliance & Privacy. Zalesky has more than 20 years of experience in regulatory affairs, quality assurance and research and development functions within the medical device and pharmaceutical industries. He has also taught as an Adjunct here at Seton Hall Law.
The panel included Maureen Ruane, Assistant U.S. Attorney and Chief of the Health Care & Government Fraud Unit for the United States Attorney’s Office, District of New Jersey, and Bruce Levy, an attorney with the firm of Gibbons, P.C. Ruane served as Assistant United States Attorney from 1998 to 2004, and returned to the office in 2010 after working as a partner in the law firm of Lowenstein Sandler. Levy, also formerly an Assistant U.S. Attorney, currently focuses his practice at Gibbons on criminal, civil, and administrative cases arising from federal and state health care fraud investigations, health care compliance, The False Claims Act and qui tam cases, corporate investigations, and white collar criminal law.
Touching on a wide variety of topics, Ruane explained that the “sea of health care fraud is so deep” that it affects all aspects of the American health care system, from hospitals to physicians to pharmacies and all other health care providers. Many of the fraud prosecutions that flow through Ruane’s office come in the form of qui tam actions under the False Claims Act. Coming from a Latin phrase meaning “[he] who sues in this matter for the king as [well as] for himself,” a qui tam action is a unique fixture of the False Claims Act that allows private citizens to act as whistleblowers and sue health care corporations for perpetrating fraud on the government. The whistleblower, or “relator,” stands to gain a percentage of the civil damages awarded against the corporations.
Having seen countless relators over her time with the government, Ruane was in a rather unique position to speak about the underlying motivations behind the people who sue on behalf of “king and self.” Contrary to common thinking, Ruane explained that whistleblowers generally did not act out of greed or a desire to hurt the company. In fact, she felt the opposite: most relators were actually intensely loyal to their companies and had usually tried to voice their concerns multiple times in-house before bringing a complaint to the attention of government prosecutors.
Working as defense counsel, Levy voiced the concerns of private industry, in particular about the lack of guidance in the current law. He stressed that many pharmaceutical companies, hospitals, physicians and health care providers feel as if they are trying to act within the bounds of the law when in reality those boundaries are more blurry than clear. As an example, Levy talked about how he felt the need for clearer guidance on pharmaceutical marketing of “off-label” medications. When the Food and Drug Administration approves a medication for use in the U.S. health care market, the drug is approved for a specific use or indication. However, clinical studies often show beneficial uses for medications for additional aliments, and it is legal for physicians to prescribe the drugs for these other uses. In addition, Medicare and many private insurers will pay for use of a medication for different indications than what the FDA approved, in effect, subsidizing “off-label” use. There are thus competing federal agency views on medications, with the FDA only approving the drug for a particular use, but the Center for Medicare Services alternatively approving use of the drug for other, off-label uses. Problems arise because there are complex, and Levy felt unclear, regulations as to how pharmaceutical companies may represent or market the drug for off-label use. Levy explained that he felt new legislation was required to give clear guidance to the industry.
Both Ruane and Levy, approaching the bar from different perspectives, engaged in lively conversation and took questions from the audience, giving students numerous real-world examples of the theories and topics they learn about in class. As might be imagined, bringing with them contrasting prosecution and defense-side perspectives, the two often approached the same issues from opposing viewpoints, providing a unique experience for the class. However, the one thing they both agreed on was that with rising health care costs directly on the government’s radar, aggressive prosecution of health care fraud will not slow down any time in the future.
[Ed. Note: We are pleased to welcome Andy Braver, Esq. to Health Reform Watch. Andy is a health care attorney and candidate for the Master of Laws in Health Law degree at Seton Hall University School of Law. Prior to entering the LL.M. program, Andy spent five years as a healthcare provider, running a state of the art medical diagnostic imaging center. During that time, he dealt with many important health law issues faces by providers today, including Fraud and Abuse, Medicare and Medicaid licensing and reimbursement, state and private accreditation organizations, private payers, electronic health records, and HIPAA and other privacy issues, to name just a few. We look forward to bringing the law based perspective of a provider to the blog.]
Fraud and Abuse is a current health law hot button. Whether looked at from the standpoint of exploding healthcare budgets, or the amount of money being removed from the system by crooked and nefarious actors, there are many opinions on the problem, and what should be done about it. My views on the subject are colored by my experience as both an attorney and a former healthcare provider.
Recently, I was lucky to hear an enlightening and informative panel discussion with a US Attorney whose post was created specifically to fight health care Fraud and Abuse, and a defense attorney, who spends a good portion of his time defending clients in prosecutions brought by this AUSA’s office. One of the issues that struck me listening to the discussion is how the lack of resources to fight the problem so greatly affects the reality of how the problem is fought. Put more succinctly, the government admits it can only go after the big offenders, and those that present immediate danger and potential harm to patients. As a result, “small time” offenders are often left to flourish without much fear of finding themselves looking down the barrel of a False Claims Act [31 U.S.C. 3729, et seq.] or Anti-Kickback Act [41 U.S.C. 51, et seq.] criminal or civil investigation.
While the overall theory is understandable, does it make sense for the government to make these admissions? Of course, the government needs to get the most from the resources it has to combat the problem– while also ensuring patient safety is not compromised in any way– but why advertise that limited resources limit investigations and prosecutions? How then is an attorney to provide counsel in the following scenario: your client, an honest specialty medical provider who has unique offerings to the community (whether specialized training or advanced equipment not found elsewhere), is having trouble breaking into the local market because of a lack of referrals. It turns out that the competition, in order to protect their business, is paying the gatekeeper (the doctor and/or office manager) at a few referring physician offices for each patient referred (Medicare, Medicaid and even private insurance), in the form of cash or gift cards, paid in small denominations, every week or two. While the effect this might have on patient care is debatable, there is no question that these payoffs are illegal [41 USC 1320(b)] and [US Attorney Criminal Resource Manual]. There is some question, however, on how the problem should be handled.
The cynic and former healthcare provider in me wants to advise my client to take the easiest route and match the payoff since there is little to fear, but of course, I would NEVER offer such advice, nor condone such behavior. How, then, do you level the playing field and advise a client who is trying to survive running an honest business, faced with dishonest competition that know that as long as they only cheat a little bit, they will not end up in any kind of trouble?
Is it realistic to ask your client to bring a Qui Tam action against those involved in the payoff schemes? Was a whistleblower action meant to be used in this kind of small provider situation involving a mixture of federal and private insurance claims? There will be no treasure trove of documents evidencing the payoffs, no smoking-gun Visa gift cards, and while your client may know the truth about the payoffs, it will ultimately turn into a he-said she-said case without assistance from professional investigators with badges. Who knows what impact this will have on your client’s business, and whether other referring physicians will want to get involved with your trouble-maker client in the future? Perhaps you might be able to convince an employee from the dishonest competition to come forward as a relator in order to share in the proceeds of any settlement [31 U.S.C. 3730(d)]. But will the government intervene in a small, low-profile case, then allowing your client to return to life as a full-time medical provider rather than a Qui Tam relator.
I believe that the government would be properly allocating its resources by, from time to time, looking into “smaller” complaints. These low-hanging-fruit cases are ripe for the picking, and, from my experience as a provider competing in this kind of an environment, a little bit of deterrence will go a long way. If nothing else, dishonest providers will be more likely to play by the rules if they are fearful that breaking them will result in in bad consequences, and honest practitioners will not have to become experts on the Qui Tam process.