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Current News and Issues

GAO Report Highlights Continued Fraud Risk

A recent Government Accountability Office (GAO) report noted that the Medicare program may have overpaid more than $700 million to durable medical equipment, prosthetics, orthotics and supplies companies in the year ending March 31, 2006. The report urged Medicare to require its contractors to adopt automated prepayment controls to identify potential over billing by suppliers.
(GAO 07-59, available at www.gao.gov)

CMS To Award $900 Million To Reduce Institutional Care

Centers for Medicare & Medicaid Services (CMS) Acting Director, Leslie Norwalk, announced a demonstration program that will award up to $900 million to states for community-based care programs designed to reduce the dependence on traditional nursing home institutional care for those who do not require that level of care. Known as the “Money Follows the Person” program, this effort allows states to explore and implement community-based care programs for Medicaid recipients without going through the traditional waiver process.
(Available at www.cms.hhs.gov/apps/media/press_releases.asp)

Unit Of Schering-Plough To Pay $180 Million Fine For Marketing Program Fraud

Schering-Plough subsidiary Schering Sales Corp. was sentenced to pay a $180 million fine for conspiracy to make false statements in conjunction with marketing and clinical trials programs. The charges stemmed from allegations that the company conspired to provide free goods and other consideration to a major HMO to disguise discounts so they would not have to be passed on to state Medicaid programs and that the company made false statements intended to hide the fact that an off-label marketing scheme was authorized by the corporate headquarters. In addition to the fine, Schering Sales Corp. was permanently excluded from participation all federal health care programs. Schering-Plough Corp. noted that the violations occurred prior to the current management team in place since 2003. The company also agreed to pay $255 million to settle civil liability under the False Claims Act.
(Available at www.usdoj.gov/usao/ma/press.html)

IMDMC Education Program Focused On False Claims Liability For Medical Device Firms

The Indiana Medical Device Manufacturers Council, Inc. (IMDMC) sponsored an education program for its members on February 28, 2007 entitled “Dangerous Intersections: False Claims Exposure Where CMS and FDA Compliance Meet.” The luncheon program provided an overview of enforcement activity and whistleblower litigation aimed at medical device manufacturers whose products and marketing programs violate FDA regulations resulting in the companies or their customers falsely certifying compliance with laws that are prerequisites to receiving payment under Medicare and other federal healthcare programs. Speakers at the event were Jim Utterback, co-chair of the Health Law Group at Bose McKinney & Evans LLP and Dwight Miller, assistant general counsel at Hill-Rom, Inc., a $1 billion medical device manufacturer.
(The text of the article is available here, and additional information is available by contacting Jim Utterback – jutterback@boselaw.com)
(More information at www.ihi.org)

Editor - James E. Utterback, co-chair, Health Law Group