Home Health & Hospice Week

If your nebulizer or infusion pharmacy provides free services to referral sources, you could be in the compliance crosshairs.

The HHS Office of Inspector General's compliance guidance for pharmaceutical companies, released April 23, has important lessons for both pharmacies and other providers, say experts. The OIG casts such a broad net for fraud and abuse that the drugmaker-tailored guidance should raise red flags for providers of all stripes.

The final CPG is far more detailed than the draft issued last October. One hot spot is data integrity. Drugmakers face both False Claims Act charges and potential kickback prosecution if they report inaccurate pricing data to the government.

Another flashpoint is kickbacks. Pharma companies' networks of business arrangements essentially form a kickback minefield, the OIG warns.

Noting that business practices "that may be common or longstanding in other businesses are not necessarily acceptable or lawful when soliciting federal health care program business," the OIG cautions pitfalls could be hidden in arrangements with purchasers, benefit managers, formulary committee members, group purchasing organizations, physicians, allied health professionals and pharmacists.

"The days of logoed golf balls are gone," says attorney Elizabeth Carder-Thompson with Reed Smith Shaw & McClay in Washington.

The guidance enumerates a wide range of potentially suspect activities, from "marketing the spread" - the manipulation of the average wholesale price to boost profits for doctors - to bogus educational grants.

The compliance guidance could impact home care pharmacies for a few reasons, says Ankur Goel, a partner with McDermott Will & Emory in Washington. First, to the extent that it convinces pharmacies to change their pricing practices and bring down AWP numbers, it could cut into pharmacies' profits.

Secondly, the OIG is signaling it'll subject all sorts of drug purchasing arrangements to greater scrutiny. And some of its guidance about arrangements between drugmakers and purchasers can easily apply to arrangements between pharmacies and referral sources as well, says Goel.

For example, if a pharmacy is providing a home medical equipment supplier with free samples or services such as checking on patients, that could attract OIG scrutiny, Goel divines from the guidance. It's not necessarily illegal, especially if it's an important component of a product or service. But to the extent that it replaces services the referral source would otherwise have to supply, it raises questions, Goel warns.

Thirdly, any inducement to someone who is in a position to influence the patient's choice of medications could trip the OIG's radar, Goel adds. This is more likely to be a physician or health plan than a pharmacist, but there could be cases in which a pharmacy receives a better price for one medication than another and convinces a patient to use the cheaper medication.

One way to carve out a safe space is to adhere to the code of ethics created by the Pharmaceutical Research and Manufacturers of America, says Carder-Thompson. The OIG says in its guidance that following this code won't shield you from liability, but will indicate a "good faith effort," says Carder-Thompson.