Georgia's Trusted Healthcare
& Medical Provider Attorneys

Durable Medical Equipment Company’s Pricing Structure Violates Anti-Kickback Statute

DMEDurable Medical Equipment (DME) manufacturers can face serious fines for violating the Anti‑Kickback Statute (“AKS”). In a recent settlement, Respironics, a manufacturer of sleep therapy products, agreed to settle allegations that its bundled pricing structure for sleep apnea masks violated the AKS. Since violations of the AKS give rise to fines under the False Claims Act, DME manufacturers can face trebled damages and fines up to $10,000 per violation.

According to Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, “The payment of illegal remuneration in any form to induce patient referrals threatens public confidence in the health care system. Americans deserve to know that when they are prescribed a device to treat a serious health care problem, the supplier’s judgment has not been compromised by illegal payments from equipment manufacturers.”

Respironics, Inc. provided call center services to DME companies at no cost so long as the patients ordered Respironics masks. DME companies had to pay a monthly fee based on the number of patients who used masks manufactured by Respironics’ competitors. According to the U.S. Department of Justice, this made suppliers more likely to use Respironics masks. Respironics has since changed the pricing structure of its call center services.

A South Carolina pharmacists recognized that the arrangement likely violated the AKS and filed a qui tam (whistle-blower) lawsuit. The U.S. Justice Department intervened along with 29 other states and the District of Columbia.

Respironics agreed to pay $34.8 million in order to settle the lawsuit even without admitting wrongdoing, and the company continues to maintain that its pricing structure fit within the discount Safe Harbor. However, this settlement serves as a powerful reminder that companies must be aware of potential AKS violations. Respironics’ “good-faith belief” that the arrangement met a Safe Harbor did not save it from AKS scrutiny or a multimillion dollar settlement.

If you have any questions or need assistance with healthcare regulatory issues, Jeyaram & Associates attorneys can help. Contact DJ Jeyaram at DJ@Jeylaw.com or 678.325.3872.

New Medicare Prior Authorization Process For Durable Medical Equipment In 2 Weeks

DMEStarting February 29, 2016, certain Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) must go through a prior authorization process in order to be approved for Medicare payment.

Pursuant to a Final Rule published December 30th, the Centers for Medicare and Medicaid Services (CMS) will soon require that DMEPOS items included on a Required Prior Authorization List (RPA List) undergo a review prior to being supplied to beneficiaries. The RPA List is to be updated on an annual basis and published in the Federal Register.

Providers are to initiate the process by submitting all relevant documentation for review by CMS or its contractors. After the review, CMS will provide a decision based on the documentation submitted. A claim submitted with a “provisional affirmation” decision will be paid so long as all other requirements are met. A claim submitted with a “non-affirmation” decision or a claim for items that did not undergo the mandatory prior authorization process will be denied. If a provider receives a “non-affirmation” decisions, a prior authorization request can be resubmitted.

CMS has stated that Medicare will make a reasonable effort to render an initial prior authorization determination within 10 business days. An expedited review process will also be available in certain circumstances.

The commentary published with the Final Rule states that a denial of prior authorization for DMEPOS coverage is not an appealable decision because it is not an initial determination.

CMS plans to publish sub-regulatory guidance to implement the Rule.

If you would like to review the Final Rule it is available here.

If you have any questions about the Final Rule or need assistance navigating through the prior authorization process please contact Danielle Hildebrand at dhildebrand@jeylaw.com or 678.325.3872.