Counsel to Counsel - January 2008 - (Page 28) MORE ACCOUNTABILITY FOR STARK STATUTE ENFORCEMENT In September 2007, a U.S. Department of Justice lawsuit against a national provider of health care services, United States v. Sulzbach, sought treble damages and civil penalties against the general counsel personally for affirming that the company had complied with Medicare/Medicaid reimbursement policies while allegedly possessing information to the contrary. This case reflects increased proactive enforcement by the Centers for Medicare & Medicaid Services (CMS) and the Justice Department against Medicare/Medicaid billing fraud, particularly involving the Stark statute governing physician selfreferral. Other recent examples include: • An information collection program requiring disclosure of ownership, investment, loan and lease arrangements between physicians and 500 hospitals selected by criteria known only to CMS. • The announcement of the new physician fee schedule that will lead to significantly tighter application of the “anti-markup” rules related to diagnostic tests performed by outside suppliers. These and other CMS actions, including the recently released Stark II, Phase III, regulations, aim to tighten reimbursement regulations affecting individual physicians who treat Medicare and Medicaid patients. Additionally, at hospitals and providers having contractual arrangements with physicians, the federal government has increased scrutiny of the general counsel’s role in affirming physician compliance with reimbursement and referral procedures. General counsel must exercise caution because of whistleblower actions filed by employees or vendors. Recent federal activity in health care fraud and abuse is proactive, and the government already has signaled that further revisions to the reimbursement and self-referral regulations will be forthcoming in the new year. PROACTIVE ADVOCACY ON PHARMACEUTICALS AND DEVICES Pharmaceutical and medical device manufacturers rightfully emphasize the health care improvement that new products can bring, but they should incorporate federal health policy reimbursement criteria and political health care policy in their product development processes. Medicare and Medicaid, as well as reimbursement programs for veterans, children and other groups, create a partial de facto national health insurance program in the United States. Federal reimbursement payments heavily influence the market prices of most devices, drugs or procedures. Companies should thus expand their focus beyond Food and Drug Administration approval of new products and proactively consider current reimbursement policies when introducing market innovations. In-house and outside counsel also should be involved in focused public policy lobbying with Congress and the executive branch to recognize an innovation’s improvement in health care outcomes, because federal reimbursement will increasingly hinge on effectiveness as well as comparative effectiveness of drugs and devices. The Centers for Medicare & Medicaid Services (CMS) is a key target for proactive advocacy to secure acceptance of, and adequate reimbursement for, medical innovations. Every federal health care dollar has a constituency seeking to protect the status quo, unless proactive advocacy paves the way for change. In addition, health care policy has its current issues, whether electronic medical records, prevention or obesity, which make federal policymakers more receptive and generous to new products and improvements in the currently favored areas. Factoring in policy realities and reimbursement policy early on greatly increases chances of a successful launch of a new drug or product. Additionally, at hospitals and providers having contractual arrangements with physicians, the federal government has increased scrutiny of the general counsel’s role in affirming physician compliance with reimbursement and referral procedures. Mark D. Folk Shareholder, Business Department mark.folk@fowlerwhite.com Peer Review Rated Ed Honowitz/Stone/Getty Images John F. Jonas Partner, Health Care jjonas@pattonboggs.com Peer Review Rated Linda M. Robison Shareholder, Business Department linda.robison@fowlerwhite.com Peer Review Rated Karen Smith Thiel Associate, Public Policy and Lobbying kthiel@pattonboggs.com Patton Boggs LLP LexisNexis® Martindale-Hubbell® 28 Fowler White Boggs Banker
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