The Department of Health and Human Services, Office of Inspector General (HHS-OIG) recently issued new industry segment-specific compliance program guidance for Skilled Nursing Facilities and Nursing Facilities (NF-ICPG). This is the first of a series of compliance program guidance that HHS-OIG plans to issue for different healthcare sectors, following the release of its General Compliance Program Guidance (GCPG), discussed in a prior Sidley Update. The NF-ICPG replaces the previous nursing facility compliance program guidance issued by HHS-OIG in 2000 and 2008 and reflects HHS-OIG’s findings and observations from its work on matters involving nursing facilities as well as its current enforcement priorities and stakeholder interactions.
Although this guidance is intended for the nursing facility industry, and industry segment-specific compliance program (CPG) for pharmaceutical manufacturers is forthcoming, manufacturers whose drug products are used in nursing facilities should be aware of the new NF-ICPG and its potential implications for their business relationships and compliance obligations. Industry stakeholders may also wish to evaluate the updated guidance for gaps, as HHS-OIG indicates it will accept feedback on an ongoing basis and may use such feedback to issue future updates.
Key Insights Regarding the NF-ICPG
- Insights Into Development Process. HHS-OIG notes that the new NF-ICPG incorporates information from its work in audits, investigations, and enforcement as well as its enforcement priorities and interactions with stakeholders. But HHS-OIG did not provide further detail on its drafting or any stakeholder input processes. Many industry stakeholders have questioned HHS-OIG’s departure from notice-and-comment rulemaking for the GCPG and now this first industry-segment-specific CPG, setting up the potential for future legal challenges or policy efforts to invalidate the guidances for failure to use notice-and-comment rulemaking.
- New Key Risk Areas. Overall, HHS-OIG takes a much deeper dive on key risk areas in this new guidance compared to the prior guidances. Many of the key risk areas highlighted by HHS-OIG are the same as in past guidance, but some are new, including care coordination and value-based payment models; topics related to Medicare and Medicaid billing requirements, including managed care and Medicare health plan enrollment; long-term care pharmacy and consultant pharmacist arrangements; and related-party transactions.
- Conflicts of Interest. The NF-ICPG includes a new section on “Minimizing Conflicts of Interest” within the “Appropriate Use of Medication” risk area. The guidance first reiterates that pharmaceutical decisions for nursing facility residents should be unbiased and based on clinical expertise and patient well-being. The NF-ICPG then notes that conflicts of interest may arise where consultant pharmacists are affiliated with long-term-care pharmacies or pharmaceutical manufacturers. Specifically, the NF-ICPG cautions that certain conflicts of interest could influence prescribing habits, which may, depending on the circumstances, violate the AKS.
HHS-OIG recommends that nursing facilities mitigate the potential for conflicts of interest in pharmaceutical decisions by (i) separating contracts for consultant pharmacist services and long-term-care pharmacy services, (ii) requiring disclosure of any affiliation that may pose a conflict of interest, (iii) implementing policies that center the patient in prescribing decisions, and (iv) scrutinizing prescribing patterns.
- AKS Risk. The AKS continues to be a main focus in the NF-ICPG. The NF-ICPG offers a detailed, industry-specific discussion of several AKS risk areas that is meant to complement the AKS risk overview provided in the GCPG. In particular, the NF-ICPG highlights eight AKS risk areas for nursing facilities, including:
- free (or below-fair-market-value) goods and services
- discounts
- arrangements for services and supplies
- long-term-care pharmacy and consultant pharmacist arrangements*
- hospital arrangements*
- hospice arrangements
- care coordination and value-based care arrangements*
- joint ventures*
Several of these risk areas were also highlighted in the 2008 supplemental compliance program guidance for nursing facilities, demonstrating HHS-OIG’s continued concerns. However, some of these risks are new, as indicated with an asterisk (*) mark above.
- Long-Term-Care Pharmacy and Consultant Pharmacist Arrangements. In the NF-ICPG, HHS-OIG singles out nursing facility relationships with pharmacies and pharmaceutical manufacturers — an area of historic government scrutiny and enforcement — and stresses that the AKS “prohibits a nursing facility from knowingly and willfully soliciting or receiving anything of value [from those entities] . . . to influence the choice of a drug or switch a resident from one drug to another (when the drug is payable under a Federal health care program).” To mitigate AKS risk in this area, HHS-OIG recommends educating both staff and contractors that are involved in prescribing, administering, and managing pharmaceuticals about prohibitions on the receipt of free, or below-fair-market-value, supplies or services. HHS-OIG also referenced an earlier section in the NF-ICPG, discussed above, to recommend that nursing facilities take affirmative steps to minimize the potential for conflicts of interest in pharmaceutical decisions.
What Pharmaceutical Manufacturers Should Consider
Pharmaceutical manufacturers that have business relationships with nursing facilities should consider closely reviewing the new NF-ICPG and assess their potential compliance risks and practices in light of the guidance. In particular, manufacturers should
- ensure that any discounts, rebates, or other price reductions offered to nursing facilities are structured to comply with the discount safe harbor to the AKS
- evaluate discount arrangements for potential “swapping” risk, including
- offering below-cost arrangements or prices lower than those provided to other customers with similar business volumes but without Federal healthcare program referrals
- providing discounts or other pricing schemes in conjunction with explicit or implicit agreements to refer additional business from the facility to the manufacturer
- avoid offering or providing any free or below fair market value goods or services to nursing facilities or their staff that could be construed as inducements or rewards for referrals or drug switching
- monitor any arrangements with long-term-care pharmacies or consultant pharmacists that may involve the promotion or recommendation of their products to nursing facilities or their residents and ensure that such arrangements are compliant with the AKS and other applicable laws and regulations
Manufacturers should also stay abreast of any updates or revisions to the NF-ICPG. HHS-OIG welcomes written and specific feedback from industry stakeholders on the NF-ICPG and stated that it may periodically update the guidance to address newly identified risk areas and compliance and quality measures.
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