Constant vigilance by all of us in the field is the only way to ensure that sunlight continues to find its way into this sometimes shadowy area of materials management, however.

In July, medical device manufacturer Medtronic Inc. agreed to pay $40 million to the federal government to settle two whistleblower lawsuits related to the federal Anti-Kickback Statute. According to the Department of Health and Human Services Office of Inspector General, or OIG, the Anti-Kickback Statute’s "main purpose is to protect patients and the federal healthcare programs from fraud and abuse by curtailing the corrupting influence of money on healthcare decisions…anyone who knowingly and willfully receives or pays anything of value to influence the referral of federal health care program business, including Medicare and Medicaid, can be held accountable for a felony." ¹

The U.S. Department of Justice investigated the whistleblowers’ accusations that Medtronic Sofamor Danek (MSD), the spinal implant division of Medtronic, paid kickbacks to doctors to induce them to use MSD products through "sham consulting agreements, sham royalty agreements and lavish trips to desirable locations," according to a recent report on the settlement in The New York Times.

Medtronic admitted to no wrongdoing, but agreed to the settlement deal. In addition to the $40 million payment, they must also enter into a Corporate Integrity Agreement (CIA) with the OIG. You can access the 43-page CIA at http://oig.hhs.gov/fraud/cia/
agreements/Medtronic
_and_MSD_CIA.pdf.

Focus on anti-kickback compliance

In executing the CIA, MSD President Peter Wehrly and other senior executives of Medtronic and MSD have signed up to ensure that certain compliance policies and procedures are developed, implemented and monitored, for a period of five years.

At the highest levels, both Medtronic and MSD are required to appoint a Compliance Committee and name a Compliance Officer who reports directly to their respective president or CEO and will have direct access to the Board of Directors.

Moving down to the rank and file, who are more likely to appear in a hospital materials management department or operating room to interact with you, your physicians and staff, the companies are required to include adherence to a Code of Conduct in performance evaluations for all employees. Specific policies, procedures and Anti-Kickback training must also be fully implemented.

What behavior is in question?

What is under the microscope here are "arrangements." These include "every arrangement or transaction entered into by MSD that (a) involves, directly or indirectly, the offer, payment, solicitation, or receipt of anything of value; and (b) is between MSD and any actual or potential source of health care business or referrals of health care business to MSD." The CIA lists "any physician, contractor, vendor or agent" as potential sources of referrals. A referral is defined as "referring, recommending, or arranging for, ordering, leasing or purchasing" anything that is reimbursable under a Federal health care program such as Medicare.

By agreement with the OIG, MSD is building an Arrangements Database to catalog and describe all of the current and future arrangements. An independent auditing body will use this database to evaluate every arrangement for compliance with the Anti-Kickback Statute. In addition to identifying the parties to an arrangement, the database will be used to track payments made and provide service and activity logs to monitor whether the services paid for (such as physician consulting or research) have actually been rendered according to the terms of the arrangement.

Going forward, all arrangements must be in writing and signed by MSD and the other parties to the agreement. Further, MSD must provide every party to the arrangement with a copy of MSD’s Code of Conduct as well as the Anti-Kickback Statute Policies and Procedures document. Each party to the arrangement must certify in writing their agreement not to violate the Anti-Kickback Statute in performance of the arrangement.

A call to action

What is your personal and professional responsibility in the event you observe or suspect an apparent violation of the Anti-Kickback statute by any vendor, physician or staff member in your hospital? That is something each of us must decide. Obviously, there are internal channels you can follow. The OIG also staffs a hotline, 1.800.HHS.TIPS, to enable reporting.

But looking the other way is not an option. This is serious business – potentially felonious business. It defrauds the U.S. healthcare industry of countless dollars, and each of us needs to do what we can to stop it. HPN

References

1. "Federal Anti-Kickback Law and Regulatory Safe Harbors." Fact Sheet, OIG Office of Inspector General, http://oig.hhs.gov/fraud/docs/safeharbor
regulations/safefs.htm