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| Dear Friend,
A drug maker's recent Anti-Kickback Statute/False Claims Act settlement serves as a warning.
Just days prior to Christmas in 2023, Ultragenyx Pharmaceutical Inc. (“Ultragenyx”) agreed to pay the U.S. government $6 million to resolve allegations that it caused the submission of false claims to Medicare and Medicaid, in violation of the False Claims Act.
In connection with the settlement, which arose from allegations under the False Claims Act brought by a whistleblower, the Relator, Lisa Ruggiero, Ultragenyx admitted that:
- It understood that, in some cases, a positive genetic test for a genetic mutation consistent with X-linked hypophosphatemia (“XLH”) would be required for an insurer (including Medicare or Medicaid) to reimburse Crysvita prescribed to a patient, or for a healthcare provider (“HCP”) to make a definitive diagnosis of XLH and prescribe Crysvita.
- Ultragenyx entered into an arrangement with a genetic testing laboratory (“Laboratory”) whereby Ultragenyx paid the Laboratory to conduct these tests—at no cost to HCPs or patients—and provide the results to the HCP. Ultragenyx separately paid the Laboratory to provide test results back to Ultragenyx and its commercial team used the results, in part, to find potential Crysvita patients and their HCPs for follow up Crysvita marketing efforts. Ultragenyx referred to this program as its “sponsored” XLH testing program.
- Ultragenyx sales personnel discussed the XLH testing program with HCPs and delivered order forms for the tests to HCP offices. The test results Ultragenyx received did not contain patient names but did contain the name of the HCP who ordered the test, a de-identified patient ID number, the date the test was ordered, and—once ready—the test result itself (collectively, “Results Reports”). Until April 2022, Ultragenyx received Results Reports and disseminated this information to its sales force with instructions to make sales calls for Crysvita to HCPs who ordered a test or, in particular, who had a patient with a positive test result. Ultragenyx’s sales force followed up with HCPs regarding test results.
Although Ultragenyx admitted to the above facts, it entered into the settlement without admitting that it violated the law; as a result, the government’s (and the Relator’s) claims are allegations only, there having been no determination of liability.Discussion
In the context of the allegations aimed at Ultragenyx, the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b (“AKS”), prohibits drug companies from knowingly and willfully paying remuneration to induce a person to: (1) refer an individual to a person for the furnishing, or arranging for the furnishing, of any Medicare or Medicaid-reimbursed drug; or (2) to purchase or order, or arrange for the purchasing or ordering, of any Medicare or Medicaid-reimbursed drug.
Underlying the Ultragenyx situation were allegations that the free tests, free to the patients and to the healthcare providers, that is, were inducements to those individuals and entities.
Because the AKS equally criminalizes the receipt of remuneration to induce referrals, its possible that the DOJ and state attorneys general could pursue the healthcare providers on the other side of the transaction.
Just as the post, OIG Permits Deferred Payment Physician Partner Buyout illustrates how potential AKS traps lie within internal business arrangements, the allegations surrounding Ultragenyx demonstrate the AKS issues within arrangements that, to many, are difficult to envision as being referrals.
Just because they’re hard to envision doesn’t mean that referrals within the scope of the AKS don’t exist.
Actionable Takeaways for You
Analyze: Any potential arrangement must be analyzed carefully because the AKS is a criminal statute, the violation of which can lead to fines, civil penalties, whistleblower lawsuits, exclusion as a provider, and imprisonment.
Structure: Any deal must be structured in compliance with the AKS, Stark, and numerous other federal laws, as well as with various state law counterparts and other restrictions. Your investment in structuring things correctly is an investment in yourself and your jail-free future.Audit: No matter how well structured, it’s essential that you engage in periodic compliance audits coordinated through legal counsel. Laws change and actual behavior impacts all of the structure and planning. Even the best planning can be made worthless if illegal conduct takes place within the context of what was planned to be a proper structure.
Investigations: If you learn that you (or any person or entity connected to the operation) are under investigation, immediately engage a team of experienced healthcare attorneys and criminal defense counsel. Many potential prosecutions are resolved at this stage.
Indictment: Again, immediately engage a defense team of healthcare and criminal defense counsel.
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| | | | | Tuesday - Ownership Vs. Control: Who Really Owns Your Group? - Success in Motion
Watch the video here, or just keep reading below for a slightly polished transcript:
The concept of "ownership and control" can come up several ways in the contractual context.
For example, we could see it as a prohibition on assignment in the context of a change in ownership or control of an entity. Or, we could find it in a provision that requires a hospital to bring along your contracted medical group in the event that the hospital changes ownership or changes control.
But it also makes sense for medical group leaders to think about "ownership and control" in an entirely different context: At what point in a relationship with a vendor, or with a payor, or even with a hospital, have you ceded so much authority over your medical group that your ability to manage the group, to exercise your ownership, has been given away or has been mooted?
As you do business, there are many sorts of arrangements that essentially serve to shift the sort of control that only an owner would traditionally exercise. For example, giving a third party the right to control who you hire and who you fire.
Consider whether giving up little pieces of control, such as control over payment, control over with whom you can deal, control over what other facilities you can pursue, and the geographic areas into which you are able to move, amount to a stealth sale of your group without any payment of a purchase price at all. |
| | Wednesday - All That Glitters Isn't Gold. Is Your Contract Merely Sparkly? - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript:
Just like in a heist movie, they inspected a few of the shipping containers expecting to find the half billion dollars’ worth of nickel, a metal vital to producing batteries for electric vehicles, that they were all to contain, only to find other metals of lesser or no real value. That's the story reported on page 1 of the February 10, 2023, issue of The Wall Street Journal in connection with the commodity trader, Trafigura Group. Not only is all that glitters not gold, shipping containers thought to contain nickel might just contain carbon steel. So, what does this B-movie plot come to life have to do with you, assuming that you're not a metals trader? More than you might realize. Here are some rather common examples: - You enter into an agreement thinking you've obtained, for example, a seven year contract. Nine months later, you realize that it's terminable on 10 days’ notice under some circumstance that just occurred.
- You enter into an agreement to provide all services at a hospital system, only to find out that the system has the right to unilaterally grant carve outs to your exclusivity.
- You think you've solved your financial problems through obtaining stipend support only to realize that the support is actually structured as a loan that has to be paid back, with no hope of ever doing so.
- Just as in the most notorious of "you've got to be kidding me, isn't this a scam" sort of contracts, insurance policies, nearly any form of legal agreement is capable of giving you something on page 3 and taking it away on page 14.
Prepare for negotiations. Negotiate for your best deal. Make sure the agreement reflects that best deal. If the best deal isn't good enough, hopefully you've positioned your business so that you don't have to take it. And in any event, make sure that what you take is consistent with what you believe you've taken. If a fake "gold" ring can turn your finger green, and if $577 million worth of nickel turns out to be scrap metal, there's no reason why your contract might turn out to be something other than what you expect. |
| | | Listen to the podcast here, or just keep reading for the transcript.
Imagine that you are an engineer packing a space vehicle for flight. You'd include what you'd intend be used and toss in some backups – but you certainly wouldn't include anything that won't be required.
The same rule holds true with provisions in contracts, from seemingly simple employment agreements to inch-plus thick exclusive contracts.
No matter what the other negotiator says, no matter how lovingly she explains that section such-and-such is simply "corporate policy," and no matter how wonderful your relationship with her ("She'd never screw the group over, we've known her for years!"), each provision in an agreement is a tool that's intended to be used.
For your safety, consider the phrase "intended to be used" as including "against you." Just as in packing for a space flight, there is no extra baggage in that contract. |
| | Help Us Help You With Helpful Content
What tailored content would you most like to see during this
time? How can we focus on solutions to your most pressing strategic concerns?
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| | | | We all hear, and most of us say, that the pace of change in healthcare is quickening. That means that the pace of required decision-making is increasing, too. Unless, that is, you want to take the “default” route. That’s the one is which you let someone else make the decisions that impact you; you’re just along for the ride. Of course, playing a bit part in scripting your own future isn’t the smart route to stardom. But despite your own best intentions, perhaps it’s your medical group’s governance structure that’s holding you back.
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| In fact, it’s very likely that the problem is systemic. The Medical Group Governance Matrix introduces a simple four-quadrant diagnostic tool to help you find out. It then shows you how to use that tool to build your better, more profitable future. Get your free copy Free.
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| | | | Whenever you're ready, here are 4 ways I can help you and your business:
1. Download a copy of The Success Prescription. My book, The Success Prescription provides you with a framework for thinking about your success. Download a copy of The Success Prescription here.
2. Be a guest on “Wisdom. Applied. Podcast.” Although most of my podcasts involve me addressing an important point for your success, I’m always looking for guests who’d like to be interviewed about their personal and professional achievements and the lessons learned. Email me if you’re interested in participating.
3. Book me to speak to your group or organization. I’ve spoken at dozens of medical group, healthcare organization, university-sponsored, and private events on many topics such as The Impending Death of Hospitals, the strategic use of OIG Advisory Opinions, medical group governance, and succeeding at negotiations. For more information about a custom presentation for you, drop us a line.
4. If You’re Not Yet a Client, Engage Me to Represent You. If you’re interested in increasing your profit and managing your risk of loss, email me to connect directly. |
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