MSP Compliance Blog

Expert summary, analysis and recommendations on issues impacting Medicare Secondary Payer compliance.

The FDA Focuses New Attention on Compounding Pharmacies

Posted on April 17, 2013 by Rita Wilson

According to an article released by NBC News on April 11, 2013, the FDA posted reports on its web site for 28 of 31 compounding pharmacies it inspected between February and April listing a raft of violations ranging from inappropriate clothing for sterile drug processing to insufficient testing for contaminants.

The release of the inspection reports comes five days before a congressional hearing into the meningitis outbreak traced to the Framingham, Massachusetts-based New England Compounding Center (NECC) that killed more than 50 people and sickened hundreds. The hearing, by the House Committee on Energy and Commerce, will be the second held on the matter.

In November, the FDA’s commissioner, Dr. Margaret Hamburg, testified before the same committee that ambiguities in the law had inhibited its ability to take aggressive enforcement action against compounding pharmacies, which are mostly regulated by the states. Republican lawmakers argued that the agency has plenty of authority but failed to use it in a way that could have prevented the meningitis outbreak.

In my post on December 13, 2012, I summarized the first hearing held by the House Committee on Energy and Commerce noting that in follow up the committee sent letters to the board of pharmacy for all 50 states making specific points regarding their responsibility to regulate compounding pharmacies and asking for a response from each by December 7, 2012.  If responses were submitted, they were neither published nor acknowledged by the committee.  Now, it appears that the FDA is back in the hot seat, being challenged on its lack of action.

On Thursday a group of Democratic lawmakers urged the Committee in a letter to invite the head of the International Academy of Compounding Pharmacists (IACP), an industry association, to testify at Tuesday’s hearing.  The letter specifically noted Internal IACP documents provided to the Committee reveal that for almost two decades, the organization lobbied aggressively and successfully to restrict FDA authority over compounding pharmacies, even when top IACP leaders were aware of significant public health risks from compounding.”

Last month the IACP wrote to members of the Senate Committee on Health, Education, Labor and Pensions in a bid to head off any attempt to allow the FDA to determine whether a firm should be classed as a compounding pharmacy and which pharmaceuticals company. That authority, the letter said, “should and must remain exclusively” with the states.

Both the FDA and the state boards of pharmacy have done a great job of dodging the bullet thus far.  Unfortunately, however, it is the patient who suffers.  And in the case of a workers’ compensation case, the payer as well.   Compounds represent one of the most dangerous and fraudulent forms of medication dispensing. That being said, compounds can also be extremely beneficial when medically necessary, and in the right environment of audits and controls.

Compounds are difficult to analyze value and benefit. As such, they are never indicated for pain management in Evidence Based Medical (EBM) guidelines such as the Official Disabilities Guidelines (ODG).

While there are exceptions, as a general rule compounds should never be authorized and/or covered without consideration of the following intervention strategies:

  1. If Utilization Review (UR) is a part of the state regulatory landscape, compounds should be sent through UR before being authorized for fill the first time.
  2. If the UR reviewer deems the compound to be unnecessary, immediately direct your PBM to exclude it from the patient’s formulary.
  3. If UR isn’t an alternative, escalate the authorization request to a nurse, clinician or physician to request a determination of  necessity and appropriateness based on the state’s designated treatment guidelines.
  4. As an example, for states that follow ODG, compounds would be indicated as necessary and appropriate ONLY in the following situations:
    1. An indicated first line therapy was tried and failed,
    2. The patient has an allergy to an inactive ingredient of a more traditional form of a medication.

At the claim level, we cannot protect our patients against every danger, clinical oversight and scam artist seeking to benefit financially from the workers’ compensation system.  By consistently following the guidelines available, however, and encouraging more states to implement treatment guidelines like ODG, we can better position our companies and our patients to achieve the best in care, cost and compliance.

 

How Will State Boards of Pharmacy Respond to Senate Committee’s Compounding Inquiry?

Posted on December 13, 2012 by Rita Wilson

On November 19th, Chairman Tom Harkin (D-IA), Ranking Member Mike Enzi (R-WY) and members of the Senate Health, Education, Labor and Pensions Committee sent letters to all fifty state boards of pharmacy, the entities responsible for maintaining registries of pharmacies operating within their state. The HELP Committee is investigating the New England Compounding Center (NECC) for its production of tainted drugs that caused the recent outbreak of fungal meningitis, which has resulted in 33 deaths and more than 480 illnesses.

The letters were sent as a follow up to a hearing on November 15th in which Senators heard a very troubling account of NECC’s oversight record, which highlighted the gaps and grey areas that complicate the law establishing regulatory authority over such companies. In the course of the investigation, committee staff found that compounding pharmacies like NECC are required to register with their state of residence, and not with the U.S. Food and Drug Administration. This inquiry will help lawmakers to assess the scope of these companies nationwide. Today’s letters will also assist the committee as it determines what changes need to be made to ensure that compounded drugs are safe and available for patients and hospitals who need them.

“The outbreak raises serious questions about the level of oversight that a large-scale compounding pharmacy was subject to, both by state and federal regulators, and what if any additional steps need to be taken to prevent such a tragedy in the future. Therefore, as part of our investigation, we write to request information regarding general oversight of compounding pharmacies in your state and what actions you have taken to address this meningitis outbreak,” the Senators wrote.

Key Points Made in the Inquiry
As foundation for its request for information, HELP noted that the Centers for Disease Control and Prevention (CDCP) linked the recent meningitis outbreak to three lots of preservative-free methylprednisolone acetate produced by the New England Compounding Center (NECC) — a compounding pharmacy in Massachusetts. According to the CDCP, the three lots consisted of 17,676 products distributed to 23 states, exposing approximately 14,000 patients since May 21, 2012. As of November 16, 2012, at least 480 patients have become ill throughout the country, of which 33 have died as a result of the contamination.
In order to better understand how states address the potential issue of compounding pharmacies distributing large quantities of drugs throughout the country and whether additional federal oversight may be necessary, HELP requested that each state’s board of pharmacy provide information responsive to its requests as noted below:

    1. Does your agency require compounding pharmacies to identify if they produce large volumes of drugs, if they compound sterile injectable products and/or ship their products across state lines? Do your inspection procedures vary based upon the production of sterile drugs, or large quantities of drugs, or drugs shipped across state lines?
    2. Does your state require that pharmacies engaged in sterile compounding comply with USP and if so what is your procedure for ensuring compliance with the standard?Are compounding pharmacies in your state required to have a patient-specific prescription prior to producing a compounded drug or are they able to produce batches of products without a prescription?
    3. Please provide the name and address of all pharmacies in your state that hold licenses or waivers or other exceptions that permit the pharmacy to operate in the absence of providing a full service retail pharmacy and meet all of the following three criteria (to the extent that you have information that allows you to identify pharmacies this way):
      • engage in sterile compounding;
      • hold licenses in other states; and
      • engage in compounding as opposed to dispensing.

Assuming the states responded, information should have been available no later than Friday, December 7, 2012.  Unfortunately, no responses have been published at this point, but it will be interesting to see how each state views its responsibilities to oversee compounding pharmacies at the state level.

Medicare Advantage Plans – A New Layer in the Conditional Payment Process?

Posted on November 8, 2012 by Rita Wilson

Over the past few years, much has been written about the mandatory reporting requirements associated with MMSEA Section 111 and the increased interest in ensuring that Medicare is reimbursed for any conditional payments made for a workers’ compensation injury.   Unfortunately, under this same backdrop of focused attention on recovery, very little, (i.e. no) attention has been given to the unique issues raised when settling a case with a Medicare beneficiary who receives Medicare Part D benefits, or is enrolled in a Medicare Advantage (MA) plan. This changed overnight when, On June 28, 2012 in the case of In re Avandia Marketing, Sales Practices and Products Liability Litigation, 2012 WL 2433508, the Third Circuit Court of Appeals became the first Circuit Court to recognize that a Medicare Advantage Plan has a private cause of action under the Medicare Secondary Payer Act (“MSP”).  So what are the recovery rights of MAP’s and how do we make certain the interests of both the payer and Medicare are appropriately considered when settling a case with a Medicare beneficiary who is enrolled in such a plan?

Background

In 1980, Congress enacted the Medicare Secondary Payer (MSP) statute in an effort to reign in the burgeoning costs of the Medicare program. Under the MSP statute, Medicare makes “conditional” payments, and Medicare has a right of reimbursement if it determines that a third-party primary payer bore responsibility for those payments. 42 U.S.C. § 1395y(b)(2)(B) (2006). The MSP also created a private cause of action to enforce the right to recover payments made by Medicare that are the responsibility of a primary plan. 42 U.S.C. § 1395y(b)(3)(A).

In 1997, Congress created Part C of the Medicare law, now known as the Medicare Advantage program, as an alternative to the traditional Medicare program under Parts A (hospital insurance) and B (medical insurance). MAP’s are offered by private companies and provide all coverage provided by Medicare Part A and Part B and typically offer additional coverage, such as vision, hearing, dental, etc. MAP’s are essentially Medicare HMOs operated by private insurers. The statute creating these plans contains an independent secondary payer provision, which references but does not fully adopt or incorporate the MSP statute. 42 U.S.C. § 1395w-22(a)(4).

Enacted in 2007, the Medicare, Medicaid, and State Child Health Insurance Program (SCHIP) Extension Act (MMSEA) expanded the ability of the federal government to recover sums owed under the MSP statute by imposing strict reporting requirements and penalties for noncompliance. 42 U.S.C. § 1395y(b)(7), (b)(8). Under MMSEA section 111, all insurers as well as self-insurers, collectively referred to as “responsible reporting entities” (RREs), must report information regarding payments made to Medicare beneficiaries and other data to ensure proper coordination of benefits with the Medicare program. 42 U.S.C. § 1395y(b)(7)(A); 42 U.S.C. § 1395y(b)(8)(A). This reporting requirement applies irrespective of whether the beneficiary is enrolled in traditional Medicare or in a MA plan.

What Are the Recovery Rights of MAP’s

Medicare conditional payments are a potential cost that must be considered in any claim involving a Medicare beneficiary.   Medicare has the right to be reimbursed, and the power to enforce that right, under the Medicare Secondary Payer Act (MSPA) to the extent that Medicare has already paid for injury related medical treatment.   What some do not appreciate, however, is that the conditional payments referenced in the standard Conditional Payment Letter from the Medicare Secondary Payer Recovery Contractor (MSPRC) are only those that have been made under Medicare Part A (inpatient and some outpatient care) and Part B (physician’s fees, therapy, durable medical equipment, etc.), sometimes referred to collectively as “traditional Medicare”.   MSPRC presently does not track, and does not attempt to recover, those payments that have been made under Part C (Medicare supplemental plans) or Part D (drug coverage) and very often these other payments are quite substantial.

Part D payments are made by private insurers, and third party pharmacy suppliers, approved by, and under contact with, Medicare and Part C payments are made by private insurers who have been approved by Medicare to write policies that cover items that are either not covered by Medicare under Parts A and B (this is Medicare supplementary coverage) or which replace traditional Medicare completely and which provide additional medical benefits as well.  These Part C comprehensive plans are known as Medicare Advantage Plans (MAP’s) and the insurers or sponsors are referred to as Medicare Advantage Organizations (MAO’s). It should be noted that some, but not all, MAP policies also replace Part D coverage.

While there is a general agreement that MAP’s have a contractual right to seek recovery of expenses paid to a Medicare beneficiary, the existence of a private right of action to enforce that claim in federal court under the MSP statute has been less straightforward. MAP’s contend that they have rights as a secondary payer under the MSP statute to seek recovery of paid expenses. Beneficiaries and primary payers, on the other hand, contend that the MSP statute does not confer a private cause of action on MAP’s. Prior to 2012, federal district court cases lend support to the position that MAP’s do not have a private right of action to enforce their reimbursement rights under the MSP statute; instead leaving MAP’s to enforce their rights as secondary payers under state contract law. However, the more recent Third Circuit of Appeals opinion In re: Avandia Marketing, Sales Practices and Products Liability Litigation, 2012 WL 2433508 (6th Cir. 6/28/12) marks a departure from earlier decisions and will no doubt create uncertainty and debate surrounding the reimbursement rights of MAP’s going forward.

Third Circuit Opinion–In re: Avandia Marketing, Sales Practices and Products Liability Litigation

In In re: Avandia Marketing, Sales Practices and Products Liability Litigation, No. 11-2664, 2012 WL 2433508 (3rd Cir. 6/28/12), the Third Circuit Court of Appeals held that a MAP has a private right of action under the MSP to recover payments it has made that are the responsibility of a primary plan. In doing so, the court reversed the district court, which had dismissed the claims of the involved MAP on the basis that the MSP does not grant a MAP a private right of action to enforce its rights as a secondary payer.

In sum, the Third Circuit found that MAP’s have the same recovery rights as traditional Medicare based on a plain reading of the MSP statute, given the legislative history and policy goals of the Medicare Advantage program, and considering due deference owed to Medicare’s interpretation of the MSP statute and related regulations.

Tower MSA Partners – Proactive in Pursuit of Resolution

Regardless of whether an injured worker / plaintiff received Medicare benefits through a MAP or traditional Medicare, compliance with MMSEA Section 111 MIR mandates that the responsible reporting entity report the settlement to CMS. This reporting obligation is separate and distinct from a MAP’s recovery rights under the MSP statute.  In addition, Primary payers may not be aware that during a March 22, 2012 teleconference call, CMS stated that they are now sharing MMSEA Section 111 Data with MAP’s.  Therefore, MAP’s are now armed with settlement information concerning Medicare beneficiaries in the same manner as traditional Medicare.

Today, about 13.3 Million People are enrolled in Medicare Advantage Plans. There are close to 50 million Medicare beneficiaries, so more than 1 in 4 is on a Medicare Advantage Plan compared to traditional Medicare. Furthermore, Medicare Advantage Plans are gaining members – almost 10% more enrollees over the last year. In terms of Part D Prescription Plans, the number of enrollees for 2012 is estimated it to be around 10.6 million. There are approximately 1,041 plans available from both traditional and Medicare Advantage Plans to choose from.

From a practical standpoint, the Avandia decision creates several challenges.

  1. How are Medicare’s interests protected in a Medicare Advantage case? Is the primary plan now exposed to repeat double damage claims any time the Part C or Part D plan makes payment that was part of a settlement? It would appear that an approved Liability Medicare Set Aside Arrangement (LMSA) would help, but rules are still yet to be developed by Medicare.
  2. Will the Medicare Advantage Plan negotiate or hold at 100% recovery rate? Now more than ever, we have an important reason to support Hadden v. U.S.
  3. How will Medicare contractor enhancements, such as the $300 exemption, Fixed Payment Option, or Self Calculate Option work in this arena? It is unknown, as MAP’s do not use Medicare contractors to pursue its recovery.

While these questions remain, Tower MSA Partners recognizes and will pursue conditional payments from MAP’s based on the following understanding:

  1. Tower MSA Partners will assist clients in recognizing a Medicare Advantage Plan and its demand letters.
    1. MAP demands are issued from the MAP directly, i.e., if the MAP is Humana, the demand will be issued on Humana letterhead.  This is unlike traditional Medicare conditional payment demands which are issued directly from CMS and on MSPRC letterhead.
    2. Forward all demand letters from MSPRC, as well as from any MAP or Part D provider when presented.
  2. Tower MSA Partners will be proactive in determining whether a MAP demand exists.
    1. Request enrollment/benefit history from claimants/plaintiffs prior to settlement.  As a Medicare beneficiary can move between traditional Medicare (Part A & B) and Medicare Advantage (Part C), the parties will need to clear both Medicare and Medicare Advantage, including Part D, for every case.
    2. Contact both MSPRC and MAP for conditional payment information.
    3. Follow the same protocols as are in place with traditional Medicare conditional payments to satisfy the interest of the MAP

Proactively addressing the claims of MAP’s in this manner will relieve much of the uncertainty surrounding their reimbursement rights.  For questions regarding conditional payment lien negotiations, MAP’s and Medicare Part D recovery, please contact Tower MSA Partners @ info@towermsa.com.

What Can Workers’ Comp Learn About Compounds From the Meningitis Outbreak?

Posted on October 29, 2012 by Rita Wilson

Compounding medicationAs of Tuesday, the Centers for Disease Control and Prevention reported 317 meningitis cases across several states, including 24 deaths. According to a preliminary report released on Monday, investigators from the Massachusetts Department of Public Health found “serious health and safety deficiencies” at the compound pharmaceutical lab  (NECC) tied to the fungal meningitis outbreak.

Investigators also found a leaky boiler adjacent to the clean room with a pool of water creating unsanitary conditions inside the Framingham, Mass.-based New England Compounding Center. Culture results from that potential contaminant are still pending, the report states.

Tacky mats used to trap dirt and other contaminants from workers’ shoes prior to entering a clean room “were visibly soiled with assorted debris,” according to the report from Massachusetts’ Executive Office of Health and Human Services.

Investigators also reported the compounding center distributed large batches of products in bulk, which was not allowed under the terms of its pharmacy license.

Managed Care Matters – Killing Compounds Update

According to Joe Paduda, “Although the FDA’s ability to regulate compounders is very limited, the agency studied compounds produced by12 different pharmacies a decade ago; a third of the products failed one or more standard quality tests.  Another test in 2006 found the same results.”

We know that compounding is regulated at the state level as it is considered to be “the same” as any other form of pharmacy practice, all of which are state controlled.  What is different about compounding, however, is that regulation of the compound itself, unlike FDA approval and regulation of standard drugs, is virtually non-existent.  In his recent post, (http://www.healthstrategyassoc.com/wordpress/2012/10/killing-compounds/ ) Joe Paduda also notes, “Only two states – MO and TX – test compounded drugs, and their findings are alarming indeed.  The strength of the potions concocted by compounders can vary greatly, with Texas determining a quarter of the compounds they tested were “too weak or too strong” and MO finding the potency is as much as three times higher than the compound was supposed to be.

What Can Workers’ Compensation to Do Protect Its Patients?

Compounds represent one of the most dangerous and fraudulent forms of medication dispensing. That being said, compounds can also be extremely beneficial when medically necessary, and in the right environment of audits and controls.

Compounds are difficult to analyze value and benefit. As such, they are never indicated for pain management in Evidence Based Medical (EBM) guidelines such as the Official Disabilities Guidelines (ODG).  Compounds are not approved or regulated by the FDA, but are allowed based on individual state pharmacy regulations.

While there are exceptions, as a general rule compounds should never be authorized and/or covered without consideration of the following intervention strategies:

  1. If Utilization Review (UR) is a part of the state regulatory landscape, compounds should be sent through UR before being authorized for fill the first time.
  2. If the UR reviewer deems the compound to be unnecessary, immediately direct your PBM to exclude it from the patient’s formulary.
  3. If UR isn’t an alternative, escalate the authorization request to a nurse, clinician or physician to request a determination of  necessity and appropriateness based on the state’s designated treatment guidelines.
  4. As an example, for states that follow ODG, compounds would be indicated as necessary and appropriate ONLY in the following situations:
    1. An indicated first line therapy was tried and failed,
    2. The patient has an allergy to an inactive ingredient of a more traditional form of a medication.

At the claim level, we cannot protect our patients against every danger, clinical oversight and scam artist seeking to benefit financially from the workers’ compensation system.  By consistently following the guidelines available, however, and encouraging more states to implement treatment guidelines like ODG, we can better position our companies and our patients to achieve the best in care, cost and compliance.

 

When NOT to Authorize an Additional MRI

Posted on October 24, 2012 by Tower MSA Partners

Additional MRI States that follow the Official Disability Guidelines (ODG) do not need to authorize an additional MRI
unless there are specific changes in pathology.
The ODG states that ³MRI¹s are test of choice for patients with prior back surgery,
but for uncomplicated low back pain, with radiculopathy, not recommended until after at least one month conservative therapy,
sooner if severe or progressive neurologic deficit. Repeat MRI is not routinely recommended,
and should be reserved for a significant change in symptoms and/or findings suggestive of significant pathology
(eg, tumor, infection, fracture, neurocompression, recurrent disc herniation).² (Bigos, 1999) (Mullin, 2000)
(ACR, 2000) (AAN, 1994) (Aetna, 2004) (Airaksinen, 2006) (Chou, 2007)

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Helen King Patterson
813.690.4787
helen@kingknight.com

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