Supervision of Hospital Outpatient Diagnostic Tests in the 2010 OPPS

The calendar year 2010 Outpatient Prospective Payment System final rule, published by the Centers for Medicare & Medicaid Services (“CMS”) on October 30, 2009, provides a “restatement and clarification” of the requirements for physician supervision of hospital outpatient diagnostic tests. Generally, all hospital outpatient diagnostic services provided directly or under arrangement, whether furnished in the main buildings of the hospital, in a provider-based on-campus department, in a provider-based off-campus department or in a non-hospital facility, must comply with the physician supervision requirements (general, direct or personal supervision) for each individual test as listed in the Medicare Physician Fee Schedule Relative Value File.

The definitions of general, direct and personal supervision as codified at 42 C.F.R. § 410.32(b)(3)(i)-(iii), and revised under this final rule, apply to the supervision of hospital outpatient diagnostic tests. In the case of diagnostic tests requiring direct supervision furnished directly by the hospital or under arrangement in the main hospital buildings or in an on-campus provider-based department, the physician must be on the hospital’s campus, whether in the main buildings of the hospital, in an on-campus provider-based department, or in non-hospital space located on campus, and immediately available to furnish assistance and direction throughout the performance of the test. In the case of diagnostic tests requiring direct supervision furnished directly by the hospital or under arrangement in an off-campus provider-based department, the supervising physician must be present in the off-campus provider-based department and immediately available to furnish assistance and direction throughout the performance of the test. Finally, for tests requiring direct supervision that are performed in physician offices and other non-hospital locations and provided by the hospital to its outpatients under arrangement, the supervising physician must be present in the physician office or other non-hospital space in which the test is performed. CMS requires physicians to supervise outpatient diagnostic tests; non-physician practitioners cannot properly supervise such tests.

For more information, please see the 2010 OPPS Final Rule, beginning with page 983. Lara Parkin

2010 Physician Fee Schedule Final Rule Clarifies Stark "Stand in the Shoes" Requirements

On October 30, 2009, the Centers for Medicare and Medicaid Services (“CMS”) published its CY 2010 physician fee schedule final rule, in which it clarifies the “stand in the shoes” provision to the Stark Law prohibition on physician self-referrals. The rule finalizes the proposed rule without change and amends 42 C.F.R. § 411.354(c)(3)(i), to clarify that written agreements need not be signed by all physicians in a physician organization in order to meet relevant Stark Law exceptions. The revised language eliminates the previous attempt at defining the relevant parties and states that “[w]hen applying the exceptions in § 411.355 and § 411.357 of this part to arrangements in which a physician stands in the shoes of his or her physician organization, the relevant referrals and other business generated ‘between the parties’ are referrals and other business generated between the entity furnishing DHS and the physician organization (including all members, employees, and independent contractor physicians).” The revised language “reiterates that the relevant referrals and other business generated between the physician organization and the entity furnishing DHS are the referrals of all physicians in the physician organization (including all members, employees, and independent contractors), not simply the referrals made by each physician who stands in the shoes of the physician organization.” By revising the language CMS intends to “eliminate any possible public misconception that all physicians in a physician organization (whether or not they stand in the shoes of the physician organization) must sign the writing(s) memorializing a compensation arrangement between their physician organization and an entity furnishing DHS.” The final rule will be published in the Federal Register on November 25, 2009 and is available here. Mark Faccenda

Omnicare Agrees to Pay $98 Million to Resolve Kickback Allegations

On November 3, 2009, the Department of Justice announced a settlement with Omnicare, Inc. resolving allegations that the nation’s largest nursing home pharmacy engaged in kickback schemes with drug manufacturers. According to the Department of Justice, Omnicare solicited and received kickbacks from Johnson & Johnson in exchange for recommending that physicians use the pharmaceutical manufacturer’s drugs. The kickbacks allegedly took a variety of forms, including payments disguised as data purchase fees, educational grants and fees to attend Omnicare meetings. The government also alleged that Omnicare received $8 million in kickbacks from IVAX Pharmaceuticals in exchange for Omnicare’s agreement to purchase $50 million in drugs from the manufacturer. Under the terms of the settlement agreement, Omnicare will pay a total of $98 million, with $68.5 million being paid to the federal government and $43.5 million designated for State Medicaid programs and the District of Columbia. IVAX will pay $14 million. Both Omnicare and IVAX will enter into corporate integrity agreements as a part of the settlement. To read the DOJ press release, click here. Peter Leininger

Required Accreditation of Advanced Diagnostic Imaging Services is Coming

As required by the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”) section 135, beginning January 1, 2012, with respect to the technical component of advanced diagnostic imaging services for which payment is made under the fee schedule, and that are furnished by a supplier, payment may only be made if such supplier is accredited by an accreditation organization designated by the Secretary of the Department of Health and Human Services. In the 2010 Physician Fee Schedule (“PFS”) final rule published by the Centers for Medicare & Medicaid Services (“CMS”) on October 30, 2009, CMS promulgated a new section 414.68, which governs the implementation of accreditation standards for such suppliers.

The rule defines “advanced diagnostic imaging” to include MRI, CT, nuclear medicine and positron emission tomography. CMS has chosen to utilize clinical guidelines that are already accepted by the experienced accreditation organizations already performing accreditation, under the theory that the suppliers should be able to assimilate these new accreditation requirements easily into their medical practice. The accreditation standards would also require suppliers to (1) establish and maintain a quality control program to ensure the technical quality of diagnostic images produced by the supplier, (2) ensure the equipment used meets performance specifications, and (3) ensure the safety of personnel.

In the 2010 PFS final rule, CMS states that it will designate accrediting organizations based on, at minimum, their ability to meet the requirements set forth in MIPPA, including the ability of the organization to conduct timely reviews of accreditation applications and whether the organization uses random site visits, site audits or other strategies for ensuring accredited suppliers maintain compliance with the accreditation requirements. CMS expects to meet the January 1, 2010 statutory deadline to designate such organizations. For more information, please see the 2010 Physician Fee Schedule final rule, starting at page 572. Lara Parkin

FDA Issues Industry Guidance on Emergency Use Authorization Requests for H1N1 IVD Tests

On November 6, 2009, the U.S. Food and Drug Administration (“FDA”) issued guidance to industry on the information and data required to be submitted in an Emergency Use Authorization (“EUA”) request for in vitro diagnostic (“IVD”) devices intended for use in diagnosing the 2009 H1N1 flu virus. The guidance, entitled “In Vitro Diagnostic 2009 H1N1 Tests for Use in the 2009 H1N1 Emergency,” was issued following the Swine Influenza A1 emergency declared by the Secretary of Health and Human Services in April 2009. After a declaration of emergency, provided certain criteria are met, the FDA may authorize the use of unapproved or uncleared medical products, or unapproved or uncleared uses of previously cleared or approved products. An EUA ends when the emergency declaration terminates or when FDA revokes the authorization. To date, no IVD tests have been approved or cleared for the diagnosis of H1N1, although FDA has granted several EUAs. In a press release, the FDA said that while it encouraged manufacturers to submit premarket applications for the tests, the agency recognized that it may not be possible to generate complete clinical validation data that would normally be included in an application. In the guidance, FDA provides information along with specific examples of package inserts and other documents required for the EUA. To view the guidance, click: http://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/UCM188679.pdf. Lisa Thompson

FDA Commissioner Announces Initiative to Reduce Medication Errors

On November 4, 2009, the U.S. Food and Drug Administration (“FDA”) announced a new “Safe Use Initiative,” a collaborative project to reduce medication errors and other preventable harm from medications. As part of this initiative, FDA intends to collaborate with health care professionals, drug companies, patients, insurers and other stakeholders to identify drugs and drug classes that are linked to preventable harm. It will create a list of specific problems, cross-sector interventions for reducing harm from these problems and the metrics for success. FDA Commissioner, Dr. Margaret Hamburg, explained that “too many people are harmed every year from inappropriate medication use” and noted that FDA, through this new Safe Use Initiative, will develop targeted solutions for reducing these injuries. Dr. Hamburg and Dr. Woodcock, director of FDA’s Center for Drug Evaluation and Research, prepared a report entitled “FDA’s Safe Use Initiative – Collaborating to Reduce Preventable Harm from Medicines,” which provides more detail about the initiative and also highlights several risk-reduction projects that may benefit from Safe Use collaboration. These projects include evaluating consumer medication information, communicating about the risk of inadvertent overexposure to acetaminophen, implementing safeguards against surgery fires caused by alcohol-based surgical preps, and avoiding contamination of multiple-use medication vials. To further advance its new initiative, FDA will hold a series of public meetings to gather feedback as the candidate list develops and will also open a public docket to receive comments on the report and proposed candidate cases. In addition, FDA made public new guidance for companies that manufacture, market or distribute over-the-counter liquid medications packaged with dosage delivery devices such as calibrated cups, droppers, syringes and spoons. The guidance document, entitled “Dosage Delivery Devices for OTC Liquid Drug Products,” was posted for advanced viewing in the Federal Register on Wednesday of this week. For more information about this initiative, please click here. To read Dr. Hamburg and Dr. Woodcock's report, please click here. For the guidance posted in the Federal Register on Wednesday, please click here. Cori Annapolen Goldberg