In May, Innovasis Inc. agreed to pay $12 million to resolve civil allegations that it violated the Anti-Kickback Statute (AKS) and False Claims Act by paying various kickbacks to induce physicians to select Innovasis medical devices for spinal surgeries.
The alleged kickbacks in the scheme included:
- Consulting service fees for work never actually performed
- Referral fees tied to physician use of Innovasis products
- Sponsored conferences at luxury resorts
- Patent licenses Innovasis paid for but never used for meaningful product development
Innovasis’ settlement agreement serves as a reminder for providers to be cognizant of the financial remuneration they receive directly, or indirectly, from manufacturers. Sponsored continuing education (CE) programs and other conference opportunities are common forms of remuneration physicians are offered by pharmaceutical companies. Other increasingly common fees physicians are offered are in relation to de-identified, aggregated data.
Providers must perform diligence to review the appropriateness of manufacturer-funded CE, conferences and other benefits by considering whether the programs are actually educational and/or whether the value is appropriate.
- Hosting CE programs in offices or conference areas is generally appropriate. In contrast, CE programs at restaurants or entertainment venues are often considered inappropriate because these settings are not conducive to learning.
- Modest and reasonable meals are typically appropriate. For example, it is generally acceptable for sponsors to provide bagels and coffee, pizza, and soft drinks. In its Special Fraud Alert, the United States Department of Health and Human Services Office of Inspector General (OIG) identified inclusion of free alcohol at company-sponsored programs as a suspect characteristic that may raise AKS issues.
- Physicians should be wary of conferences that do not charge a registration fee. In Advisory Opinion 22-14, the OIG discussed how providing free CE services to physicians had a risk of implicating fraud and abuse issues under AKS. The OIG explained that these CE services have independent value to the physician and could induce them to prescribe or order the sponsoring company’s products.
- Additionally, attending and/or speaking at CE programs on the same or substantially similar topics can raise scrutiny. Programs should contain relevant information and attendees should have a legitimate business purpose for attending.
- If speaker fees or speaker opportunities are offered based on previous business generated by the prescriber, this increases the risk of scrutiny.
- With respect to data purchases or other licensing fees, it is important that a fair market value appraisal be performed to determine the actual value of the data being licensed, and it is important that the manufacturer actually utilize that data for a bona fide purpose—it would be inappropriate to license data as a means to compensate the prescriber if the “buyer” does not make use of that data (similar to the allegations associated with Innovasis’ patent licensing fees for intellectual property they did not otherwise use).
Prescriber relationships with manufacturers may create a variety of complex issues that must be individually evaluated to ensure regulatory compliance, particularly with the AKS. Contact Frier Levitt to speak with an attorney who can assist in evaluating these compensation arrangements and help to avoid federal and state anti-kickback liability.
