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The President’s Proposal

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On Monday, February 22, President Obama put forward a series of health reform proposals leading up to the February 25 bipartisan health care summit. These proposals can be found here. I describe the proposals at length at the Health Affairs blog. Of particular legal interest are the proposals provisions for health care fraud and abuse and for pharmaceutical patent litigation.

The fraud and abuse proposals, drawn both from the President’s 2011 budget and from Republican proposals, would:

  1. Create a comprehensive Medicare and Medicaid sanctions database, to be overseen by the HHS Inspector General;
  2. Require registration and background checks of billing agencies and individuals and strengthen exclusion authority;
  3. Open up the health care integrity and protection data bank to quality control and peer review organizations, and to private plans that are involved in federal health care programs;
  4. Hold Medicare administrative contractors liable for payments made to excluded individuals or entities or for denied claims;
  5. Strengthen oversight of community mental health centers;
  6. Limit bankruptcy discharges for fraudulent health care providers and suppliers;
  7. Enhance real-time data review to identify fraudulent payments;
  8. Increase sanctions for illegal acquisition and distribution of Medicare or Medicaid beneficiary identification numbers or billing privileges;
  9. Study the use of universal product numbers for selected items and services paid for by Medicare;
  10. Improve state monitoring of high-risk billing activity to identify worrisome patterns of drug prescribing and utilization;
  11. Apply extrapolation of error rates to MA plans to recoup overpayments;
  12. Increase the authority of MA contractors to conduct medical reviews; and
  13. Coordinate CMS and IRS investigations and enforcement to target high-risk provider types in high-vulnerability areas.

The President’s proposal, like the House bill, also addresses “pay for delay” settlements of llitigation between brand-name and generic drug manufacturers designed to keep generics of the market, which the Federal Trade Commission estimates costs consumers $35 billion per decade. The President’s Proposal declares anticompetitive and unlawful any agreement in which a generic drug manufacturer receives anything of value from a brand-name drug manufacturer and in which the generic drug manufacturer agrees to limit or forego research, development, marketing, manufacturing, or sales of the generic drug. This presumption against the legality of the agreement can be overcome only if the parties to such an agreement provide clear and convincing evidence that the procompetitive benefits of the agreement outweigh its anticompetitive effects. The FTC is given authority to enforce the prohibition.

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The views reflected in this expert column are those of the individual authors and do not necessarily represent those of the O’Neill Institute for National and Global Health Law or Georgetown University. This blog is solely informational in nature, and not intended as a substitute for competent legal advice from a licensed and retained attorney in your state or country.

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