Reimbursement Report

What Manufacturers Should Know About Reimbursement and Case Management Hotlines for Providers

By Kristofer C. Munroe

While support services are important, manufacturers must be aware of both state and Federal regulations, as there can be conflicts and differences in interpretations.

The operation of a manufacturer-sponsored reimbursement or case management hotline can be a powerful and productive tool in supporting patient access to a new and medically necessary technology. As is often the case, the use of such a tool requires the navigation of some important compliance issues. Life science companies are subject to rules and regulations that prohibit conduct that is commonly accepted and legal in businesses outside of health care. Along with a well-developed set of federal regulations, several states are attempting to implement their own rules. The web of state regulations sometimes conflicts with federal rules, and it is not uncommon to see agency interpretations that seem out of step with both the federal regulations and even a state’s own rules. In an attempt to understand the challenges facing life science companies and manufacturers, this article examines one state law… that leads to one regulation… that leads to one agency interpretation… that demonstrates the importance of compliance planning in providing support services.

Massachusetts General Law Chapter 111N went into effect on January 1, 2009. The purpose of the law was to regulate the pharmaceutical and medical device industries by imposing a gift ban and a reporting requirement. The gift ban portion of the law required the Massachusetts Department of Public Health (the “Department”) to adopt a standard marketing code of conduct for all pharmaceutical or medical device manufacturing companies (PMDMCs) that employ a person to sell or market prescription drugs or medical devices in Massachusetts.

The Department responded to its obligation under Chapter 111N by creating the Department’s Code of Conduct for pharmaceutical and medical device manufacturing companies at 105 CMR 970.000. The regulation includes marketing restrictions, compliance requirements, and disclosure requirements for PMDMCs. Sensibly, the Department recognized that reimbursement channels are often difficult to navigate and that healthcare providers often need support by adding at 970.008 (2)(f):

“Nothing in 105 CMR 970.000 shall prohibit the following . . . [the] [p]rovision of reimbursement information regarding products, including identifying appropriate coverage, coding, or billing of products, or of procedures using those products and information, in support of accurate and responsible billing to Medicare and other payers and provision of information designed to offer technical or other support intended to aid in the appropriate and efficient use or installation of products, provided, however, that this technical or other support shall not be offered or provided for the purpose of inducing health care practitioners to purchase, lease, recommend, use, or arrange for the purchase, lease or prescription of products”.

As part of the implementation process, the Department rolled out a series of “Frequently Asked Questions” guidance documents to help the public and industry understand how the law and the regulations would be enforced.

In the most recent Frequently Asked Questions Pharmaceutical and Medical Device Manufacturer Code of Conduct (FAQ Document) the Office of the General Counsel for the Department provided the following question and answer (FAQ #10) as the position of the Department on reimbursement hotlines as viewed through the statute and related regulation:

“10) Is running a reimbursement hotline considered ‘sales and marketing activities?’  A company runs a reimbursement hotline that contracts with PMDMCs to provide services. After a doctor makes a decision to use a specific drug or a specific medical device, and after the patient’s insurance carrier refuses to authorize payment, the doctor then calls the reimbursement hotline. Staff at the hotline handle the appeal of the rejection, and are usually successful. Does this service conflict with the new Massachusetts pharmaceutical and medical device marketing law and regulation?

The Department would consider a reimbursement hotline to be “sales and marketing activities” and it would not be permissible under Massachusetts law because it offers ‘in kind’ services to influence prescribing behavior. [sic]”    

The underlying regulation recognizes that there is a need to provide “…reimbursement information regarding products, including identifying appropriate coverage, coding, or billing of products…”  However, it also recognized that reimbursement support services can be provided via high- and low-risk channels, as it goes on to state that the support “shall not be offered or provided for the purpose of inducing health care practitioners to purchase, lease, recommend, use, or arrange for the purchase, lease or prescription of products”. FAQ #10 draws no such distinction and looks inexplicably harshly at all reimbursement support delivered via any mechanism that could be described as a reimbursement hotline. The position in FAQ #10 flies in the face of the regulation that is was intended to help implement. Arguably, the interpretation as written, is harmful to patients, and detrimental to clinicians wanting to provide the most appropriate care for their patients. It stifles innovation, and is inapposite to State and Federal law; however, it is still an agency interpretation, and until it is revised, support services provided in Massachusetts must be structured in a way to account for it. A reimbursement or case management support service that interacts with providers in Massachusetts could expose the manufacturer to risk if those agency interpretations aren’t considered when designing the program.

Support services are important: They are important to patients because they improve access to care, and they are important to manufacturers because they can speed the adoption of new technology. It is necessary to remember that both the Federal and various state governments have interests in regulating the provision of health care. More importantly, since the Patient Protection and Affordable Care Act, properly structured support services can operate under a Federal safe harbor if they improve patient access to care and present a low risk of harm to the Federal health programs. Life science companies and manufactures should be aware of FAQ #10, because it is an example of challenges facing life science companies and manufacturers. It shows how one state law that starts out relatively clear can end up in the weeds. While seemingly flawed, FAQ #10 is a reminder of why compliance planning during the development of a support line is so important, and why the experience to help with it should be critical selection criteria for any support line vendor.

The information in this article is provided for educational and informational purposes only. It should not be treated as legal advice and does not form an attorney client relationship.


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