• Medtronic Spine, LLC Settlement Reinforces Risk of Medical Device Manufacturers Providing Reimbursement Consulting (Part II)
  • July 29, 2008
  • Law Firm: McGuireWoods LLP - Richmond Office
  • Part two of this two-part series discusses the Medtronic settlement with the Department of Justice and the Office of Inspector General and the remedial measures that Medtronic will be required to undertake as part of its Corporate Integrity Agreement with the Office of Inspector General.

    III. The Settlement and Corporate Integrity Agreement

    In settling the allegations against Kyphon, Medtronic agreed to pay a $75 million fine and enter into a Corporate Integrity Agreement with the OIG. The CIA requires Kyphon to implement certain policies and procedures, engage in training of its employees, and submit to ongoing monitoring by an independent review organization. The CIA requires Medtronic to promulgate policies and procedures applicable to the provision of reimbursement consulting to customers. These policies and procedures must include the following:

    i. The Federal health care programs’ use of reimbursement codes in identifying reimbursable items;

    ii. A process for addressing questions from Kyphon’s customers or physician users regarding Federal health care program reimbursement for reimbursable items;

    iii. How to disseminate information regarding reimbursement for reimbursable items; and

    iv. Use of current resources of official guidance from Medicare contractors and the Centers for Medicare and Medicaid Services regarding reimbursement questions related to reimbursable items.

    The CIA also requires Medtronic to provide certain specific reimbursable items training to all employees. The training must include a discussion of the following topics:

    i. Appropriate methods to legally promote and sell Kyphon’s products;

    ii. The personal obligation of each employee to comply with all applicable health care program requirements; and

    iii. The personal obligation of each person involved in customer relations, reimbursement, sales, and marketing to comply with the law and to ensure the accurate provision of information regarding Kyphon’s products and payer resources.

    In addition to reimbursement training, Kyphon is required to provide Anti-Kickback training which must include a discussion of:

    i. Arrangements that potentially implicate the federal Anti-Kickback Statute and other relevant regulations and guidance;

    ii. Kyphon’s policies, procedures, and other requirements relating to proper arrangements;

    iii. The personal obligation of each “arrangements covered person” to know the applicable legal requirements and company procedures;

    iv. The legal sanctions under the federal Anti-Kickback Statute; and

    v. Examples of how the Anti-Kickback Statute can be violated.

    Beyond these training procedures, Kyphon is required to implement a compliance program which involves tracking and monitoring all relationships with Kyphon referral sources, including physicians and facilities.

    The requirements of the CIA demonstrate steps that all medical device manufacturers should consider to attempt to prevent the conduct alleged in the Medtronic settlement. These policies and training should be particularly considered by medical device companies that provide any form of reimbursement consulting to customers. Implementing policies and procedures on reimbursement consulting and reimbursement information dissemination may decrease the risk of False Claims Act violations. The training of sales personnel and all staff on the implications of the Anti-Kickback Statute and the False Claims Act is equally important. These types of prophylactic steps may prevent a potential government investigation or, in the event that an investigation is commenced, demonstrate a company’s attempted compliance with applicable laws and regulations and mitigate potential fines or penalties.