But OIG allows university pharmaceutical deal

Lest you think OIG has something against pharmacy deals, the agency has also blessed a contract between a university and a pharmacy company which will administer an outpatient pharmacy program for the school's hemophilia center. This is a good sign for providers engaged in disease treatment programs, says attorney Paul DeMuro, JD, at Latham Watkins in San Francisco.

Advisory opinion 98-15 addresses an arrangement that's under the auspices of Section 340B of the Public Health Service Act, which allows some entities — including hemophilia centers — to buy some outpatient drugs at a steep discount. In this case, the pharmacy company handles billing and collections on an as-needed basis. The company is paid according to a fee schedule that sets a sliding scale depending on how many units of anti-hemophilia factor are dispensed, with compensation at fair-market value. Payment is only for pharmacy services, and not for the drugs themselves, which the school will purchase directly from manufacturers.

Because of Medicaid rules regarding reassignments and multiple discounts, Medicaid fee-for-service patients are barred from the pharmacy program. Other patients will be warned that the university and the company share a financial relationship.

The deal doesn't fit a safe harbor — an OIG guarantee of immunity — because compensation isn't fixed rigidly in advance. And while the company won't be getting referrals for Medicaid fee-for-service patients, excluding business from federal programs is problematical because it's tough to avoid implicating the federal health care system in any contract, OIG says. More important, the agency is concerned that separating federal and private pay patients might be a sham because providers can swap referrals for discounted private pay business in return for higher-paying federal business.

Nonetheless, regulators are satisfied with the deal because:

s The pharmacy company doesn't control the prices the hemophilia center will charge for drugs and won't be filing the claims for the drugs.

s Compensation is at fair market value.

s Patients will be informed that there is a financial relationship between the school and pharmacy company and will be given a list of alternate providers.

In addition to a university/pharmacy deal, the OIG has also OK’d a plan by a renal dialysis company to support a charity that helps ESRD patients. The company will fund a program that pays health insurance premiums for needy patients. As in past advisory opinions, OIG says it's satisfied with such arrangements as long as the company routes the funds through an independent charity rather than to individual beneficiaries. Patients will also be free to choose other providers besides the dialysis company.