The Office of the Inspector General (OIG) issued its first Special Fraud Alert in over six years Nov. 16, 2020. The Alert highlights growing concerns with pharmaceutical and medical device companies’ speaker programs.
The OIG considers speaker programs as “company-sponsored events at which a physician or other health care professional (collectively, HCP) makes a speech or presentation to other HCPs about a drug or device product or a disease state on behalf of the company.”
These HCPs are not employees of the drug or device company but are, as speakers, paid an honorarium, and attendees to the program may be paid remuneration through free meals, drinks, or entertainment.
Leah Ruedinger, Mitchell Hamline 2013, has worked on the payor and provider side of health care for the past six years.
Speaker programs get murky around remuneration provided to both the speaker and the attendees, and whether such remuneration violates the anti-kickback statute (AKS).
Throughout this Special Fraud Alert, the OIG highlights skepticism around the “educational value of such programs,” focusing on evidence from its numerous investigations, which often found that the speaker programs were not provided with education in mind, but rather to increase referrals.
In their investigations, the OIG found HCPs received “generous compensation” to speak in “circumstances not conducive to learning,” and the HCPs addressed attendees who had “no legitimate reason to attend.”
In one case, the programs were held at a high-end restaurant where the average food and alcohol cost per attendee was over $550. In another, the HCP’s remuneration was conditioned on sales targets, such as where the HCP had to write a minimum of prescriptions in order to receive the honoraria.
These cases strongly “suggest one purpose of the remuneration to the HCP speaker and attendees is to induce or reward referrals” that lead to a potential AKS violation.
Anti-Kickback Statute Implications
The AKS1 makes it a criminal offense to knowingly and willfully solicit, receive, offer, or pay any remuneration to induce or reward referrals for, or orders or purchases of, items or services reimbursable by a federal health care program. Remuneration includes anything of value either directly or indirectly, overtly or covertly, in cash or in kind.2 Criminal liability applies to parties both providing and receiving remuneration.
Punishment is also steep under the AKS, with a fine of up to $100,000, imprisonment up to 10 years, or both. Additionally, a conviction under the AKS leads to exclusion from all federal health care programs, including Medicare and Medicaid.
Regardless of the numerous enforcement actions, drug and device companies are utilizing speaker programs often, and at quite the price tag.
According to the Open Payments website, which tracks payments to covered recipients (HCPs) from reporting entities (drug or device companies), in 2017, 2018, and 2019 drug and device companies paid HCPs nearly $2 billion under the “compensation for services other than consulting, including serving as faculty or as a speaker at a venue other than a continuing education program.” The amount for 2020 has not yet been published.
Given the dollars at play, it is no surprise the OIG has increased scrutiny on speaker programs, especially given the OIG’s track record for enforcement actions surrounding these programs.
Enforcement actions from the OIG and Department of Justice regarding fraud cases with speaker programs have revolved heavily around violations of the AKS. Investigations found that many HCPs were generously compensated for speaking at programs not designed for educational purposes, but rather in a way to generate referrals.
Most recently, in October 2020, the device company Medtronic USA Inc. agreed to pay $8.1 million to settle allegations that it violated the AKS and False Claims Act by holding and paying more than $87,000 for over 130 events at a restaurant owned by a neurosurgeon. The government alleged that the events were often lavish, social in nature where the physician invited his social acquaintances and potential and existing referral sources, and that sales personnel falsely stated events were to discuss educational or business information.
Does a Speaker Program Violate the Anti-Kickback Statute?
The OIG acknowledges facts, circumstances, and intent surrounding each speaker program are crucial in determining AKS liability. In the Special Fraud Alert, the OIG highlighted several non-exhaustive list of characteristics that could, independently or together, indicate a violation of the AKS. These characteristics are when:
the company sponsors speaker programs where little or no substantive information is actually presented;
alcohol is available or a meal exceeding modest value is provided to the attendees of the program (the concern is heightened when the alcohol is free);
the program is held at a location that is not conducive to the exchange of educational information (e.g., restaurants or entertainment or sports venues);
the company sponsors a large number of programs on the same or substantially the same topic or product, especially in situations involving no recent substantive change in relevant information;
there has been a significant period of time with no new medical or scientific information, nor a new FDA-approved or cleared indication for the product;
HCPs attend programs on the same or substantially the same topics more than once (as either a repeat attendee or as an attendee after being a speaker on the same or substantially the same topic);
attendees include individuals who don’t have a legitimate business reason to attend the program, including, for example, friends, significant others, or family members of the speaker or HCP attendee; employees or medical professionals who are members of the speaker’s own medical practice; staff of facilities for which the speaker is a medical director; and other individuals with no use for the information;
the company’s sales or marketing business units influence the selection of speakers, or the company selects HCP speakers or attendees based on past or expected revenue that the speakers or attendees have or will generate by prescribing or ordering the company’s product(s) (e.g., a return on investment analysis is considered in identifying participants); and/or
the company pays HCP speakers more than fair market value for the speaking service or pays compensation that takes into account the volume or value of past business generated or potential future business generated by the HCPs.
Substitutes for Speaker Programs
The OIG has made it abundantly clear – through their enforcement actions, educational materials for HCPs, and this Special Fraud Alert – that:
HCPs could face liability under the anti-kickback statute for knowingly and willfully soliciting or receiving remuneration in connection with speaker programs in return for prescribing or ordering products reimbursable by a Federal health care program.
The OIG also acknowledges the importance of education between the drug and device companies and HCPs, but notes it can be accomplished without remuneration to the HCPs.
The OIG suggests in its Fraud Alert that education can be provided through online resources, drug or device package inserts, third-party educational conferences, and medical journals. The abundance of other avenues available without remuneration also “suggests that at least one purpose of remuneration associated with speaker programs is often to induce or reward referrals.”
Takeaway: Speaker Programs Need Careful Consideration
Although the OIG is not saying speaker programs are illegal, these programs are clearly on its radar as a potential source of fraud and abuse. The OIG’s Fraud Alert notes that it has “significant concerns” regarding speaker programs and the remuneration surrounding them. The OIG does not want to “discourage meaningful HCP training and education,” but wants to “highlight certain inherent risk of remuneration related to speaker programs.”
Through this Fraud Alert, the OIG has essentially put the drug and device companies and HCPs on notice about improper speaker programs and that they should expect an increase in enforcement activity. Given in-person programming has been on hold this past year, it appears quite timely that the OIG would call attention to in-person activities now, to allow HCPs and drug and device companies time to review their internal policies surrounding speaker programs before in-person speaker programs begin again.
Health care professionals and drug and device companies should add speaker programs to their current risk analysis and carefully assess whether their programs are flirting with an AKS violation by using the OIG characteristics noted above. Companies should review their policies and procedures for speaking and or hosting speaking programs, including assessing payment structures for speakers, venue selection, meal and lodging offerings, etc. Payment structures should also be assessed for remote HCPs, too, to ensure their payment is appropriate.
Lastly, the OIG continues to offer and publish Advisory Opinions that provide guidance for proposed business arrangements surrounding compliance with fraud and abuse laws. These are great tools to assess whether a proposed business arrangement is compliant with fraud and abuse laws.
Remember, the Advisory Opinions are only applicable to the direct parties involved, but they do offer insight into the OIG’s thoughts on what constitutes compliance with fraud and abuse laws.
This article was originally published on the State Bar of Wisconsin’s Health Law Blog. Visit the State Bar sections or the Health Law Section webpages to learn more about the benefits of section membership.
1 42 U.S.C. § 1320a-7b(b).
2 42 U.S.C. § 1320a-7b(b)(1)–(2)