PMAs come under increased scrutiny from NSC

Friday, October 31, 2003

WASHINGTON - The National Supplier Clearinghouse has begun mailing warnings to suppliers they feel have entered into non-compliant pharmacy management agreements.

In the letters, the NSC states that the supplier is not in compliance with one or more supplier standard. The NSC goes on to say it will deactivate the supplier number on a certain date if the supplier cannot show that it is compliance with the standards, said Jeff Baird, a healthcare attorney with Brown & Fortunato in Amarillo, Texas.

A spokesperson for the NSC said the letters are just part of the agency’s ongoing efforts to monitor compliance with supplier standards.

According to Baird, however, the letters are a relatively recent phenomenon, and began appearing in droves over the summer.

In a pharmacy management agreement, a mail-order drug company manages a DME’s respiratory med business. Pharmacy management companies typically manage many different DME pharmacies, generally in the same facility.

NSC’s concern with PMA’s is different than that of the OIG. Last April, the OIG issued a Special Bulletin that put providers on notice that pharmacy management agreements were under increased scrutiny for possible kick-back violations.

The OIG views some such arrangements as violating the anti-kickback statute, believing the management company pays money to the DME in exchange for patient referrals.

For the most part, the NSC wants to make sure that individual pharmacies are housed in separate facilities as required by Supplier Standard 7, Baird said.

“A pharmacy arrangement can satisfy Supplier Standard 7 such that the NSC would not have an issue, but the pharmacy arrangement could still end up being nothing more than a disguised kick back in the eyes of the OIG,” Baird said. “They are different issues.”