Thursday, July 31, 2003

WASHINGTON - ABC Plus has decided it’s no longer worth the risk to offer pharmacy management agreements (PMA) to home medical equipment providers.

Shortly after the OIG issued a special bulletin this spring questioning the validity of some PMAs, the Rainsville, Ark., mail-order respiratory pharmacy decided to exit that business line.

“We started looking at the opinion, and there is such immeasurable risk when you are dealing with the government,” said Keith Sanderson, ABC president. “In looking at our clients’ best interests, we decided we don’t need to be engaged in these types of agreements moving forward.”

In its April announcement, the OIG stated that it doesn’t like joint ventures where one side appears to shoulder most of the business risk in exchange for patient referrals. That position is nothing new, but until now, the OIG has more or less ignored such arrangements. The Special Bulletin signals a change in OIG scrutiny. Some industry watchers feel the Special Bulletin goes too far and may prompt the OIG to investigate legitimate joint ventures, which the government admits exists, as well as obvious kickback relationships. Any tangle with the OIG, even if a company defends itself effectively, is bound to be expensive. Hence, ABC Plus’ conservative reaction to the Special Bulletin.

Tampa, Fla.,-based MP Total Care, arguably the largest company to offer PMAs, intends to maintain that service, said CEO Kevin Pawlowski.

“We have always done things a little different, and it’s tougher to do business with us because we follow the rules,” Pawlowski said.

Thus far, the OIG has taken no enforcement action against joint venture arrangements. Look for that to change later this year or early next, following a grace period granted to allow companies to re-evaluate their joint ventures, say industry sources.

“What the industry has to guard against getting lulled to sleep and thinking the OIG is not going to do anything,” said Jeff Baird, a healthcare attorney with Brown & Fortunato in Amarillo, Texas. “The OIG came out with a strong public statement that they have these concerns, and you can’t ignore that.”