Senators Propose Bill To Expand HHS Authority To Regulate Business Practices of Hospital Supply Purchasers
Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights Chair Mike DeWine (R-Ohio) and ranking member Sen. Herb Kohl (D-Wis.) on Friday introduced a bill that would provide HHS with more authority to regulate the sale of medical supplies to hospitals, a "part of the economy where numerous abuses have been uncovered in the last two years," the New York Times reports (Williams Walsh, New York Times, 10/2). The senators introduced the legislation after the subcommittee last month heard evidence of questionable business practices in contracts between medical supply companies and hospital supply purchasers -- for-profit companies established by groups of not-for-profit hospitals that negotiate the purchase of billions of dollars in medical supplies each year.
The Department of Justice recently launched a criminal investigation into whether hospitals and other providers have fraudulently overcharged Medicare and other public health insurance programs for products used in medical services. The investigation focuses on whether rebates, discounts, barter arrangements and refunds provided to hospital supply purchasers by medical supply companies have led to such overcharges. The investigation likely seeks evidence of health care fraud, conspiracy to defraud the United States, theft or bribery involving programs receiving federal funds, obstruction of investigations and other possible violations.
Under an exemption in federal antikickback law, hospital supply purchasers can accept payments from medical supply companies, provided that they do not exceed a "safe harbor" limit (California Healthline, 9/15). The current limit is "ambiguous," the Times reports.
The bill would not ban the payments that hospital supply purchasers can receive from medical supply companies but would limit them to 3% of the amount of related hospital purchases, as well as clarify other regulations. In addition, the legislation would require HHS to monitor hospital supply purchasers and certify that they have complied with the regulations.
Under the bill, hospital supply purchasers found in violation of the regulations would lose their "safe harbor" protection, which "could very likely put them out of business," the Times reports (New York Times 10/2).