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Medicare Anti-Kickback Safe Harbor Statute is “An Excellent Example of Good Intentions Gone Awry”, says AMAC spokesman

medicareWASHINGTON, DC – As the saying goes, the road to hell is paved with good intentions and, according to Andrew Mangione, “an excellent example of good intentions gone awry is the Medicare Anti-Kickback Safe Harbor Statute.  Originally intended to ensure fair marketing and reduce fraud for the Medicare and Medicaid programs, the safe harbor statute actually enables pay-to-play schemes.”

Mangione, a vice president at the Association of Mature American Citizens [AMAC], has an extensive background in healthcare, says “most hospitals belong to GPOs for the purpose of leveraging the combined purchasing power of multiple institutions when buying supplies, including medical supplies and prescription drugs.  The mission of the GPOs was clear: save money for their member hospitals, and for approximately 80 years this “co-op” model worked as intended.”

Originally, the administrative expenses of GPOs were covered by their member hospitals.  But, in 1991, when the statute was implemented, vendors began paying their expenses without the threat of being accused of engaging in bribery, as long as the fees paid did not exceed 3% of sales.

“In the ensuing years, the GPOs have circumvented the rules by playing a game of semantics, inventing other kinds of fees (a/k/a kickbacks), including advance payments and payments for marketing,” says Mangione.  “In effect, the GPOs became de facto agents for their vendors.”

He believes that repealing the Anti-Kickback Safe Harbor Statute would generate tens of billions of dollars in savings for the hospital supply chain (which includes the Medicare and Medicaid programs).  It would also promote free-market competition for the drug and medical supply marketplace at the same time.

But the patient advocacy group, Physicians Against Drug Shortages [PADS], estimates that “total kickbacks paid by suppliers to GPOs have sometimes exceeded half of the suppliers’ annual revenues for a single drug.”  PADS says that group purchasing organizations currently control buying for more than $300 billion a year in hospital goods, including drugs, devices and supplies for about 5,000 acute care hospitals and many more outpatient clinics, surgery centers and long term care facilities.

Oversight has been lacking and so a pay-to-play system has emerged, Mangione alleges.  “Medical suppliers and drug manufacturers can simply purchase market share by paying exorbitant fees to GPOs in return for contracts that give their products exclusive access to GPO-member hospitals.”

Meanwhile, in 2003 Pharmacy Benefit Managers [PBM] achieved protection under the statute.  The PBM industry was created specifically to administer drug benefits for health plans, including commercial, employee and retiree plans and Medicare Part D.

Thus, Mangione contends, the safe harbor statute has created a system where purchasing agents, and not clinicians decide which drugs, medical devices and supplies physicians can use for their patients.  “These decisions could be based largely on how much kickback revenue these products can generate for the GPOs and PBMs.”

Mangione says that repealing the safe harbor provision would create free market competition and foster innovation. He believes that it would result in potential cost reductions estimated at $100 billion, including savings for the Medicare and Medicaid programs. “These estimates were calculated through an analysis of a variety of sources, including government data and empirical studies.”

Repeal of the safe harbor provision has resonated with physicians. In addition to the Physicians Against Drug Shortages organization, the American College of Emergency Physicians (ACEP) chimed in when in late 2017 it formally adopted a resolution calling for repeal.  ACEP has resolved to “work with other medical specialties and patient advocacy groups to seek Congressional legislative repeal of the Group Purchasing Organizations’ safe-harbor protection.”

The benefits of repealing the safe harbor provision have drawn the attention of Congress, Mangione notes.  “If successful, repeal could be used as a catalyst for the Trump Administration to fix our broken healthcare system, rid it of Obama-era inefficiencies and finally provide Americans with care that is responsive to their needs.”

About AMAC

The 2 million member Association of Mature American Citizens [AMAC] [https://www.amac.us] is a vibrant, vital senior advocacy organization that takes its marching orders from its members. We act and speak on their behalf, protecting their interests and offering a practical insight on how to best solve the problems they face today. Live long and make a difference by joining us today at https://amac.us/join-amac.

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Michelle

The safe harbor act should be repealed , and it’s time to break up these large corporations that have a hold on everything from insurance companies that dictate what your doctor can and can not do because the insurance companies think they know more than your doctor and have the right to deny coverage. Let’s face it that’s only one conglomeration. They ( the government, never used to let companies get so large that they actually eliminated all small companies that actually tried to do right and what was best for the customers. A good example was Ma Bell, when they became a conglomerate, they were broken down so smaller companies could have fiscal growth and actually cared about people and not just the bottom line. How many people actually know that your doctor gets a kickback on every prescription that they e-script?

Judy

A very good friend of my mother’s went to England in the late fifties or early sixties when their socialized medicine plan had been in effect for just a short time. She had a heart attack while there. As a tourist / visitor, she was allowed all the benefits of their system. That was Part 1. Now for Part 2, a couple who are very good friends of mine were there about 25 years ago. He had a heart attack. She had to find herself a place to stay and pay for everything she needed. I believe this should tell us about the real cost of something we think sounds good but goes fowl.

Robert Hooe

Read the safe harbor provision – then join the effort to get rid of it…

Christina Helson

I think repealing the safe harbor statute would benefit mature Americans, physicians etc

Fred Miller

The safe harbor act should be repealed!

Peter K

GPO’s exist in virtually every industry in the USA. From A-Z Think of a labor union and how they fleece their membership for personal gain and political influence. Call the model corrupt if you will however that’s life in the USA. Incompetent individuals running a plethora of companies and relying on kickbacks, and fees to earn a profit. A pretty sad commentary of how bad things are in an environment where payoffs of one type or another have become commonplace. Do you believe that AARP and AMAC do not receive fees/commissions for “negotiating” discounts from advertisers for their members? It should be obvious to anyone that they cannot survive on member dues. How do the companies that pay commissions, fees, and kickbacks make up for the cost of these handouts? They do it by inflating their prices. Pharmaceutical and medical companies are famous for inflating prices. How does a $15.00… Read more »

Dave

Repeal the safe harbor act and watch drug prices come down.

Ron Smith

REPEAL NOW THE SAFE HARBOR BILL

Coni

The Safe Harbor act allows insurance companies to dictate which drugs a patient should have regardless of what the physician prescribed. We ranch, my husband operates big machinery. We live so far out that Paramedics would have to administer a reversal for the blood thinner in the helicopter should he be injured. We researched and came up with Pradaxa as the one drug which would work, and could be reversed. The Insurance company called and said they were going to put him on Eliquis! This was NOT what his doctor had prescribed and I told them so. The man with his prissy Indian accent told me that THEY had decided. I explained the rational, and that Eliquis would not be reversible, and because of the distance from town, that Pradaxa is safer. THEY decided, to heck with what we or his doctor wanted! It was toward the end of the… Read more »

Robert D Robertson

I am in favor the changes as described in the article above. We need changes! With what we have in congress right now a lot of the reprentatives don’t seem to have interest common sense. All my votes will be against these fools.

Ron Smith

REPEAL NOW!

Dixie Harrison

Thank you for standing up for the conservative people in the United States of America

Dixie Harrison

Thank you for standing up for the Conservative people here in the USA.

Ben Lesser

Missing definitions of GPO and PBM.

Ben

Keep us informed great job!!!

Nancy Woodell

Repeal it!!!!

Mack

Where does the writer define what GPO mean and what does it do, who are members and how limited is it? Poorly written. Let’s educate us!

Ron

Repeal Now

Garland

Some are subjecting there children and others thru the spread of dreaded decease thru stupidity