Compliance Update

PAMA Reporting Penalties Can Be Substantial for Laboratories

STARTING JAN. 1, 2017, there are substantial penalties for labs that fail to properly meet the complex lab test price marketing reporting requirements of the Protecting Access to Medicare Act of 2014. Labs that fail to do so face the potential of stiff, multi-million dollar fines.

“Under PAMA, clinical labs need to report full and accurate data in a timely manner,” warned Jeffrey J. Sherrin, a health lawyer and President of O’Connell & Aronowitz, in Albany, N.Y. “Under the law, labs can be liable not only for the failure to report required information or the failure to timely report it, but also can be liable for misrepresentations or omissions in reporting the required data. Penalties are possible just because your lab may have mistakenly failed to report certain information or failed to report that information on time.

“The penalties can be severe,” Sherrin added. “The statute and regulations put in place a maximum penalty of $10,000 a day for each failure to report or for each such misrepresentation or omission.” Sherrin provides legal services to the National Independent Laboratory Association (NILA). He participated on THE DARK REPORT’s recent webinar about PAMA.

“When enacting PAMA, Congress set up penalties that are similar to those established for pharmaceutical companies under the Medicaid drug rebate program,” noted Sherrin. “Under the Medicaid drug rebate program, recent penalties for individual drug companies have ranged from $60,000 to $12.6 million. These penalties were assessed for violating the price reporting requirements.

“Here’s how the Medicaid rebate program works: Manufacturers must submit quarterly pricing data to CMS so the agency can calculate what’s called the unit rebate amount,” explained Sherrin. “The reporting requirements in this drug rebate program are similar to the laboratories’ requirements for reporting under PAMA.

penalties of $10,000 per Day

“The Medicaid drug rebate program calls for penalties of $10,000 a day for each act or omission in the reporting,” he said. “The statute also refers to the False Claims Act, which will apply to the calculation or imposition of civil monetary penalties.

“Under the Medicaid drug rebate program, HHS issued a special advisory bulletin to drug manufacturers in September 2010, stating that the OIG had learned of significant failures to report data in a timely fashion, and that CMS would implement a new enforcement initiative,” observed Sherrin. “Since that special advisory, recent penalties of as much as $12.6 million were made against drug companies that did not follow the price reporting requirements.” Sherrin provided two examples:

On March 11, 2015, Sandoz settled with OIG for $12.6 million related to allegations that Sandoz misrepresented drug pricing data.

On Aug. 31, 2016, Glenmark Pharmaceuticals settled with OIG for $2.9 million for failure to submit certi- fied monthly and quarterly average manufacturer’s price (AMP) data.

Contact Jeffrey Sherrin at 518-462-5601 or jsherrin@Oalaw.com.

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