Medicare and Medicaid fraud and abuse regulations.

Specific business arrangements that are protected under legislation and regulations governing parties doing business with Medicare or Medicaid are discussed. Regulations implementing the Medicare and Medicaid Patient Protection Act of 1987 specify practices and activities that are not subject to criminal penalties under the antikickback provisions of the Social Security Act or to exclusion from Medicare or state health-care programs. As of July 29, 1991, all organized health-care settings that receive payments from either Medicare or state health-care programs must comply with these regulations. The final rule sets forth "safe harbors"--exceptions to prohibitions against (1) kickbacks, bribes, rebates, and other illegal activities involving remunerations for patient referrals and (2) inducements to purchase or lease goods paid for by Medicare or state health-care programs. The safe harbors comprise 11 broad categories--investment interests, space rental, equipment rental, personal services and management contracts, purchase of a medical practice, referral services, warranties, discounts, employees, group purchasing organizations, and waiver of deductibles and coinsurance. Implications for pharmacy are discussed. These regulations will affect the purchase of pharmaceuticals by institutional pharmacies. Each institution should review its current practices to determine whether they are within the safe harbors.

Legal issues associated with formulary product-selection when there are two or more recognized drug therapies.

The legal issues associated with selecting drug products under the formulary system when there are two or more recognized drug therapies are discussed. The primary legal issue involved is whether a decision by a health-care provider to use a particular drug product can be viewed as "reasonable" under the circumstances when there are two or more recognized drug therapies for treating a patient. In the institutional setting, the physician diagnoses and prescribes drug products but authorizes, under the formulary system, the selection of alternative agents. Imposition of civil liability on health-care providers for a patient's drug-related injury based on a formulary decision has not yet occurred. Liability would most likely be based on negligence in such a case. The standard of care a medical provider will be measured against is what a "reasonable provider" would do under like circumstances. An institution's decision whether or not to routinely have available a particular drug product that is among several accepted therapies would probably not be viewed as negligent, so long as that decision was based on the objective clinical judgment of the medical staff operating under the formulary system. It is unlikely that a decision to use one of two (or more) drug products would be "negligent" if that decision was based on a current and objective evaluation of the medical literature and supported by a recognized segment of medical opinion.

New Medicare Conditions of Participation for Hospitals.

The new Medicare Conditions of Participation for Hospitals are reviewed, and their effect on hospital pharmacy is discussed. In general, the revised Conditions, which are federal regulations establishing requirements that hospitals must meet to participate in Medicare programs, focus on outcomes and services rather than on procedures and departments. A new standard requiring discharge planning as part of an institution's quality-assurance program implicitly invites pharmacy participation by not limiting responsibility for such a program to the medical staff. The medical staff is accountable to the governing body, rather than co-equal with it, as was the case previously. Hospitals now have greater flexibility in granting staff privileges to nonphysician practitioners; pharmacists could be designated as a category of medical-staff membership. The opportunity exists for initiation and expansion of pharmacy-based medication-administration programs, since the Conditions do not limit such services to nursing or medical personnel. Pharmacists are permitted to receive oral orders for prescriptions. The importance of pharmaceutical services is recognized in the new standards by requirements for drug-therapy monitoring and information and drug-product control. Further, the regulations mandate establishment of a formulary system. The pharmacy-related changes in the Conditions recognize several key professional practice concepts, thus easing implementation of new strategic directions for hospitals and hospital pharmacy.

The cost and funding of family practice graduate education in the United States.

This paper reports the findings of a national cost survey of 369 nonmilitary family practice graduate education programs in the United States, 1981-82. The purpose of the study was to develop a reliable revenue and cost information data base to enable an understanding of current family practice education costs and funding. The availability of this information will be of assistance in the development of future budgetary plans for family practice graduate education. The results presented are based on 147 programs associated with hospitals using a non-cost center accounting protocol. These programs provided 100 percent complete revenue and cost data (40 percent of the targeted programs). Major sources of income were hospital support (35 percent), patient income (31 percent), and public dollars (28 percent). The mean cost per accredited position was $57,471. Expenses, each at approximately one third of the total, were resident stipends, faculty salaries, and clinic expenses. Statistically significant differences were found only for source of income when program structure, program size, and geographic location were examined. Recommendations for future family practice funding include modification of present reimbursement formulas and other third-party payment mechanisms, increasing hospital support, maintenance of public subsidies, and development of a uniform system of monitoring and evaluating costs of residency programs operated under both cost center and non-cost center accounting protocols.