GPO in­dus­try: We’re on track

Modern Healthcare - - THE WEEK IN HEALTHCARE - Jaimy Lee

The health­care group pur­chas­ing in­dus­try says the new­est gov­ern­ment re­port on the busi­ness is ev­i­dence that self-polic­ing and fed­eral over­sight across sev­eral agen­cies is work­ing. The Gov­ern­ment Ac­count­abil­ity Of­fice re­port looks at the fed­eral over­sight and self-reg­u­la­tion of GPOS in the years fol­low­ing a con­gres­sional hear­ing of the same topic in 2004 and the for­ma­tion of the Health­care Group Pur­chas­ing In­dus­try Ini­tia­tive in 2005. It’s the fourth GAO re­port since 2003 since to ad­dress GPOS.

The GAO found few ex­am­ples of HHS’ in­spec­tor gen­eral’s of­fice, the Fed­eral Trade Com­mis­sion and the Jus­tice Depart­ment tak­ing le­gal ac­tion against GPOS in the past eight years.

Cur­tis Rooney, pres­i­dent of the Health­care Sup­ply Chain As­so­ci­a­tion, said in a writ­ten state­ment that the re­port “found that the fed­eral gov­ern­ment has suf­fi­cient abil­ity to mon­i­tor and in­ves­ti­gate GPOS, and that the gov­ern­ment has ex­er­cised its over­sight ca­pac­ity and found no ev­i­dence of anti-com­pet­i­tive GPO be­hav­ior.”

How­ever, the re­port, ad­dressed to Sens. Herb Kohl (D-wis.), Chuck Grass­ley (R-iowa) and Tom Coburn (R-okla.), said the cur­rent sys­tem of over­sight does not ad­dress all ques­tions about GPO busi­ness prac­tices, notably whether con­tract ad­min­is­tra­tive fees “cre­ate a fi­nan­cial in­cen­tive that is in­con­sis­tent with GPOS ob­tain­ing the low­est prices for their cus­tomers.”

The 2005 in­dus­try ini­tia­tive, re­ferred to as HGPII, re­quires mem­ber com­pa­nies to fol­low ethics and busi­ness con­duct re­quire­ments and can re­voke mem­ber­ship if a GPO vi­o­lates the group’s stan­dards. A HGPII of­fi­cial told the GAO it has never oc­curred. HGPII es­tab­lished a ven­dor-griev­ance process in 2010 to ad­dress the con­cerns of sup­pli­ers. Com­plaints are re­viewed by a third party pro­vided by the Amer­i­can Ar­bi­tra­tion As­so­ci­a­tion.

A rep­re­sen­ta­tive of small de­vice man­u­fac­tur­ers told the GAO that they were un­aware of the new process nearly two years af­ter it was formed. A Med­i­cal De­vice Man­u­fac­tur­ers As­so­ci­a­tion spokesman de­clined to com­ment.

The GAO as­sess­ment of the Jus­tice Depart­ment’s over­sight found ad­di­tional fric­tion be­tween the de­vice­mak­ers and GPOS. In 2010, some de­vice­mak­ers filed a com­plaint “ques­tion­ing the gen­eral struc­ture of the in­dus­try and how the in­dus­try op­er­ates.” An in­ves­ti­ga­tion was not con­ducted be­cause there was not enough in­for­ma­tion about anti-com­pet­i­tive be­hav­ior, the GAO re­ported.

The Jus­tice Depart­ment has filed one law­suit against a GPO since 2004. In 2007, the Ari­zona Hospi­tal and Health­care As­so­ci­a­tion set­tled with the Jus­tice Depart­ment and Ari­zona’s at­tor­ney gen­eral over an­titrust al­le­ga­tions in­volv­ing rate­set­ting by its sub­sidiary GPO’S trav­el­ing nurse reg­istry for mem­ber hos­pi­tals. The FTC told the GAO that it usu­ally re­ceives about one com­plaint a year al­leg­ing anti-com­pet­i­tive be­hav­ior, and has in­ves­ti­gated some, but has not taken any en­force­ment ac­tion since 2004.

HHS’ in­spec­tor gen­eral’s of­fice said it has col­lected in­for­ma­tion about GPOS’ con­tract ad­min­is­tra­tive fees in the course of au­dit­ing hos­pi­tals’ cost re­ports, but has not “rou­tinely ex­er­cised its au­thor­ity” to re­quest and re­view in­for­ma­tion about the fees from GPOS or im­posed penal­ties on any GPO dur­ing the past eight years. Of­fi­cials noted that such in­for­ma­tion would not nec­es­sar­ily be enough to de­ter­mine whether a GPO vi­o­lated the anti-kick­back statute.

Grass­ley said in an e-mailed state­ment that GPOS would be sub­ject to “public ac­count­abil­ity” next year un­der a pro­vi­sion of the Pa­tient Pro­tec­tion and Af­ford­able Care Act that re­quires GPOS to re­port own­er­ship or in­vest­ment in­ter­ests held by physi­cians and their fam­i­lies. “In light of this GAO re­port and prior re­ports, I look for­ward to the im­ple­men­ta­tion of the Physi­cians Pay­ments Sun­shine Act, which Sen. Kohl and I au­thored,” he said.

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