Defense Health Agency Update

Bryan T. WheelerActing General Counsel, Defense Health Agency

September 22, 2015

““Medically Ready Force…Ready Medical Force”Medically Ready Force…Ready Medical Force”

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DHA at Full Operating Capability

““Medically Ready Force…Ready Medical Force”Medically Ready Force…Ready Medical Force”

2015-2016 Update

∎ DHA Structure, support∎ Procurements∎ Compound Pharmacy Spending Issues

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Defense Health AgencyLeadership Team

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Lt Gen Douglas RobbDirector

Mr. Paul HutterActing Deputy Director

CMSgt Edward VotteroActing Senior Enlisted Advisor

MG Richard ThomasDirector

Healthcare Operations

RADM Bruce DollDirector

Research & Development

Brig Gen Robert MillerDirector

Education & Training

RADM Raquel BonoDirector

NCR Medical

Mr. David BowenDirector

Health IT

Mr. Darrell LandreauxActing Director

Business Support

““Medically Ready Force…Ready Medical Force”Medically Ready Force…Ready Medical Force”

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Emerging Issues

““Medically Ready Force…Ready Medical Force”Medically Ready Force…Ready Medical Force”

DHA Procurements

• Authority to address coverage for emerging technologies

• DHMSM

• T-2017

• Other Procurements

7““Medically Ready Force…Ready Medical Force”Medically Ready Force…Ready Medical Force”

DHMSM

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Tailored Acquisition

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∎ Per the 2 Jan 2014 ADM, the tailored acquisition process is documented in the Acquisition Strategy Authority to Proceed (ATP) decision points used as acquisition

milestones: RFP ATP, Contract Award ATP, Limited Fielding for Initial Operational

Capability (IOC) ATP (4Q 2016), Full Deployment Decision (FDD) ATP

∎ The DHMSM program uses the DoD EHR Senior Stakeholder Group (SSG) and the Functional Advisory Council (FAC) to iteratively inform OSD, DHA, and Service program stakeholders

∎ National Defense Authorization Act (NDAA) for Fiscal Year 2014 mandates deploying EHR solution by 31 Dec 2016

Distribution D: Distribution authorized to the DoD and U.S. DoD contractors only. Other requests for this document shall be referred to DHMSM PMO.

Governance

Functional Advisory Council (FAC)

ASD(HA) / Service Military Medical Advisory

Committee (SMMAC)

Secretary of Defense

USD(AT&L)USD(AT&L)

= Command relationship= Functional relationship

DHMS PEODHMS PEO

DoD EHR Senior Stakeholder Group (SSG)

Medical Operations Group (MOG)

Medical Deputies Action Group (MDAG)

USD(P&R)USD(P&R)

DHMSMDHMSM DMIXDMIX IPOIPO

Director DHA

Secretary of Veterans Affairs

DoD/VA Executive Committee

10Distribution A: Approved for Public Release

A Common Goal

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2009EHR Way Ahead

2010iEHR

2013DHMSM Kick-Off

2015Contract Award

2006AHLTA Fielding

Complete

“I walk slowly, but I never walk backward.”- President Abraham Lincoln

DHMSM Road to Full Deployment

Enterprise Deploymentto all CONUS

and OCONUS sites

All IOC Sites GALs

Limited Fielding for IOC Decision [USD(AT&L)]

IllustrativeNot to Scale

Full Deployment Decision [USD(AT&L)]

IOC Decision and Declaration[ASD(HA) & Service SGs]

DT

&E

OT

&E

VC

D

Full Deployment / FOC

FO

T&

E

Remainder of Region

Acronyms:

ASD(HA) – Assistant Secretary of Defense for Health Affairs DT&E –Developmental Test & EvaluationFDD – Full Deployment DecisionFOC – Full Operational CapabilityFOT&E – Follow-on Operational Test & Evaluation,if neededIOC – Initial Operational CapabilityOT&E –Operational Test

& EvaluationSG – Surgeon GeneralUSD(AT&L) – Under Secretary of Defense for Acquisition, Technology, and Logistics VCD – Verification of Corrected Deficiencies

Contact Award ATP

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Enterprise EHRGuiding Principle: A flexible and open, single enterprise solution for

both garrison and operational healthcare.

55 Military Medical Centers & Inpatient Hospitals352 Health Clinics282 Dental Clinics

450+ Forward & Resuscitative Sites300+ Ships2 Hospital Ships6 Theater Hospitals3 Aeromedical Staging unitsO

pera

ting

Envi

ronm

ent

Competitively acquire, test, deliver and successfully transition to a state-of-the-market

EHR

Deployment of the new EHR and follow-on theater capabilities to expeditionary

locations

EHR60+

Capabilities

JROC CDDRequirements

Consolidated Data Center

MED COI Infrastructure

Small & Distributed Form Factor

Service Tactical Infrastructure

C2

MHS Approved Requirements Logistics

Service Specific

DHMSM JOMIS

+ =DHMSM

Configured EHR +

Theater Capabilities

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Collaborative Delivery of a Modernized EHR

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To deliver a modernized EHR to the military garrison and operational points of care, and transform how the military health system provides healthcare, the Services, DHA and Acquisition Teams will collaboratively work with the care locations to configure, test, train and deploy the new solution

Conclusion

AcquisitionDHMS

Solution Delivery & InfrastructureDHA

Site PreparationServices

Modernized EHRBusiness Processes

& RequirementsFunctional Champion

Deploy to 1,200+ Care

Locations

& 205,000+ ProvidersAcross the

World

EHR Modernization Potholes

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• Governance • Unstable resources• Unclear Program Scope • Insufficient Change

Management • Inadequate Technical Skills• Schedule Driven• Consensus Decision Making• Lack of Communications• Insufficient Training • Underestimating Culture • Leadership Stability

Distribution A: Approved for Public Release

T-2017

∎ T-3 Contracts Worth $53B∎ Two Regions Instead of Three∎ Award expected early CY16

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Other Procurements

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Other DHA Procurements

∎ 8 expected awards for September∎ 3-4 expected awards for October∎ 1 expected award for November∎ 2 expected awards for December∎ Those contracts and others with cum. awards of

>$30 B over next two years

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Compound Pharmaceuticals

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LES/FOUOLES/FOUO 20

Unsolicited Marketing and Misrepresentation

Scheme:

• DHA-PI and its contractors are receiving numerous complaints from beneficiaries regarding “cold calls” and “robo calls”

• Typically callers state they represent TRICARE and are offering a new benefit at no cost (usually pain or scar cream) and needs patient’s PII

• Compound pharmacies are also using Patient Recruiters (including Active Duty Personnel) that offer gift cards or cash to sign patients up to receive compounds. Marketers reported to receive as much as $5K per beneficiary that they convert to compounds

• Websites are targeting TRICARE beneficiaries stating they will be paid anywhere from $200-$350 a month to join a study. There is no study being conducted. It’s a ruse to get beneficiaries to sign up and receive compounds

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No Physician/Patient Relationship

Scheme:

• Utilizing select physicians to write scripts without patient interaction

• Physicians receive as much as $500 per script

• TRICARE experiencing an increase of high volume compound prescribers

o Top prescriber generated $102.4M in paid claims (for 15,987 scripts) within last 360 days

o Prescriptions written by physicians that are not in the same geographical region of the beneficiary

o Providers generally are not submitting healthcare claims—they are being paid by the pharmacies

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Compromised PII and PHI

Scheme:

• Personally Identifiable Information/Protected Health Information is compromised

o Purchased from co-conspirators at providers office, hospital, clinic, etc.

o Acquired from marketing calls; e-mail solicitations; website

• Information is sold to pharmacy engaged in fraud

o Information is used to fabricate prescriptions

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Beneficiary Kickbacks

Scheme:

• Beneficiary converts to compound medication in return for cash kickback

o Beneficiary may or may not receive the medication

o Typically beneficiary converts to multiple compound medications

o In some instances immediate family members also convert to compounds to expand the kickback revenue stream

o In some instances beneficiaries that are recruiters also convert to compounds to receive kickbacks

• No cost share or copayment collected

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Investigative Activities

76 active compound pharmacy/prescriber investigations opened in past 90 days

DCIS is lead agency for the majority of compound pharmacy investigations; DCIS independently pursuing numerous leads

May 1, 2014-May 1, 2015:

• $603.4 million paid to top 10 pharmacies – Related to suspect pharmacies under law enforcement review

• $349.7 million paid for prescriptions generated by top 10 high volume prescribers

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Investigative Activities (cont.)

DCIS Cyber Crimes Unit engaged in link analysis intelligence gathering concerning top 50 paid pharmacies

DHA-PI routinely sharing data mining reports with DCIS-HQ (high prescribers report, top paid compound pharmacies, etc.)

NCIS gathering intel on Active Duty Patient Recruiter/Patients

Weekly collaboration meetings with PBM, DCIS, and DOJ

• DCIS leadership want to be kept apprised of effectiveness of TRICARE controls

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Investigative Activities (cont.)

Common owner(s) of different suspect pharmacies is not unusual

In one ongoing DCIS fraud investigation of a retail pharmacy the pharmacy converted their business model from a retail pharmacy to a compound pharmacy

Health Care Fraud Prevention and Enforcement Action Team (HEAT) initially declined dedicating resources to TRICARE.

Recently one Heat (Strike Force) Prosecutor from DOJ has been assigned to a case. And the Miami HEAT (Strike Force) has agreed to look at five cases.

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CBS News Segments

http://www.cbsnews.com/news/investigation-insurance-billed-18000-for-unwanted-pain-meds

http://www.cbsnews.com/news/free-pain-meds-for-veterans-cost-taxpayers-big-bucks/

http://www.cbsnews.com/news/doctors-complicit-costly-abuse-military-health-care-system/

To view right click

LES/FOUOLES/FOUO

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Limited Controls

ESI-PI notifying select pharmacies that directly soliciting beneficiaries is prohibited by network agreement; requesting pharmacies to acknowledge they will comply – 13 notifications have been mailed so far

Pharmacies requesting to be in network that note they dispense over 5% of compound drugs are generally denied

ESI-PI identifying network retail pharmacies that converted to compounding pharmacies in violation of network agreement; also pharmacies known to enter network as a retail pharmacy that convert to a compounding pharmacy; 34 compound pharmacies terminated from network

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Limited Controls (cont.)

Claims suspensions triggered by DHA-PI administrative review of prescribers prescribing outside the state in which they practice, or after significant law enforcement/DOJ event

Exclusions burdensome to execute; typically requires health care fraud conviction

As of 1 May 2015 TRICARE instituted a preauthorization process, and will deny payment for safety and efficacy concerns

TRICARE does not have a closed compound pharmacy network (similar to specialty pharmacy network)

TRICARE does not use a fee schedule to control costs of compound medications. ESI is now negotiating rates with compounding pharmacies as of 1 May 2015

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Resource Impact

Law Enforcement:

• Health Care Fraud is one of the DCIS Investigative Priorities;

• Limited DCIS investigative resources; law enforcement resources not sufficient to address scope of problem

• DCIS operates from a finite budget (unlike FBI and HHS-OIG no recoveries go to DCIS from doubles, trebles, fines, and penalties to support future investigative operations)

DHA-PI:

• Tremendous increase in Fraudlines (498 in last 90 days)

• Active case inventory greatly expanding

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Compound Expenditures 2012-2015

Compound Pharmacy Expenses Through April 30th, 2015

$600,000,000

$500,000,000

Through April 30th: $546.8 M March: $335M February: $233.5M January: $167M

$400,000,000

$300,000,000

$200,000,000

$100,000,000

$0

May Total: $70.67, June Total: $10.231M,July Total: $11.533M, August Total : $9.01M

Data Source: ESI Claims Data

Seized from Oldsmar PharmacyFebruary 2015

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Questions

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