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1099 Compounding Commissions?

Discussion in 'Specialty Pharmacies - General Discussion' started by Anonymous, May 28, 2013 at 10:43 AM.

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  1. Anonymous

    Anonymous Guest

    Any well paying and reputable companies in NJ?
     

  2. Anonymous

    Anonymous Guest

    How do I get in touch with you????
     
  3. Anonymous

    Anonymous Guest

    Commissions aren't everything, but 15-20% is pretty standard. Service, efficacy, quality, are all very important for sustained business. These docs don't want to get patient complaints about anything. Sometimes the companies try to lure away reps with higher %, but you'll make less when you lose credibility with the product. Find a leader, a good % and quality product, and you'll make money. Some companies like to bonus reps over and above their performance when deserved. Lots of ways to incentivize sales performance.
     
  4. Anonymous

    Anonymous Guest

    Agree with this comment 100%..spot on. Look for good pharmacy and good support with sales transparency. The fly by night start up pharmacies trying to throw out high commissions to lure reps away would be a very bad move. Do your homework, ask to speak to several reps.
     
  5. Anonymous

    Anonymous Guest

    Right on. Stay away from the small pharmacies who will most likely be out of the compound biz, soon. Make sure you have a good lead manager who provides accurate information and a pharmacy who has a data system portal. Also look for those who have credentials and are licensed in most states.

    All you need are a few prescribers who believe in the product and who prescribe often. This has been a great opportunity for many in adding great, additional income.
     
  6. Anonymous

    Anonymous Guest

    any pharmacy or rep working on a 1099 commission only basis is violating federal and state anti-kickback laws. If your doing get ready for a major legal issue. large fines and possible jail
     
  7. Anonymous

    Anonymous Guest

    So all distributors who sell Ortho products as 1099 are violating anti-kickback laws as well according to your logic. The law you are referring to that you think compounders are violating would apply to every medical rep selling 1099. You are wrong.
     
  8. Anonymous

    Anonymous Guest

    No. You're wrong. The person knows what they are talking about. Anytime federal money is involved (ie. Medicare reimbursements, tricare, etc.) then in fact it is in violation the the anti-kickback statute. So yes you could In fact get put of the exclusion list, face fines, and or go to jail
     
  9. Anonymous

    Anonymous Guest


    well it's also a good way to get your customers mad. Greedy compound pharmacies who charge over $12,500 for a month supply of Scar Gel (which has no proof of working) really have pissed off my customers via their patients. Now hardly any of the payers are covering them.

    Way to go Greedy Pharmacists and owners.
     
  10. Anonymous

    Anonymous Guest

    I represent a 50 year old pharmacy that is licensed in 40 plus states with pending licenses in for the others. Not just pain and scar but obviously those are good products that generally reimburse well by private insurers. Free next day delivery via UPS....reasonable copays and cheap cash prices for the uninsured.

    We are ethical, competent and just do the right things. I do not want to release anymore detailed information....but please call me at 985-377-2197 if you are interested in switching your book of business, your team or just want to get started in compounding. thanks.
     
  11. Anonymous

    Anonymous Guest

    What do you mean by "reasonable copays"?
     
  12. Anonymous

    Anonymous Guest

    Looking for the top companies in this industry - looking to make more money. other poster, what is your company? what is your email address?
     
  13. Anonymous

    Anonymous Guest

    This is actually not completely true. There are scar gels that have proven studies for efficacy done on the bases they are made in. The bases are generally one of the reasons the cost is so high, but they work. Also, these greedy pharmacies you speak of only submit the ndc codes for the meds included and the insurance companies decide what is reimbursed. That's why some don't cover, some cap their amounts (ie. BCBS) and some pay very well.

    I don't believe any pharmacy should send an insurer back money and tell them they way overpaid for that compound. Is that what you think? Not a fan of capitalism huh?
     
  14. Anonymous

    Anonymous Guest

    50 year old seasoned pharmacy.....licensed throughout the USA. Free next day delivery.

    Have many compounding products that are getting reimbursed very, very well....70% success rate on getting quality reimbursements. Have products that are not on the radar of insurance companies and products that have already been approved via FDA.

    If you would like to talk further about potentially working with us or switching your group or book of business.....call me at 985-377-2197.

    We have positioned ourselves for continued success in the compounding pharmacy business for many years to come.
     
  15. Anonymous

    Anonymous Guest

    Anti kickback applies to bribing the doctors not paying commissions to pharmacy sales reps. Seriously, you people need to stop giving legal advice, which is illegal called unlicensed practice of law in most states.
     
  16. Anonymous

    Anonymous Guest

    Lol, this place blows. No fool is gonna switch to you guys after u just lost half your sales force. 70% lol nice try. More like 30
     
  17. Anonymous

    Anonymous Guest

    I'm not an attorney, but I can understand commonsense legal issues. You are incorrect about "Anti kickback applies to bribing doctors not paying commissions to pharmacy sales reps."

    Apples and oranges. Venus and Mars. Under the law, there is a huge difference between a W2 employee and a 1099 independent contractor.

    There is no such thing as a "1099 employee" and there is no such thing as a "W2 independent contractor." Only a human being can be an employee; an "it" cannot be an employee.

    In other words, while John Smith (a human being) can be an employee, John Smith Marketing Group, LLC (an "it") cannot be an employee. John Smith is either a W2 employee or a 1099 independent contractor—but not both. The 16-year-old-kid that mows my yard on Saturday is a 1099 independent contractor; my secretary (whose office is next to mine) is my employee.

The Medicare anti-kickback statute prohibits offering, paying, soliciting, or receiving any remuneration in exchange for referring (or arranging for the referral of) a patient to a person or entity for any Medicare-covered item or service or in exchange for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any Medicare-covered item or service.

    There are both an exception and a safe harbor to the anti-kickback statute that say that it is permissible for a health care provider (such as a DME supplier) to pay commissions to a bona fide full-time or part-time W2 employee. The reasoning behind this exception is because the supplier has the obligation to supervise and control its employee, and the supplier is liable for the acts of its employee.

    On the other hand, a supplier has no duty to supervise and control a 1099 independent contractor, and the supplier is not liable for the acts of a 1099 independent contractor. And so while it is permissible for a DME supplier to pay commissions to a bona fide employee who generates business to the supplier (in which the payer is a government program), it is a violation of the kickback statute if the supplier pays commissions to a 1099 independent contractor who generates business to the supplier (in which the payer is a government program).

    The anti-kickback statute cuts both ways: the payer of the money (the DME supplier) and the recipient of the money (the 1099 independent contractor) are both liable under the statute, which is a criminal statute.



    A 1989 statement by the Department of Health and Human Services is illuminating: “We are aware of many examples of abusive practices by sales personnel who are paid as independent contractors and who are not under appropriate supervision. We believe that if individuals and entities desire to pay a salesperson on the basis of the amount of business they generate, then to be exempt from civil or criminal prosecution, they should make these salespersons employees where they can and should exert appropriate supervision for the individual's acts.

    https://oig.hhs.gov/fraud/docs/safeharborregulations/012389.htm

    Also instructive is an OIG Advisory Opinion that addressed a proposed arrangement in which a sales representative for a medical supply manufacturer would be paid a monthly commission based on a percentage of amounts invoiced for products sold pursuant to the sales representative's efforts.

    According to the OIG: "Sales agents are in the business of recommending or arranging for the purchase of the items or services they offer for sale on behalf of their principals, typically manufacturers, or other sellers (collectively, "Sellers"). Accordingly, any compensation arrangement between a Seller and an independent sales agent for the purpose of selling health care items or services that are directly or indirectly reimbursable by a Federal health care program potentially implicates the ant-kickback statute, irrespective of the methodology used to compensate the agent. Moreover, because such agents are independent contractors, they are less accountable to the Seller than an employee...For these reasons, this Office has a longstanding concern with independent sales agency arrangements.

    https://oig.hhs.gov/fraud/docs/advisoryopinions/1999/ao99_3.htm

    However, the AO did state that in some circumstances, these type of arrangements may be permissible if the sales rep's contact is structured to fit the Personal Services and Management Contracts safe harbor to the anti-kickback statute.

 When promulgating the proposed rule containing this safe harbor, DHHS highlighted that it was crafted in light of the fact that arrangements for services frequently arise between health care providers/suppliers and their referral sources. According to DHHS, it established the safe harbor "for joint ventures and other arrangements involving payments for personal services or management contracts, but only if certain standards are met and safeguards are present to limit the opportunity to provide financial incentives in exchange for referrals."

    Although a 1099 independent contractor relationship may be established under the safe harbor, such an arrangement must comply with the specific elements of the safe harbor, including the following: (i) payments to the 1099 independent contractor must be pursuant to a written agreement with a term of at least one year, and (ii) the aggregate compensation paid to an independent contractor must be set in advance, consistent with fair market value, and not determined in a manner that takes into account the volume or value of any referrals or business generated.



    Note also that the OIG has taken the position that if a 1099 independent contractor paid on a production basis is generating both commercial and federally funded health care program referrals, any arrangement where the independent contractor is paid commissions only for the referrals of commercial patients, and is paid nothing for the patients covered by a government program, nevertheless violates the anti-kickback statute. The reasoning is that the commissions for the commercial patients, in reality, also serve as compensation for the patients covered by a government program.

    As stated by the OIG: "[A]s a threshold matter, we must address whether the "carve out" of Federal business is dispositive of the question of whether the Existing Arrangement implicates the anti-kickback statute. It is not. The OIG has a long-standing concern about arrangements pursuant to which parties "carve out" Federal health care program beneficiaries or business generated by Federal health care programs from otherwise questionable financial arrangements. Such arrangements implicate and may violate the anti-kickback statute by disguising remuneration for Federal business through the payment of amounts purportedly related to non-Federal business."



    Here are the "take-aways" from all of this:

    1. It is permissible to pay commissions to bona fide W2 part-time or full-time employees who generate patients to the DME supplier in which the payer is as government program.

    2. The employment arrangement must be "bona fide," not a "sham." The smell test applies. Let's say that the supplier and the sales rep sign a written employment agreement; let's say that the supplier withholds taxes from the rep's paycheck; let's say that the supplier gives a W2 to the rep; but let's say that the supplier, in reality, exercises no supervision and control over the rep. It is likely that the this "employment" arrangement will be considered to be a "sham" arrangement...meaning that the government will likely take the position that the rep is, in fact, a 1099 independent contractor of the supplier. This, in turn, will result in a violation of the anti-kickback statute.

    3. A sales rep (who generates patients covered by a government health care program) can be a 1099 independent contractor if the arrangement complies with the Personal Services and Management Contracts safe harbor. However, a fixed annual fee arrangement (no commissions) with a sales rep is normally unrealistic.

    4. If a 1099 independent contractor sales rep generates both commercial patients and patients covered by a government health care program, the parties cannot avoid violating he anti-kickback statute by the supplier paying commissions only for the commercial patients...and paying nothing for the patients covered by a government health care program.

    5. Lastly, let's say that the rep is a 1099 independent contractor, is paid commissions, and only generates commercial patients for the DME supplier. In this scenario, the Medicare anti-kickback statute will not apply. However, the parties will need to review the state's anti-kickback statute. All states have anti-kickback statutes that are similar to the Medicare anti-kickback statute. Some state anti-kickback statutes only come into play when the payer is the state's Medicaid program. Other state statutes come into play regardless of the payment source.

    http://www.medtrade.com/news/general-healthcare/Do-Not-Pay-Commissio-1646.shtml?utm_source=Silverpop&utm_medium=email&utm_campaign=44381669&utm_term=8333315&utm_content=#sthash.trC0Usmx

    The above article was written by an attorney who specializes in health care law. I added the links to the OIG opinions.

    Remember, commissions paid to the 1099 rep, from a pharmacy for the referral of a federally funded patient, are directly linked to the "value or volume" of services provided.

    If you are so sure you are correct, I dare you to call the OIG, inform the OIG of the 1099 commission arrangement with any named pharmacy that is billing a federally funded program, and ask if the named pharmacy should be investigated.
     
  18. Anonymous

    Anonymous Guest

    Lol, a lawyer promoting his practice on cafe pharma. So I guess all the big Ortho companies companies like depuy, synthes , Biomet who have 1099 distributor agreements will be busted soon
     
  19. Anonymous

    Anonymous Guest

    No, and no. You can laugh all you want, but I am not the attorney who wrote the article for Medtrade.

    You are missing the legal points raised. In regards to ortho companies that use a distributorship model, such as Biomet, the ortho company is not billing a federally funded program for provision of the device (e.g. knee). Instead, it is the hospital that is billing for the device. In addition, Biomet does not care who insures the patient, as they are making their profit on selling the knee to the hospital. Last, Biomet is not involved in steering patients to any hospital.

    You may want to compare and contrast the above scenario with the 1099 rep who is convincing the physician to prescribe pain creams to his patients insured by a federally funded program, then once the pain creams are paid for by a federally funded entity, the sales rep gets a percentage of the amount reimbursed.

    You can try to muddy the waters all you want, but at the end of the metaphorical day, the pharmacy is fee splitting with the 1099 rep, or giving a kick back to the 1099 rep --- specifically for the referral. Both the pharmacy and the rep are vulnerable.

    You may want to once again read the thrust of the article by the attorney:

    "

The Medicare anti-kickback statute prohibits offering, paying, soliciting, or receiving any remuneration in exchange for referring (or arranging for the referral of) a patient to a person or entity for any Medicare-covered item or service or in exchange for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any Medicare-covered item or service."

    Again, I double-dog dare you to call the OIG and inquire about the legality of a compounding pharmacy paying a 1099 rep for the referral of a patient who is insured through a federally funded program --- where the 1099 rep is paid a percentage of the amount reimbursed for the pain creams.
     
  20. Anonymous

    Anonymous Guest

    You are missing the legal points raised. In regards to ortho companies that use a distributorship model, such as Biomet, the ortho company is not billing a federally funded program for provision of the device (e.g. knee). Instead, it is the hospital that is billing for the device. In addition, Biomet does not care who insures the patient, as they are making their profit on selling the knee to the hospital. Last, Biomet is not involved in steering patients to any hospital.

    WRONG! all these companies( much bigger than any pharmacy) have distributors that they 1099 and yes , they do bill federally funded programs all the time everyday. They don't just sell knee implants. They sell DME such as braces, splints, bone growth stimulators etc. in which they are billing the patients insurance directly..not the hospital. You obviously have an agenda. Go try your scare tactics elsewhere. I triple dog dare you!