An Analysis of Urine Toxicology — Considerations for Health Providers

Urine toxicology, also referred to as urine drug screening, is an important procedure that health providers use for several reasons: to monitor patients’ medication compliance, detect drug abuse, or identify the presence of disease. There are numerous implications that accompany a urine toxicology examination though, and health providers are sometimes left wondering if they should hand over the cup to patients.

Male doctor explaining prescriptions to senior woman in clinicFirst, physicians and providers should anticipate the entire continuum of possible test results, including results outside the original purpose of the urinalysis.  For example, an ob-gyn may perform urine toxicology during a pregnant patient’s routine prenatal visit to determine hormone levels but test results may also indicate recent patient drug use. Further, if the results reveal that the mother is using marijuana, the ob-gyn must be prepared with how to deal with that information. A patient, even a consenting one, may feel uncomfortable or violated if the provider discusses what the test reveals outside than agreed-upon test purpose. Providers should clearly communicate why they are testing the urine and advise the patient that the test can reveal other things.  This can be accomplished through intake forms, treatment contracts, etc as well as communications informing the patient through the course of treatment but it is advisable that the provider discloses the purpose and potential outcomes before testing.

Further, the principle of autonomy means that patients should be able to decide whether or not to undergo testing or treatment for anything. Thus, it is important to consider if patient intake forms and authorizations explain that the provider may use urine toxicology for the purposes of treatment and the provider’s policies for responding to urine toxicology results.  These policies may include automatic discharge for patient use of illicit drugs.

Confidentiality is, of course, the other concern with these tests. A fully executed information release and HIPAA authorization form should always be on file before a test is executed.  Remember, federal and state law include provide a heightened level of protection for patient health information related to substance abuse.

The issue of cost must also be considered. To avoid claims of deceptive billing practices or fraud, the procedure should be medically necessary and the patient should always be informed that they will be responsible for the cost of a procedure.

When performing these tests, providers should be familiar with specific drug screening statutes and regulations in their own state. State regulations might address issues such as chain of custody requirements, patient privacy, and how results may be used or shared. It is important for providers to have the proper intake form, policies and procedures in place before performing urine toxicology. It may be a simple procedure, but it presents a myriad of issues that must be considered when providing patient care.

Molly LewisMolly Nicol Lewis  is an Associate of McBrayer, McGinnis, Leslie & Kirkland, PLLC.  Ms. Lewis concentrates her practice in healthcare law and is located in the firm’s Lexington office. She can be reached at or at (859) 231-8780. 

 This article is intended as a summary of state and federal law and does not constitute legal advice.

Providers Wary after First Ruling on 60-Day Rule

The False Claims Act (“FCA”) is already a minefield for healthcare providers, especially when coupled with the Stark Law. Treble damages and fines of up to $11,000 per violation add up quickly under the FCA. The U.S. District Court for the Southern District of New York just made further FCA “reverse false claims” nightmares that much more of a reality in the case of Kane v. Healthfirst. That case is illustrative of how the government will interpret and enforce the Centers for Medicare & Medicaid Services’ (“CMS”) “60-day rule” for retention of overpayments, and the result should make all healthcare providers take notice.

Kane is the first case to interpret the 60-day rule, which requires providers to report and refund “identified” overpayments. The 60-day period is a safe harbor to return the payments. Delays past that period result in a violation of the FCA. The not-yet-final rule will enforce a provision of the Affordable Care Act and was delayed by CMS in February of 2015 for one more year. The question in both the finalization of the proposed rule and the Kane case is how to interpret how and when overpayments are “identified” for purposes of the rule. Congress did not define what constitutes the identification of an overpayment in the ACA. CMS issued a proposed rule in February of 2012 to clarify for Medicare providers that an overpayment is identified if a provider either actually knows of the overpayment or “acts in reckless disregard or deliberate ignorance of the overpayment.”[1]

Modern HospitalIn Kane, a software issue from a private insurer, Healthfirst, caused a nonprofit hospital system, Continuum, to erroneously bill claims to New York’s Medicaid program as a secondary insurer. New York’s Comptroller identified a relatively small number of claims that had been erroneously billed in September of 2010. The hospitals then conducted an internal investigation starting in February of 2011 and discovered that potentially up to 900 claims were submitted wrongfully. The investigator, Robert Kane, determined the number of potential claims and amount of prospective liability and informed Continuum’s administrators of the issue. He was immediately sacked. Kane’s report did not say that all the claims were actual overpayments, but that they contained an erroneous billing code that warranted further investigation. The New York Comptroller continued to investigate Continuum’s billing system, identifying more and more erroneous claims and bringing them to Continuum’s attention. Continuum began to pay the claims back over a period that began in April 2011 and ended in March 2013. 300 of those claims were reimbursed only after Continuum received a Civil Investigative Demand seeking information on the payments. Continuum never released Kane’s report to the Comptroller. Kane brought a qui tam whistleblower suit against Continuum, and the government intervened.

The court in Kane ruled in line with the CMS proposed rule as to the definition of “identified”, although that rule only would apply to Medicare, and not Medicaid, providers. Continuum’s overpayments were “identified” as soon as it became aware that there might have been an overpayment, as per Kane’s report. The court rejected Continuum’s argument that the obligation to repay the overpayment would not be triggered until a conclusive determination had been made as to the exact nature and amount of the overpayment, suggesting that such a result would create an incentive to delay investigations into potential overpayments.

This decision highlights the urgent need for providers to conduct investigations into overpayments as stridently as possible. Overpayments are common among healthcare providers, but the government is taking a hard line on the identification and repayment of these payments. This new standard of “identification” sets the bar relatively low for knowledge of such payments, exposing providers to potentially serious liability for failing to act on any possible notice of potential overpayments. The court in Kane sent a very clear message – the government wants it money back, and failure to return it in a timely fashion can wreak havoc on even the most well-intentioned healthcare provider.

For assistance with evaluating potential overpayments or more information on CMS proposed rules and how they will affect your practice, contact the attorneys of McBrayer.

Chris Shaughnessy

Christopher J. Shaughnessy is an attorney at McBrayer, McGinnis, Leslie & Kirkland, PLLC.  Mr. Shaughnessy concentrates his practice area in health care law and is located in the firm’s Lexington office.  He can be reached at or at (859) 231-8780. 

This article is intended as a summary of federal and state law activities and does not constitute legal advice.

[1] 77 Fed. Reg. 9179-9187 (Feb. 16, 2012).

CMS Sends a Lifeline on Stark after Tuomey Affirmed: What Health Providers Should Know

In July, the Court of Appeals for the Fourth Circuit upheld a record verdict of $237 million against Tuomey Healthcare Systems in the case of U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc. for violations of the False Claims Act and the Stark Law. Tuomey allegedly violated these laws in over 21,000 claims, submitting bills to Medicare worth $39 million. The False Claims Act allows up to triple damages per claim, as well as a penalty of up to $11,000 per violation. Perhaps in light of such a verdict, the Center for Medicare & Medicaid Services (“CMS”) issued a set of proposed changes and clarifications to the Stark Law that should help healthcare providers to breathe a sigh of relief.

Tuomey’s alleged violations of the Stark Law occurred upon its payment of 19 physicians’ compensation and bonus payments in a manner that corresponded with the physicians’ volume of referrals to the healthcare system. The bonuses were tied only to the collection of the physicians’ own professional fees, and base salaries were computed based upon the physicians’ fee collections from the prior year. The Stark Law prohibits referrals of Medicare patients by a physician to an entity with which that physician has a financial relationship. The court found Tuomey’s compensation arrangements with its physicians to be violations of the Stark Law, and claims submitted under these arrangements violations of the False Claims Act.

As the concurrence in Tuomey noted, such a strict application of the Stark Law can spell disaster for smaller hospitals – “a likely death sentence for a community hospital in an already medically underserved area.”[1] Luckily, CMS proposed changes just after the Fourth Circuit’s Tuomey holding that should mitigate future effects of this decision.   These changes were issued in the context of the proposed 2016 Medicare physician fee schedule[2] and were designed with the intent of reducing some of the more onerous technical requirements of the law. The changes include clarifications that: “in writing” requirements may be fulfilled through “a collection of documents” even without a formal contract; a personal services or lease term is not required to be in writing if it lasts at least one year and complies otherwise with the law; personal services and lease arrangements may continue on the same terms upon expiry if they comply otherwise; missing signatures may now be obtained within a 90-day grace period, regardless of fault in failure to obtain the signature; and, importantly, when a physician provides services to patients in a hospital, a financial relationship is not necessarily formed if both the physician and the hospital bill for the services separately.

heap of dollars with stethoscopeAdditionally, CMS proposed two new Stark Law exceptions, one that would allow sharing arrangements for the use of office space, personnel, equipment, supplies and other services in underserved areas, and another that would allow hospitals to help physicians employ non-physician primary care providers in the service area of the hospital. This second exception is CMS’ response to primary care provider shortages in the face of expanded insurance coverage under the Affordable Care Act.

Fortunately for providers, CMS appears responsive to health care providers’ concerns after the startling verdict in Tuomey. Still, physicians should be acutely aware of the requirements of both the Stark Law and the False Claims Act and review all provider arrangements for potential violations.

For information on the impact of the Tuomey case or the proposed CMS changes to the Stark Law, contact your McBrayer health care attorney today.

Anne-Tyler MorganAnne-Tyler Morgan is an Associate of McBrayer, McGinnis, Leslie & Kirkland, PLLC.  Ms. Morgan concentrates her practice in healthcare law and is located in the firm’s Lexington office. She can be reached at or at (859) 231-8780. 

This article is intended as a summary of federal and state law and does not constitute legal advice.

[1] United States ex rel. Drakeford v. Tuomey Healthcare Sys., Inc., No. 13-2219 (4th Cir. July 2, 2015) at 54.


CMS Proposes Sweeping Changes for Nursing Home Oversight

On July 16, 2015, the Center for Medicare and Medicaid Services (“CMS”) published a Proposed Rule with new standards that will have a sweeping effect on the long-term care industry. This new Rule is the first comprehensive review and update to Medicare and Medicaid nursing home standards since 1991. Since the last update, the number of Medicare beneficiaries, excluding Medicare Advantage beneficiaries, residing in nursing homes has tripled to 1.8 million residents and the Medicaid Program has become the primary payer of long term care (64% of residents are on Medicaid).[1]

The 403 page Proposed Rule sets high standards for quality of care and patient safety in nursing homes and long term care facilities that participate in Medicare and Medicaid.[2] The U.S. Department of Health and Human Services (“DHHS”) summarizes the proposed changes as follows:

  • Making sure that nursing home staff is properly trained on caring for residents with dementia and in preventing elder abuse.
  • Ensuring that nursing homes to take into consideration the health of residents when making decisions on the kinds and levels of staffing a facility needs to properly take care of its residents.
  • Ensuring that staff members have the right skill sets and competencies to provide person-centered care to residents. The care plan developed will take the resident’s goals of care and preferences into consideration.
  • Improving care planning, including discharge planning for all residents with involvement of the facility’s interdisciplinary team and consideration of the caregiver’s capacity, giving residents information they need for follow-up, and ensuring that instructions are transmitted to any receiving facilities or services.
  • Allowing dietitians and therapy providers the authority to write orders in their areas of expertise when a physician delegates the responsibility and state licensing laws allow.
  • Requiring nursing homes to provide greater food choice for residents while also giving flexibility for nursing homes.
  • Updating the nursing home’s infection prevention and control program, including requiring an infection prevention and control officer, and an antibiotic stewardship program that includes antibiotic use protocols and a system to monitor antibiotic use.
  • Strengthening rights of nursing home residents, including placing limits on when and how binding arbitration agreements may be used.[3]

To improve quality of care, the Proposed Rule requires nursing facilities to meet the Quality Assurance and Performance Improvement (QAPI) requirements and requires compliance and ethics programs. The Proposed Rule also focuses upon enhancing a resident’s quality of life and protecting residents’ rights.

Attentive doctor and nurse caring for an elderly hospital patienThe Proposed Rule significantly expands and strengthens governmental oversight of nursing facilities in an attempt to curb perceived fraud and abuse in the nursing homes.[4] The Proposed Rule increases the focus upon abuse, sexual abuse, and neglect in nursing homes. The Rule prohibits nursing homes from employing professionals that have received some form of professional discipline for abuse, mistreatment or even theft and requires that nursing homes craft, which means that facilities will have to conduct extensive professional disciplinary background checks before hiring professionals. The Proposed Rule also requires developing and enforcing policies to prevent abuse, mistreatment, and theft.

The proposed regulation also requires increased supervision and review of the use of medications. Under the Proposed Rule, a pharmacist will have to review a resident’s medical chart every six months and under certain circumstances at admission and then report any drug irregularities, including unnecessary drugs. Additionally, the regulations would limit the use of psychotropic drugs to residents by restricting these drugs to medically necessary uses and tapering long term users off of them with dose reductions and behavioral health services.

As indicated above, the federal and state payers, especially Medicaid, pay the bulk of the cost of long term care. As a result, the Proposed Rule is going to have an enormous impact on long term care facilities. Moreover, CMS estimates that the Proposed Rule would cost the nursing home industry $729 million in the first year and $638 million in the second year, serious figures for an industry with 15,000 long-term care facilities.[5]

CMS will accept Public Comments on the proposed rule for 60 days. For assistance with Public Comments on the Proposed Rule or for more information on how the Proposed Rule will affect long term care facilities, contact the attorneys at McBrayer.

Emily HordEmily M. Hord is an Associate of McBrayer, McGinnis, Leslie & Kirkland, PLLC.  Ms. Hord concentrates her practice in healthcare law and is located in the firm’s Lexington office. She can be reached at or at (859) 231-8780. 

This article is intended as a summary of federal and state law and does not constitute legal advice.

[1] Dickson, Virgil, Modern Healthcare, “Obama administration moves to strengthen nursing home oversight” (July 13, 2015),

[2] “Reform of Requirements for Long-Term Care Facilities (CMS-3260-P),”

[3] DHHS, Press Release, “HHS proposes to improve care and safety for nursing homes residents” (July 13, 2015)

[4] DHHS, Press Release, “HHS proposes to improve care and safety for nursing homes residents” (July 13, 2015)

[5] Dickson, Virgil, Modern Healthcare, “Obama administration moves to strengthen nursing home oversight” (July 13, 2015),

Changes and Challenges for Mental and Behavioral Health Providers

As Kentucky’s Senate Bill 192 highlights, coverage and treatment of substance abuse problems is dramatically changing as the current penal model is slowly being replaced with a treatment model. Even terminology for what has been called “drug addiction” is now referred to as a “substance disorder” problem. Behavioral health has become the new catchall name for both mental health and substance disorders. As substance disorders become medical problems rather than drug abuse problems, the Federal Mental Health Parity Act and the Affordable Care Act now mandate that substance disorders and mental health problems, which often go hand in hand, must be covered by health insurance just as medical problems are covered. As of January 1, 2015, these illnesses must also covered by Medicare and Medicaid. Paving the road for coverage, however, has not been easy as a wealth of new federal and state government regulations are creating a complicated framework with a host of changes for behavioral health providers. While Kentucky struggles to provide and pay for services for the 150,000+ new Medicaid beneficiaries, these new laws and regulations significantly affect not just behavioral health providers, but also employers as the struggle to treat individuals who suffer from these maladies is addressed.

intelligence brain function gears cogs in motion neurology mental health medical symbol mind isolated

To bolster behavioral health services, Kentucky recently created a multitude of new behavioral health provider types that are eligible for reimbursement under the state’s Medicaid plans, but which will also be reimbursed by health insurance. The most significant are the Behavioral Health Services Organization (“BHSO”) and the Behavioral Health Multi-Specialty Group (“MSG”). Licensed under 902 KAR 20:430, BHSOs may provide a comprehensive variety of services from mental health and substance disorder providers that may include physicians, psychologists, therapists, social workers, nurse practitioners and physician assistants. Under this license, BHSOs may provide these services in both outpatient and residential settings. As opposed to BHSOs, MSGs are provider groups that can include only therapists and do not require licensure, but must meet credentialing requirements to be paid by Medicaid.

Kentucky’s behavioral health providers are a key part of the state’s plan to combat a growing substance use problem that threatens to spiral out of control. Senate Bill 192, Kentucky’s “heroin bill,” became law on March 25, 2015. A key provision of the new law exempts several behavioral health providers from the requirement of a Certificate of Need. SB 192 also requires Kentucky’s Department for Medicaid Services (“DMS”) and Medicaid managed care organizations (“MCOs”) to approve or credential, respectively, behavioral health providers within forty-five days of application, expediting the process. The law requires MCOs to adjudicate all clean claims in a timely fashion as provided by statute or face a civil penalty of $100 per day. This provision addresses failures of MCOs to handle and pay claims in a timely fashion.

As health insurance, Medicaid, and Medicare begin to cover important behavioral health services that allow patients to participate in activities of daily living including work, employers will confront complicated and thorny issues about how individual employees should be treated when undergoing treatment for these problems. Issues like use of medicated assisted therapies by employees in the work place are difficult and can have significant legal implications that range from employees’ rights to privacy of protected health information to rights to continued employment under the Americans with Disabilities Act.

Paradoxically, as the new legal and regulatory framework is developed with the intent of broadening access to important behavioral health services, the base of providers available to serve these patients is shrinking because of the cost of compliance with regulatory requirements and extremely low reimbursement. For instance, the regulatory landscape and the need for more providers to treat these substance disorder problems became even more complicated when the Kentucky Board of Medical Licensure (“KBML”) issued regulations establishing prescribing standards for buprenorphine, also known as Suboxone, which is a narcotic prescribed by physicians to treat opioid addiction disorders. Buprenorphine is one of several medication-assisted therapies now eligible for Medicaid coverage in Kentucky for the treatment of the substance use disorders. The new regulations are the KBML’s attempt to curb the abuse of these therapies and prevent doctor shopping. Law enforcement’s efforts to combat Kentucky’s serious drug problem by focusing on medical professionals and regularly reviewing KASPER and other reports may motivate behavioral health providers to choose less regulated areas for practice. Medicaid’s low reimbursement rates drive providers to close their practices to Medicaid patients as the cost of compliance does not justify the rate of reimbursement.

The federal government’s Centers for Medicare and Medicaid has just announced its intent to allow MCOs to pay all inclusive rates for behavioral health treatment, which, if enacted, may create financial incentives for providers to treat Medicaid patients if rates area reasonable. All inclusive payments for behavioral health services are being incorporated into the private health insurance market as well. Payment to providers to keep a substance disorder patient in compliance rather than on a fee for service basis may be in the future.

Interesting times are ahead for Kentucky’s health care providers as the framework for treatment and payment for behavioral health services is developed and becomes recognized as a basic component of primary care and overall health. Keeping mental health and substance disorder patients healthy and productive members of the workforce will require new treatment models and most certainly will provide a host of new issues for employers. Both changes and challenges lie ahead for providers, insurance companies, regulators, and employers as the new framework is developed, but the reward will be that individuals with these issues will become productive members of our workforce.

Lisa HinkleLisa English Hinkle is a Member of McBrayer, McGinnis, Leslie & Kirkland, PLLC.  Ms. Hinkle concentrates her practice area in health care law and is located in the firm’s Lexington office.  She can be reached at or at (859) 231-8780. 

This article is intended as a summary of federal and state law and does not constitute legal advice.

Think Twice about DEA Voluntary Surrender

It can be an intimidating experience to be sure… A DEA agent or Diversion Investigator, on an unscheduled visit to your office, confronts you with a KASPER, a KBML complaint or some other state regulatory action and alleges violations of the Controlled Substances Act. The DEA Agent then asks you to sign DEA Form 104. This form, which is titled “Voluntary Surrender of Controlled Substances Privileges,” is placed in front of you while the agent explains why you should sign it immediately, rather than face potential action to revoke your DEA and other adverse consequences. The DEA Agent tells you that you are already in deep, deep trouble (of a vague and unspecified nature), and that the simple act of signing this form can make your troubles go away and prevent federal action. Also, he tells you that all you have to do to get the number back is to reapply! Hold on…this is not the full story! This scenario is becoming a harsh reality and common situation for physicians, pharmacists, nurse practitioners, and PAs.

The truth is that signing any voluntary surrender will create multiple problems for providers including the loss of Medicare and Medicaid participation among other things that have the potential to destroy medical practices and livelihoods. Providers should know, for instance, that the DEA’s final rules, codified at 21 C.F.R. §§ 1301.52(a) and 1301.62(a), state that signing this form and handing it to a DEA employee will result in immediate loss of prescribing privileges for controlled substances in schedules II through V. When a voluntary surrender is executed, the DEA does not have to investigate further or bring any sort of charges – the signed form is akin to agreeing to a criminal sentence by bypassing an arrest, arraignment and trial, with the consequences being immediate forfeiture of a provider’s ability to prescribe any controlled substances. Make no mistake – the form may say “voluntary,” but it is in the best interest of the DEA to make the form as much the opposite as possible.

Prescription Drugs With A SyringeWhen a provider signs the form, there are three important things that happen – the provider’s surrender becomes officially “voluntary,” no matter how much that provider was pressured into signing; the provider’s signature officially resolves any governmental concerns that led to the provider being asked to sign, essentially proving the government’s case for them; and the signature creates a waiver of any right to an administrative hearing that could prevent the loss of the provider’s DEA registration. In other words, signing the form essentially is an irrevocable action.

There are other consequences beyond the immediate loss of the registration number. Once a DEA registration number is lost, it becomes excruciatingly difficult to regain. The proceedings will likely take between 18 months and two years, with the DEA opposing the provider at every step. All the while, the provider has no DEA registration and can’t prescribe controlled substances, rendering practice potentially impossible.

Also, when the form is signed, the DEA reports it to Medicare and Medicaid, which mot likely results in termination of participation. Understandably, Medicare and Medicaid do not want to pay for a provider’s services when he or she can not provide the full spectrum of care that includes prescribing controlled substances. Additionally, signing the form may trigger administrative and disciplinary action like civil monetary penalties or loss of medical staff privileges. Essentially, one signature has the potential to destroy a provider’s entire livelihood.

The DEA agent, of course, will do his or her level best to convince you that this is your best possible legal action. The DEA Agent’s intent is far from giving the provider the full story. The only advice that a provider should be accepting is legal advice from her or his attorney. When a provider confronts a DEA Agent, particularly in an unscheduled visit, the first thing a provider should do is contact an attorney before making any decisions as to how to proceed, whether the DEA is requesting consent to a search or a surrender of controlled substance prescribing privilege. Above all, do not sign anything without the advice your attorney. Tell the DEA Agent that you will have to consult with your attorney before signing any voluntary surrender or making any statements. The DEA Voluntary Surrender Form 104 is not a simple matter, whatsoever!

For information about DEA voluntary surrender, or if you need advice in an investigation, contact McBrayer’s health care team!

Lisa HinkleLisa English Hinkle is a Member of McBrayer, McGinnis, Leslie & Kirkland, PLLC.  Ms. Hinkle concentrates her practice area in health care law and is located in the firm’s Lexington office.  She can be reached at or at (859) 231-8780. 

This article is intended as a summary of federal and state law and does not constitute legal advice.

The Compounding Regulations Surrounding Drug Compounding

Drug compounding as a practice has, until recently, been met with far looser regulation than the manufacture of drugs. This practice serves to meet the needs of individuals who require certain formulations not available in manufactured form, such as discontinued medications or forms of manufactured drugs that do not contain ingredients to which a patient might be sensitive. Compounding may also change the form of the drug for patients who cannot take manufactured drugs in the manner in which they exist commercially. As industrial-level compounding grows to provide larger amounts of compounded drugs, regulators are scrambling to ensure the quality and safety of these drugs.

The biggest difference between a manufacturer of drugs and a drug compounding facility is that drug manufacturers must receive FDA approval before selling drugs to the public. Drugs from compounding facilities are not tested in the same manner for safety, efficacy or quality. After an outbreak of Aspergillus Meningitis between 2012 and 2013 due to tainted steroid injections from a compounding facility, Congress passed the Drug Quality and Security Act of 2013 (“DQSA”) in 2013, and a particular title called The Compounding Quality Act (“CQA”) to regulate the compounding industry. The DQSA/CQA set up a new regulatory regime that applies to all compounding pharmacies, and those pharmacies, large or small, should take notice as the FDA will soon release final rules implementing the provisions of the acts.

The CQA creates two different classes of compounders – traditional compounders and outsourcing facilities. Traditional compounders, such as small pharmacies that compound drugs based on prescriptions or in limited quantities, meet certain requirements that make them exempt from many of the strictures of the CQA, leaving them regulated largely by the states. Deviations from these exemptions will open these pharmacies up to federal inspection and potential enforcement actions.

PrescriptionThe second class created by the CQA is for a new kinds of pharmacies known as outsourcing facilities. These facilities must adhere to a set of stringent standards created in the CQA: the compounding must be done at a state or federally licensed pharmacy and by a licensed pharmacist; the compounding must be done pursuant to a prescription order; each facility must be registered with the FDA and create a procedure for reporting “adverse events”; bulk drug ingredients must be approved by the FDA, appear in the U.S. Pharmacopeia or have a monograph in the National Formulary, and other ingredients must also appear in the U.S. Pharmacopeia or National Formulary; a compounded drug cannot contain a drug found to be ineffective or unsafe or essentially be a copy of another drug; the compounded drugs must not be considered by the FDA to be difficult to compound (and therefore result in safety or efficacy problems); the drugs cannot be wholesaled by the compounder; the facility must be up-to-date with all fees; the compounding must occur in a state that has a memorandum of understanding on file with the FDA regarding the compounding program and limitations on outsourcing facilities; and all drugs must be labeled with specific information to identify the facility so that the FDA, a patient or health care provider can contact the facility if some adverse event takes place.

Outsourcing facilities will now also be subject to Current Good Manufacturing Practices requirements, standards that have applied in the past to drug manufacturers. The FDA released several sets of guidance documents in July of 2014 that explain how the agency will view implementation of these standards.

Final rules implementing the DQSA/CQA have yet to be adopted and enforced, but traditional compounders and potential outsourcing facilities alike should begin to take steps toward compliance in anticipation of the new regulatory regime. The attorneys of McBrayer can help bring you into compliance ahead of time.

Molly Lewis Molly Nicol Lewis is an Associate of McBrayer, McGinnis, Leslie & Kirkland, PLLC.  Ms. Lewis concentrates her practice in healthcare law and is located in the firm’s Lexington office. She can be reached at or at (859) 231-8780. 

This article is intended as a summary of federal and state law and does not constitute legal advice.