Dive Brief:

• Abbott Laboratories' Alere has agreed to pay the Department of Justice $160 million to resolve allegations it violated the False Claims Act in connection with mail-order diabetic testing supplies provided under Medicare.
• DOJ alleges that Arriva Medical, which went out of business in late 2017, and its parent company, Alere, paid kickbacks to Medicare beneficiaries by providing them free or no-cost glucometers and by "routinely waiving, or not collecting, their copayments for meters and diabetic testing supplies." Among the government's allegations were that the claims to Medicare were false because kickbacks were paid to Medicare beneficiaries, patients ineligible to receive meters, and patients who were deceased. Abbott announced it would acquire Alere in 2016, the deal closed in October 2017.
• This is the second DOJ settlement in recent weeks involving Alere. Last month, the company agreed to pay $38.75 million to resolve allegations it billed Medicare for defective rapid point-of-care testing devices. The government in that case alleged Alere concealed the defect for years despite knowing the tests were linked to over a dozen deaths and hundreds of injuries. 

Dive Insight:

Arriva Medical, which Alere acquired in November 2011, was at one time the nation's largest Medicare mail-order diabetic testing supplier until the company ceased business operations in December 2017. DOJ alleges that from April 2010 through the end of 2016, Arriva — with Alere's approval — paid kickbacks to Medicare beneficiaries. 

Among the government's allegations are that Arriva advertised that glucometers would be free and during "intake calls offered Medicare beneficiaries a 'no cost guarantee'" in which the company would provide the meters at no cost if CMS denied payment, which DOJ said typically happened because the beneficiaries were not yet entitled to a new glucometer paid for by Medicare.

Arriva also allegedly offered and provided existing customers free additional meters to induce them to reorder testing supplies from the company, while also systematically waiving small dollar copayments without informing beneficiaries of their copayment obligations by sending them an invoice, according to DOJ.

"Paying illegal inducements to Medicare beneficiaries in the form of free items and routine copayment waivers can result in overutilization and waste taxpayer funds," said Acting Assistant Attorney General Brian Boynton in a written statement.

While Medicare beneficiaries are only eligible to seek reimbursement for a new meter once every five years, Arriva allegedly repeatedly billed Medicare for new meters for existing patients in instances where the company had previously billed Medicare for meters for those patients within the five-year window. 

The $160 million DOJ settlement also resolves claims that Arriva submitted false claims to Medicare on behalf of deceased beneficiaries, for which the government program revoked Arriva's Medicare supplier number in November 2016.

Abbott in February 2016 announced an agreement to buy Alere, Arriva's parent company, for $5.8 billion.

An Abbott spokesperson in an emailed statement noted that the Alere acquisition closed in October 2017 and the settlement announced by DOJ on Monday "relates to alleged activities that took place prior to Abbott's acquisition ... and was previously disclosed by Alere in financial filings," adding that "this business was discontinued shortly after the transaction closed."