Physician Payment Sunshine Act

Thomas SullivanPresident

Rockpointe1-24-13

Acknowledgement of SupportThomas Sullivan is a Principal in Rockpointe Corporation and their subsidiary The Potomac Center for Medical Education; these entities have received educational grants or performed work from grants from the following companies in the last 24 months:

We believe that this support shows a commitment by companies to provide quality education to physicians around the country. *Expelled from school in the first grade for switching classes with identical twin brother.

AbbVie Bristol Myers Squibb Eisai Novartis

Amgen Cubist Eli Lilly Otsuka

Alcon Celgene Janssen QLT Inc

Amylin Cephalon Lantheus Pfizer

Astellas CSL Behring Medicure Sanofi

Astra Zeneca Daiichi Sankyo MedImmune St. Jude Medical

Aveo GE Healthcare Medtronic Teva

Bayer Genentech Merck Vertex

Boehringer-Ingelheim Gilead Millennium Watson

How about those Ravens

Media: Dollars for Doctors

Background: How Did We Get Here?• Rising healthcare costs – 17-22% of state budgets spent on Medicaid

• Perceived conflicts of interest • Large/high-profile pharma settlements– Failure to report $$

Background• The Physician Payment Sunshine Act was originally

drafted by Senators Chuck Grassley (R-IA) & Herb Kohl (D-WI) in 2007 and re-introduced in 2009– The Act’s stated intent is to shed light on direct payments

from product manufacturers to physicians and other medical practitioners

• Sec. 6002 of PPACA incorporated the “Sunshine Act”• Gives transparency to payments to physicians from

pharmaceutical and medical device companies• Full disclosure of physician payments in a searchable,

public database makes it easier to investigate and eventually prosecute health care fraud

Are We Just Wasting Sunscreen?• “Our results show that the disclosure laws in the two

states we examined had a negligible to small effect on physicians switching from branded therapies to generics and no effect on reducing prescription costs.”

• “Transparency is important in its own right, but if deterring unnecessary, costly prescribing is a concern for policymakers, more direct action may be required.”

• Negligible to small effects of the disclosure laws in Maine and West Virginia for both statins and SSRIs.

Arch Intern Med. 2012;172(10):819-821.

Final Rule?• On December 19, 2011, HHS issued a proposed rule for

“Sunshine Act”.• Still no final rule from CMS• In May 2012, CMS established a “Working Group”– Includes both technical and policy staff from CMS– Will assess the staff and resource requirements needed to

fully implement the program – CMS issued RFP soliciting outside help

• Sept 12, 2012– Senate Aging Committee Roundtable on Sunshine Rule

• Context of payments so patients understand• Questions on CME and meals• Experience with state laws and CIA’s

Rule Sent to OMB

• Proposed Final Rule sent to OMB (White House) November 2012

• Consumer Groups Voiced Opposition to AMA Letter December 27, 2012

• Still at OMB (Time line to be determined)– Flexibility on timing once at OMB

Physician Members of Congress Letter to CMSMay 2012• 8 physicians and 1 nurse:– Overwhelming administrative burden for companies,

doctors– Failure to exempt CME– Adverse impact on medical research in the U.S.• 24% less likely to do research if payments public; ACRO

– Impact on small companies– Compliance will cost billions• High penalties will result in greater reporting more $$

Letters.. Letters.. Letters

• Letters have been sent from consumer groups, industry, and others requesting quick resolution and publication of the sunshine regulations

• AMA Letter to Marilyn Taverna clarifying that the intent of the law was not to have indirect payments including CME Included in reporting

Everyone is Suspect

• “The administration should implement the (sunshine) act without any further delay so that it can begin, as soon as possible, to rein in the undue and harmful influence of money on medicine,”– Letter from former NEJM Editors to White House

1-16-13 Politico

AMA Issues• Expand the act beyond its intentions by proposing that some indirect

transfers, such as certified continuing medical education in which sponsoring manufacturers have no input into the content, speakers or attendees, be included in the reporting.

• Allow physicians to be listed as receiving payments or transfers if they were employed or affiliated by an organization that got them — even if those physicians individually never received them.

• Not provide physicians a sufficient mechanism for appealing or challenging any information appearing on the list. Manufacturers submit the information and have 45 days to make any appeals, but physicians have no guarantees that they will see companies’ lists on an ongoing basis so they may make corrections. AMA asserted that this process would deny physicians “substantive and procedural du process rights.”

Timeline and Responsibility • Start Dates (Former)

– ???2013: Data Collection Begins

– March 31, 2014: Partial year 2013 data submitted to CMS

– Prior to September 30, 2014: 45 Day Review Period

– September 30, 2014: CMS to publish 2013 data on public website

– GAO Stated Public Reporting Could Take Until December 2014 may be 2015….

Who Reports• Applicable manufacturers of covered drugs, devices,

biologicals, and medical supplies– Report all payments or other transfers of value to covered

recipients and physician ownership and investment interests– Certain entities under common ownership with an applicable

manufacturer must also report– Products available for payment under Medicare, Medicaid, CHIP

• Applicable Group Purchasing Organizations (GPOs)– Report only physician ownership and investment interests

– Definition includes physician owned distributors (PODs) that purchase products for resale

• Excluding OTC Only Makers

Proposed Definitions• Covered recipients– Physician/and or group practice• Includes

– MD’s, DO’s, Dentists, Dental Surgeons, Podiatrists, Optometrists, or Chiropractors

– Teaching hospital– Any Hospital Receiving Medicare Payments for Direct

Graduate Medical Education, IPPS Indirect Medical Education

– Other Hospitals Not off Hook – Indirect Payments to Staff

• Reporting anything valued over $10 or $100 cumulative within a year (down to the penny)

What Information Must Be Reported?

• Covered recipient name and address• NPI Number and Specialty• The amount and date of payment• Form of Payment – Cash or cash equivalent or In-kind items or services– Stock, stock option, ownership interest, dividend, profit

• Nature of such payment– If payment or transfer relates to marketing, education,

or research of a drug, device, biological, or medical supply, the product must also be identified

Natures of Payment• Gift• Food and beverage• Entertainment • Travel and lodging (including

specific destination)• Honoraria • Research (direct and indirect)• Education• Grant• Charitable contribution• Direct compensation for

serving as Faculty for Medical Education Program

• Consulting fees • Compensation for services

other than consulting• Royalty or license• Current or prospective

ownership or investment interest

• Any categories of information the Secretary determines appropriate

Exclusions• Payments made indirectly to a covered recipient through a third

party when applicable manufacturer is unaware of the identity of the covered recipient.

• Payments under $10, unless annual aggregate is > $100• Samples• Educational materials that directly benefit patients or are

intended for patient use• 90 Day Equipment Loans• Warranty• If Doctor is a Patient• In Kind for Charity and Discounts• Dividends from Public Company• Payments for Legal Work

Educational Materials• Sunshine Act– Educational materials must consist of materials (such as

pamphlets) that directly benefit patients or are intended for patient use.

– CMS clarified that this exclusion is limited to "materials" (including, but not limited to, written or electronic materials) and does not include services or other items.

• Implication: Implies that other educational materials that do not fall within another exception must be reported– CMS solicited comments on whether educational materials

provided to covered recipients (for example, a medical textbook) should be interpreted as educational materials that ‘‘directly benefit patients’’

Charitable Contributions• Sunshine Act:

For purposes of the reporting requirement, a charitable contribution is any payment or transfer of value made to an organization with tax-exempt status under the Internal Revenue Code of 1986 that is not more specifically described by one of the other nature or payment categories.

Proposed Rule and Third Parties

• Act generally excluded payments to third parties– If manufacturer is unaware of recipient’s identity

• However– If manufacturer is aware of identity they must report

• Broad standard for “awareness”– Actual knowledge or acts in deliberate ignorance/reckless

disregard of identity of covered recipient

• “Publicly Available” – Example: Dept chair = publicly available must be

reported (page 38-39)

Exhibits

• Under Current Definition– Transfers of Value may include exhibit fees and

sponsorships– Attendee list is available upon purchase– Could be considered disregard if they fail to order

a registration list– What if company rep sees some one they know on

exhibit floor at the meeting…….

Exhibit Booths

Do not need to report offering of buffet meals, snacks or coffee at booths at conferences or similar events where it would be difficult to definitely establish the identities of the individuals who accept the offering (page 29)

Civil Monetary Penalties

• Honest Mistakes

• Knowingly Incompliant

• Penalty Criteria

• $1,000 - $10,000/ Per Payment• Maximum Penalty $150,000

• $10,000 - $100,000 Per Payment • Maximum Penalty $1,000,000

• Length of Time• Value• Culpability• Nature and Amount Reported• Degree of Diligence

45-Day Review Period• Manufacturers, GPOs, covered recipients and physician owners

and investors may review and submit corrections before CMS makes the information available to the public

• CMS will notify the parties for review– CMS list serves and an online posting.– May also preemptively register with CMS to receive

notification• Log in to review information• In the event of disputes, CMS will provide physicians/teaching

hospitals contact info for manufacturers and GPOs on request• Physician/teaching hospital must directly contact applicable

manufacturer or GPO and resolve any dispute• In the event that a dispute cannot be resolved, CMS proposes

publishing both versions of the data

Sunshine Act: Fraud and Abuse Risks

Implications of the Sunshine Act for Providers

• Powerful new tool for prosecutors– Inquiry into billing/services patterns; overuse/misuse

• Disclosure of industry Payments to physicians and teaching hospitals poses several distinct risks:– Violation of fraud and abuse laws• Anti-Kickback Law• False Claims Act• Stark Law

– Non-compliance with federal regulations on conflicts in clinical research, or

– Reputational risk due to the appearance of impropriety

U.S. Foreign Corrupt Practices Act (FCPA)UK Bribery Act

French Transparency ActGlobal Transparency

International Issues

• Understand Aggregate Spend Program• Be aware of unexpected reporting• Timeliness is everything• No Minimum payment• Start Collecting NPI numbers on Attendees (may

need)• Training/education/compliance/risk

management• Wait – The Sunshine Rules Should be Released

Q1 2013

What Do You Need to Do?

For More Information

Thomas SullivanPresident

Rockpointetsullivan@rockpointe.com

www.policymed.com202-309-3507