the sunshine act one year in webinar

Polsinelli PC. In California, Polsinelli LLP

October 22, 2015

The Sunshine Act (Open Payments): One Year In …

Presenters:

Jeffrey Fitzgerald, ShareholderLauren Groebe, Associate

real challenges. real answers. sm

Today’s Objectives

� Review Key Elements of the Sunshine Act / Open Payments Program

� Overview of Data Collected, Perception and Program Updates

� Highlight Enforcement Mechanisms and Compliance Implications / Tips

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Review of the Sunshine Act / Open Payments Program

Key Elements

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Background

� Physician Payment Sunshine Act / Sunshine Act / Open Payments

� Enacted as Section 6002 of March 23, 2010 Affordable Care Act; February 8, 2013 Final Rule implemented and clarified Section 6002– CMS administers / enforces the program

� Program Goals – Increase transparency in financial relationships between (1)

industry and group purchasing organizations and (2) physicians and teaching hospitals through annual reporting on a public website

– Discourage inappropriate relationships and enable patients to make more informed treatment decisions by assessing potential conflicts of interest

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The Final Rule - Plain English

Unless an exception applies, Applicable Manufacturers(and applicable GPOs) must report

– payments or transfers of value made to Covered Recipients, and

– ownership or investment interests held by physicians or their immediate family

to CMS within certain timeframes on an annual basis.

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Key Definitions / Concepts

� Applicable Manufacturers (AM)� Payments or Transfers of Value� Covered Recipients� Ownership and Investment Interests� Data Reporting and the Review, Dispute

and Correction Process

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Who is an Applicable Manufacturer ?

An entity operating in the United States:

� that engages in the production, preparation, propagation, compounding or conversion of a covered drug, device, biological or medical supply

OR

� that exists under common ownership with an applicable manufacturer who also provides assistance or support with respect to the production, preparation, propagation, compounding, sale, or distribution

� “Covered drug, biological, device or medical supply” means payment for the product is available under Medicare, Medicaid, CHIP either separately or under a bundled payment, and requires premarket approval by FDA.

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Distributor as an Applicable Manufacturer?

� Yes! Two ways … 1. If a distributor holds title to any covered drug, device,

biological, or medical supply in the distribution chain; or

2. If a distributor does not hold title, but is under common ownership and provides assistance or support

� Consider application to physician owned distributors (PODs) and also wholesalers

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What is reported?

� Direct and indirect payments and transfers of value made to Covered Recipients

– What are indirect payments? Payments through a third party where the AM “requires, instructs, directs or otherwise causes the third party to provide the payment or transfer of value, in whole or in part to a Covered Recipient”

� Indirect Payments Reporting Exception: third party indirect payments or transfer of value when AM is unaware of the identity of the Covered Recipient

– Unaware = does not “know”– Know = actual knowledge or acts in deliberate ignorance

or reckless disregard of the identity

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Amount of Payment or Transfer

� Discernible economic value on the open market in the United States

� Must be reported even if the item has no value to the recipient or is not formally requested by the recipient– (ex: A textbook the physician already owns)

� Value includes tax, shipping� If made to a group of Covered Recipients, distribute the

amount among those who requested it, on whose behalf made and intended to benefit

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Form of Payment or Transfer

� Reportable forms of payments or transfers of value – Cash or cash equivalent– In-kind items or services– Stock, stock-option or other ownership interest– Dividend, profit or other return on investment

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Nature of Payments or Transfers

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� Consulting fee

� Compensation for services

� Honoraria

� Gift

� Entertainment

� Food and beverage

� Travel and lodging

� Education

� Charitable contribution

� Royalty or license

� Current or prospective ownership/investment

� Compensation as faculty or speaker at continuing education program

� Grant

� Space rental or facility fee (teaching hospital only)

� *Research (a category separate from the “general payment” categories above; made in connection with research agreement or research protocol)


Non-Reportable Exceptions

� Existing personal relationships

� Payments/Transfers of value <$10 & annual aggregate < $100– Includes CPI inflator

beginning in 2014

� Educational materials that directly benefit patients

� Charity care – in kind item for the provision of charity care

� Discounts & Rebates� Product samples intended for

patient use, coupons and vouchers

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� Short-term loan of a covered device (less than 90 days)

� Contractual warranties, maintenance agreements

� Covered Recipient acting as patient

� Provision of healthcare services to employees

� Nonmedical professionals� Civil or criminal actions or

civil proceedings� Indirect payments made to

speakers**

** Amended to be reportable under certain circumstances.


Key Provisions – Covered Recipient

� Physicians : legally authorized doctors of medicine and osteopathy, dentists, podiatrists, optometrists and chiropractors to – Excludes

� Medical students, residents, PAs and NPs� Bona fide employee of the applicable manufacturer reporting the

payment or transfer of value

� Teaching hospitals : which CMS has defined as any institution that receives indirect medical education (“IME”), direct graduate medical education (“GME”), or psychiatric hospital IME payments during the last calendar year– CMS lists those hospitals meeting this definition annually on the

Open Payments website

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Also Reported?Ownership and Investment Interests

� Covered Recipients are physicians who are owners or investors of an AM and their immediate family members– Immediate family member is the physician’s (1) spouse; (2)

natural or adoptive parent, child, or sibling; (3) step-parent, step-child, step-brother, or step-sister; (4) father, mother, daughter, son, brother, or sister-in-law; (5) grandparent or grandchild; or the (6) spouse of a grandparent or grandchild

� These interests may be direct or indirect and through debt, equity or other means– Includes stock, partnership cares, LLC membership,

loans/bonds, etc.

� There are exceptions / non-reportable interests

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Data Collection and Reporting Timeline

� Data Collection– AMs collect data throughout calendar year (i.e., a “program year”)

� Data Submission– AMs submit to CMS preceding calendar year data by on / before

the 90th day of the year

� Data Review, Dispute and Correction Period– Covered Recipient – 45 day window

– AMs – 45 day window + 15 day correction period

� CMS publishes data on June 30th of each year16


Data Review, Dispute and Correction Period

� Opportunity for Covered Recipients to review, then affirm and/or dispute records submitted by AMs

– Data records only made available for review/ dispute in the calendar year that they were submitted

� CMS will not mediate – the parties’ responsibility!

� Covered Recipients must register in the CMS Enterprise Portal and in the Open Payments system to engage in the review/ dispute process

– Provides email alerts; monitoring mechanisms; status updates

– Verification may take time – one time registration

� Covered Recipients not required to affirm the data; un-affirmed records still published by CMS

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Data Review, Dispute and Correction Period - Mechanics

� A 60-day window:– 45 days for data review/dispute by Covered Recipients; AMs can

also make corrections

– 15 days immediately following the 45-day period for AMs to continue to make corrections

� Data corrections made after the 60-day window will notbe reflected in the initial publication (the June posting)

� Data corrections are not updated immediately (may be refreshed)

� If dispute not resolved, the lasted attested to data submitted by the AM will be published, but that data will be identified as “disputed”

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Data Collection Overview, Perception and Program

Updates

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Today’s Open Payments Data Landscape

� Two report cycles completed; full year of implementation complete (second year coming to close)

� CMS has publically published two datasets –2013 and 2014 program years

� Datasets downloadable and searchable by physicians, teaching hospitals, or companies making payments by name, city, state, and specialty

� A “treasure trove” of data?20


Open Payments CMS Data Overview

2013 Program YearTotals (*partial year)

2014 Program Year Totals

Total US Dollar Value Reported

$3.43 Billion $6.49 Billion

Total Records Published

4.30 Million 11.41 Billion

Total Companies Making Payments

1,347 1,444

Total Physicians with Payment Records

470,000 607,000

Total Teaching Hospitals with

Payment Records

1,019 1,121

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• All numbers above 10,000 have been rounded. • Published 6/30/15, available at https://openpaymentsdata.cms.gov/.


2014 Open Payments Data Overview -Dollars

Total US Dollar Value Reported $6.49 Billion

General Payments Breakdown $2.56 Billion*$5.06 Million Disputed

Research Payments Breakdown $3.23 Billion*$13.16 Million Disputed

Ownership or Investment Interest Breakdown

$703 Million*$0 Disputed

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2014 Open Payments Data Overview -Records

Total Records Published 11.41 Million

General Payments Breakdown 10.82 Million*1,723 Disputed

Research Payments Breakdown 585,000*846 Disputed

Ownership or Investment Interest Breakdown

4,785*0 Disputed

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Perception and Reaction

� A mixed review? Time will tell?� Covered Recipient Awareness

– Some research firms indicate physicians have little familiarity with Open Payments

– CMS announced that for the 2014 reporting year “registered physicians and teaching hospitals reviewed nearly 30% of the total value of the reported data.”�Represents very small number of total

records and value24


Perception and Reaction

� Public Perception– Varying media exposure, commentary– Use of datasets unclear

� CMS has stated that the Open Payments website has had a total of 6.5 million hits; full data set downloaded 50,000 times

– Integrity of data called into question

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Regulatory Action Highlights -Reporting

� Effective 2016, payments provided to physicians for speaking at a continuing medical education event are reportable when – AM provides an indirect payment or transfer of value

to a continuing education organization for payment to a known (or can be identified) physician speaker at a continuing education event

– Payment must be reported to CMS in 2017, regardless of the accreditation status of the organization

– Announced in 2015 Medicare Physician Fee Schedule, November 2014

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Regulatory Action Highlights - CMS

� April 2015 - CMS Annual Report to Congress – Key components included:

�Engagement and outreach efforts are a priority for CMS

�Data integrity improvements �Action plan for enforcing penalties for AM /

GPO non-compliance– CMS consulted with the Office of the Inspector

General (OIG) to develop the report

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Regulatory Action Highlights –On the Horizon?

� October 2015 - Sen. Charles Grassley (R-Iowa) and Sen. Richard Blumenthal (D-Conn) introduced a bill that would expand the reporting requirements to include NPs and PAs� Some states already require similar reporting

requirements (ex., Massachusetts)

� Recommend AMs and Covered Recipients monitoring the Open Payments website for CMS alerts, updates, webinars

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Enforcement Mechanisms and Compliance

Implications / Tips

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Enforcement Mechanisms

� Open Payments is a “self-reporting” program with CMS oversight

� CMS can issue civil monetary penalties (CMPs) for non-compliance

� CMPs range from:– $1,000 to $10,000 for each payment or transfer of value, or

ownership or investment interest, not reported timely, accurately, or completely (up to $150,000), and

– $10,000 to $100,000 for each “knowing” failure to report timely, accurately, or completely (up to $1,000,000)

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Enforcement Mechanisms

� To date, no CMPs imposed on AMs / GPOs� CMS has proposed targets audits to identify AMs

and GPOs that should have submitted payment information but did not for program year 2013– What do AM audits / enforcement actions mean for

Covered Recipients and data reporting?

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Compliance Implications

� KEY: Open Payments information is publically available on the Internet – The vast amount of information will continue to grow

year over year� What does this mean for look back periods?� Information permanently posted?

� Notably, CMS emphasized that compliance with the reporting requirements does not exempt AMs, GPOs, Covered Recipients, and others from potential liability under the Anti-Kickback Statute or the False Claims Act

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Key Compliance Implications

1. Consider who is looking at the data– State and Federal Agencies / Competitors / Third

Parties� Using data to evaluate behaviors, trends, investigate certain

AMs and / or Covered Recipients (ex. PODs)

– What are the fraud and abuse implications?

2. Identify what, if any, other reporting and disclosure obligations impacted– State disclosure / transparency laws– Conflict of interest policies

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Suggested Compliance Tips

1. Evaluate how to internally / personally track and audit reportable payments and transfers of value

2. Register on the Open Payments portal / website3. Identify key persons to monitor Open Payment

submission dates 4. Closely monitor data reported and engage in the

Dispute and Review status5. Consistently evaluate if Open Payments applies

to you (business model changes may trigger reporting requirements)

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Resources

� Open Payments Homepage– http://www.cms.gov/openpayments/

� Open Payments Resource Page– http://www.cms.gov/OpenPayments/About/Resources.html

� Open Payments Help Desk– Live Support,1-855-326-8366

– [email protected]

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Questions?

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Presenter Profiles

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Jeffry Fitzgerald, [email protected]

Jeff is a shareholder practicing in the Denver office and represents health careproviders in disputes with federal and state licensure bodies, professionallicensure boards, and other regulators and law enforcement agencies. He alsoassists health care companies that have proactively discovered potentialcompliance issues. Jeff uses his experience in resolving investigations todevelop practical solutions that bring finality and risk reduction to complianceproblems.

Lauren Groebe, [email protected]

816.572.4588

Lauren is an associate in the Kansas City office and works with clients onoperational, compliance, and regulatory issues with a focus on theNational Physician Payment Transparency Program, 340B Program,Health Insurance Portability and Accountability Act, provider-based rulesand regulations, corporate compliance, Medicare and Medicaid

enrollment, and state licensure issues.


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