Presenting a live 90‐minute webinar with interactive Q&A Federal Payment Sunshine Law: Implications Federal Payment Sunshine Law: Implications for Manufacturers and Providers Navigating the New Federal Mandate on Public Disclosure of Payments 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific TUESDAY, DECEMBER 6, 2011 Today’s faculty features: Eve M. Brunts, Partner, Ropes & Gray, Boston Conner Childers, Director for Global Healthcare Compliance Operations, Amgen, Thousand Oaks, Calif. Bill McKenzie, CPA, Health Care Compliance Officer, DePuy Spine, Inc., a Johnson & Johnson Company, Raynham, Mass. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
Transcript
Presenting a live 90‐minute webinar with interactive Q&A
Federal Payment Sunshine Law: Implications Federal Payment Sunshine Law: Implications for Manufacturers and ProvidersNavigating the New Federal Mandate on Public Disclosure of Payments
Conner Childers, Director for Global Healthcare Compliance Operations, Amgen, Thousand Oaks, Calif., p p , g , ,
Bill McKenzie, CPA, Health Care Compliance Officer, DePuy Spine, Inc., a Johnson & Johnson Company, Raynham, Mass.
The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
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Federal Payment Sunshine Law:Implications for Manufacturers and ProvidersImplications for Manufacturers and Providers
Federal Sunshine Law:IntroductionIntroduction • Basic Mandate: Manufacturers of a drug, device, g, ,
biological or medical supply covered under Medicare, Medicaid or the Children’s Health Insurance Program must report most payments or other transfers of valuemust report most payments or other transfers of value made to a covered recipient (i.e., physicians and teaching hospitals)
• Timeline: Manufacturers must report annually to the Centers for Medicare & Medicaid Services (CMS)– First report covers calendar year 2012First report covers calendar year 2012– First report due March 31, 2013 for calendar year 2012
ROPES & GRAY6
Federal Sunshine Law:IntroductionIntroduction• Public Disclosure: Information reported will be posted on
public website– Easily searchable and understandable format
Information on enforcement actions– Information on enforcement actions– Background on industry-physician relationships– First report by September 30, 2013 and then annually by June
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• Penalties: Penalties created for non-compliance– Failure to Report: Civil money penalty from $1 000 to $10 000Failure to Report: Civil money penalty from $1,000 to $10,000
for each unreported transfer of value up to $150,000– Knowing Failure to Report: Civil money penalty from $10,000
to $100 000 for each unreported transfer of value up to
ROPES & GRAY
to $100,000 for each unreported transfer of value up to $1,000,000
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Federal Sunshine Law:IntroductionIntroduction• Compliance Challengep g
– Guidance on reporting requirements was due from CMS on October 1, 2011 but not yet issued
P d l ti t t Offi f M t d• Proposed regulations went to Office of Management and Budget (OMB) on November 17, 2011
• OMB has 90 days to review
– Manufacturers must act now to implement tracking systems to ensure information captured to meet reporting requirements
– Reasoned and supported judgment calls required in face of ambiguity and lack of guidanceP id t b d f di l f t f f
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– Providers must be prepared for disclosure of transfers of value
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Federal Sunshine Law:I t d tiIntroduction
Although many of the large g y gpharmaceutical and medical device manufacturers, universities, and even the National Institutes of Health (NIH) have already begun to implement disclosure policies voluntarily we aredisclosure policies voluntarily, we are concerned that smaller companies are waiting for clarity and direction from CMS and will find the lack of timely guidance burdensome and costly. Prompt federal guidance is urgently needed to ensure a smooth plan toward increasing disclosure, eliminating conflicts, and ultimately providing patients with the tools they need topatients with the tools they need to make informed health choices.
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Federal Sunshine Law:I t d tiIntroduction
Y h d i i d b t ti i fYou had inquired about our timing for releasing a proposed rule. We have been working to implement the statutory provision. This January, the President issued Executive Order 13563, which ,directs all Federal agencies to take steps to reduce regulatory burden. I believe we can implement the statutory goals of Section 6002 while minimizing burden on the regulated parties In thatburden on the regulated parties. In that vein, CMS is carefully reviewing this statutory requirement and working hard to ensure we meet these goals.
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Overview of Federal Sunshine Law
Manufacturers of a drug, device, biological or medical supply that is covered under Medicare,medical supply that is covered under Medicare, Medicaid or the Children’s Health Insurance Program must report most payments or other
f f l d d i itransfers of value made to a covered recipient
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Overview of Federal Sunshine Law:ApplicabilityApplicability• Manufacturer
– Scope of Activity• Any entity engaged in the production, preparation,
propagation compounding or conversion of a coveredpropagation, compounding, or conversion of a covered product or
• Any entity under common ownership with manufacturing entity which provides assistance or support to such entityentity which provides assistance or support to such entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered product
– Location of Operations• Entity must operate in the United States, or in a territory,
possession or commonwealth of the United States
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possession or commonwealth of the United States
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Overview of Federal Sunshine Law:ApplicabilityApplicability• Covered Product
– Manufacturer must manufacture (or support) drug, device, biologic or medical supply
• No definition of any terms– Compare to state laws that incorporate FDA definitions for
regulated products• Potential uncertainty
– Are there any products considered medical supplies that are not also medical devices?
– Product must be reimbursable under Medicare, Medicaid or Children’s Health Insurance ProgramChildren s Health Insurance Program
• No distinction on separate reimbursement versus reimbursement as part of global payment for service, procedure or stay
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y
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Overview of Federal Sunshine Law: A li bilitApplicability• Manufacturer of Covered Product
C k ti t– Co-marketing arrangements• Report only what each pays or allocate reporting
responsibilities?
– Independent contractor distributors• Title to product retained?
C t t f t / t f t
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– Contract manufacturer/component manufacturer
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Overview of Federal Sunshine Law: A li bilitApplicability• Covered Recipients
– PhysicianPhysician• Physician defined consistent with Medicare statute to include
physician, osteopath, dental surgeon, podiatrist, optometrist and chiropractor
– Excludes manufacturer employee– No reference to office staff (as most state laws have)
– Teaching Hospitalg p• How identify teaching hospital? Not defined in statute• What transfers tracked when teaching hospital is component of
larger entity (such as university)?larger entity (such as university)?• Track payments to teaching hospital only or to hospital and
individual employees and agents as well?– Requests for CMS Database of Physicians and Teaching
ROPES & GRAY
Requests for CMS Database of Physicians and Teaching Hospitals Outstanding
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Overview of Federal Sunshine Law:R ti R i tReporting Requirements• Covered Recipients
M f t t t t i t th– Manufacturers must report certain payments or other transfers of value made directly or indirectly to:
• Covered recipient (i.e., physician or teaching hospital)• Entity or individual at the request of or designated on behalf
of a covered recipient
– Exclusion for indirect transfers of value if identity ofExclusion for indirect transfers of value if identity of recipient not known
• No knowledge or no involvement in selection?Transfers of al e to clinical sites ( ith affiliated ph sician• Transfers of value to clinical sites (with affiliated physician investigator), contract research organization, or grant to academic institution for physician fellowship?
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Overview of Federal Sunshine Law:R ti R i tReporting Requirements• Transfers of Value
– Reportable payments or transfers of value include anything of value unless specifically excludedExclusions generally relate to amount type or purpose of– Exclusions generally relate to amount, type or purpose of transfer
• Excluded Transfers of Value– Amount of Transfer
• Any transfer less than $10 unless annual aggregate value transferred in calendar year exceeds $100transferred in calendar year exceeds $100
– Manufacturer still needs to track in case aggregate threshold met
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Overview of Federal Sunshine Law:R ti R i tReporting Requirements• Excluded Transfers of Value
– Common Business Practices• Discounts (including rebates)• Loan of a covered device for 90 days or less to permit• Loan of a covered device for 90 days or less to permit
evaluation• Items or services provided under contractual warranty if terms
set forth in purchase or lease agreementset forth in purchase or lease agreement
– Patient/Charitable Activities• Product samples not intended to be sold and intended for
patient use• Educational materials that directly benefit patients or are
intended for patient use
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• In-kind items used for the provision of charity care
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Overview of Federal Sunshine Law:R ti R i tReporting Requirements• Excluded Transfers of Value
– Transfers Not Related to Business Relationship• Transfer of value to covered recipient as patient• Payment for non-medical professional services of licensed
non-medical professional• Payment for services related to civil or criminal action or
administrative proceeding• Payment by self-insured employer for health care to
employees• Dividend/profit distribution from publicly traded security and
mutual fund
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Overview of Federal Sunshine Law:R ti R i tReporting Requirements• Information Reportedp
– Name– Business address– Specialty and National Provider Number (if physician)– Amount of transfer of value
D t l id d t i i t– Date value provided to recipient– Form of value
• Cash or cash equivalentCash or cash equivalent• In-kind items or services• Ownership interest or return on investment
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Overview of Federal Sunshine Law:R ti R i tReporting Requirements• Information Reported
– Nature of value Consulting fees Compensation for
Research Charitable contribution Compensation for
services (other than consulting)
Honoraria
Charitable contribution Grant Royalty or license Current or prospectiveHonoraria
Gift Entertainment Food
Current or prospective investment interest
Direct compensation for serving as faculty or
Travel (including destinations)
Education
g yspeaker at medical education program
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Overview of Federal Sunshine Law:R ti R i tReporting Requirements• Information Reportedp
– Covered product if transfer of value related to marketing, education or research specific to particular product
Id tif i th “ l t d d t” f di l d i• Identifying the “related product” for medical device companies?
– Any other information as specified by CMS
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Overview of Federal Sunshine Law:R ti R i tReporting Requirements• Research and Development Activities
– Required information reported for transfers of value related to services provided for research and development activities but delay in public disclosure on website
– Delay relates to research and development activities, including clinical investigations, of new product or new use of existing productof existing product
• Sponsored clinical trials v. investigator-initiated trials
– Delay until first public website update after the earlier of d t l/ l fnew product or new use approval/clearance or four years
after payment date– Information maintained by government as confidential
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y gduring delay period
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Overview of Federal Sunshine Law:State Pre emptionState Pre-emption• Preemption of state law (or portion of state law) that p ( p )
requires disclosure “in any format” of information required to be reported under federal lawN ti f t t l ( ti f t t l ) th t• No preemption of state law (or portion of state law) that requires disclosure of information:– Other than by “applicable manufacturer” to “covered y pp
recipient”– Other than information reported under federal law (except
no reporting transfers of value less than $10)no reporting transfers of value less than $10)
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Future of Federal Sunshine Law: C li i th F f U t i tCompliance in the Face of Uncertainty• Reasonable Interpretations Made and Documented
– State law approaches if no federal guidanceState law approaches if no federal guidance– IRS treatment if no federal guidance– Industry benchmarking– Policies, procedures and internal records, p
• Capture More rather than Less Information– Broader collection now and selective reporting later
• Recipientsp• Transfers of value without exclusions• Information necessary to characterize transfer of value
– Allows flexibility if/when guidance issued– Assists with coordination of federal and state reporting responsibilities
• Revise Business Practices to Minimize Reporting Obligations and/or Enhance Information Flow from Third Parties
ROPES & GRAY25
Federal Payments Sunshine Law:Federal Payments Sunshine Law: Implications for Manufacturers and Providers
Operational Challenges from a Medical Device Perspective
Bill McKenzieHealth Care Compliance Officer508‐828‐[email protected]
December 6, 2011
Th t i l d i d d i thiThe materials and views expressed during this session are those of the presenter, which may not reflect the views of DePuy Spine Johnsonnot reflect the views of DePuy Spine, Johnson
& Johnson, or any other medical device manufacturer.
27
Covered RecipientsCovered Recipients
• Teaching hospitals• Specific definition available?• Includes related foundations?• Unique identification number?
List to be p blished b CMS?• List to be published by CMS?• Physicians
• List to be published by CMS?• Ascertaining correct NPI number• Ascertaining correct NPI number• Limit to those who live/practice in US?
• Payments “at the request of or designated on behalf of...”• IRS treatment (“constructive receipt”)( p )• Payments to medical practices• Clinical trial payments
• Physician-owned companies
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Definition of “Manufacturer”Definition of Manufacturer
E l d t ki di t ib t ?• Excludes stocking distributors?• Includes non-stocking sales agents?
• What about non-exclusive agents?What about non exclusive agents?
• OUS subsidiaries of US entities• Payments to US physicians from overseas
• Corporate holding companies: a “manufacturer”?
29
Payments & Value TransfersPayments & Value Transfers
Need for better definition of categories• Need for better definition of categories• e.g., honoraria, valuation of stock options, in-kind services
• Overlapping categories• How to report a “consulting” payment that includes travel
reimbursement• Timing of manufacturer’s disclosure
S i d d• Service date vs. payment date• Attributing specific device brand name
• Differences between Device & Pharm• Secretary’s discretion
• Review and comment period?
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ExclusionsExclusions
• Product samples definition• Single use disposables• Demo units / “Do Not Implant” devices• Valuation of loaners > 90 days
• “Educational materials that directly benefit patients or are intended for patient use”
• Other desired exclusions:Ot e des ed e c us o s• For provision of health care services to manufacturer’s employees• Recall-related costs (FDA compliance)• Publicly available services (e.g., room rental)Publicly available services (e.g., room rental)• Credentialing of sales reps• Recruiting costs• Other?Other?
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Delayed Reporting for Clinical Studies and Product Development
Need for crisp definition of payments eligible for delayed• Need for crisp definition of payments eligible for delayed publication
• Mechanics & logistics – how to flag such paymentsCMS f di f t d t• CMS safeguarding of trade secrets
• Notification process when FDA approval is obtained (disclosure trigger)
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Background on Industry-Physician Relationships
What will be disclosed?• What will be disclosed?• Who will provide the content?• Will manufacturers be able to provide payment- or company-
ifi t ?specific commentary?
33
Other Operational ChallengesOther Operational Challenges
Acquisitions• Acquisitions• Integration of newly acquired companies• Need for immediate combination of entities’ reports
G i d ll d?• Grace period allowed?• Pre-emption of state laws
• Inconsistencies with existing state laws (MA, VT, etc.)• Will CMS provide any specific comments?
• 45-day review period• Method & logistics• Access by manufacturers and covered recipients?• Dispute resolution
34
Final CommentsFinal Comments
Training & awareness efforts by manufacturers• Training & awareness efforts by manufacturers• Training internal associates• Communications to health care professionals
N d f t t difi ti• Need for contract modifications• Prepare for public reaction to public payments
• Regulators and prosecutors• Institutions and payers• Competitors• Physician peers• Patients• Consumer groups• Media
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Physician Sunshine ActO ti l Ch ll fOperational Challenges from a Global Biotechnology Perspective
Conner ChildersDirector Global Health Care Compliance OperationsDirector, Global Health Care Compliance OperationsAmgen, Inc.Office: 805.447.8520Email: [email protected]
The materials and views expressed during this session are those of the gpresenter, which may not reflect the views of Amgen, Inc. or any other g , ybiotechnology company.
37
Biotech Companies Share Many of the Same Operational Issues as Medical Device ManufacturesOperational Issues as Medical Device Manufactures
• Definitions:• Teaching Hospitals• Physicians• Payments “at the request or designated on behalf of….”• Physician-owned companies• Payment and Value Transfers
Lack of implementing regulations is a severe hindrance• Lack of implementing regulations is a severe hindrance to the development of a comprehensive reporting platform/ regimen
38
Additional Legal Concerns for Global Biotech Companiesp
• Delayed Reporting for Research and Development
• Different Reporting Requirements
• Global Privacy Laws
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Delayed Reporting for Research and Developmentp
• What type of spend properly belongs under R & D?• Steering Committees, Data Monitoring Committees, Scientific
Advisory Boards (Research) etc…
• What about research on a potential new indication forWhat about research on a potential new indication for an already approved biological?• Does this spend get reported in current year?• 4 year delay?• 4 year delay?
40
Different Reporting Requirementsp g q
• Biotech Companies are required to report different t f d d diff t l l i ttypes of spend under different legal requirements.• Physician Sunshine Act; US Tax Code; State Tax Code; State
Reporting Laws, International Reporting Laws• The requirements of each report are different, which will
produce spend reports with different totals if aggregated• Potential conflicts between State and Federal reporting
i trequirements
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Global Privacy Lawsy
• US Physicians practicing abroad (or doing consulting k f i t ti l ffili t ) i t blwork for an international affiliate) may incur reportable
spend
• EU Privacy Laws• EU Privacy Laws• Spend data collected by US Company for work done by US
Physician within EU jurisdictions• Spend data collected by Affiliate of US Company for work done• Spend data collected by Affiliate of US Company for work done
by a US Physician within or external to EU Jurisdictions
• Other Jurisdictions (e.g. Australia)
42
Additional Operational Concerns for Global Biotech Companiesp
• Building a Global Spend Capture Platform
• Scope of reportable persons/teaching hospitals
• 3rd party payments to physicians/teaching• 3rd party payments to physicians/teaching hospitals
Meals• Meals
• Interactions with our “covered” consultants
43
Building a Global Spend Capture Platform
• Do you use an off-the-shelf product or build your own system?C li ti t b ildi Pl tf• Complications to building one Platform• International and Domestic Affiliates/Subsidiaries use different systems of
record for payments• Different methods of collecting necessary data within same organization g y g
(Commercial/R & D)• Global Privacy Laws• Global Disclosure Laws (UK, Netherlands)• Spend Data Collection/Storage/ManipulationSpend Data Collection/Storage/Manipulation
• Consultant review of proposed spend report• Can you build a perfect “mousetrap?”
I th t bl l l f i k• Is there an acceptable level of risk
• Change Management• How do you change corporate culture to ensure quality data input/capture
44
Scope of Physician/Teaching Hospitalsp y g p
• How do you create a system where you can determine hi h t / t bl d?which payments/payees are reportable spend?
• How do you set your “universe” of reportable entities and persons?and persons?• Create internal list of Licensed Physicians?• Purchase list of Licensed Physicians?y• Pros and cons to both approaches
• Is there any level of “acceptable risk?”
45
3rd Party Payments to Physicians/Teaching Hospitalsy g p
• Intent of Sunshine Act is transparency of interactions b t “Ph ” d Ph i i d T hibetween “Pharma” and Physicians and Teaching Hospitals
• What if 3rd party will have spend on behalf of company• What if 3 party will have spend on behalf of company that would be required to disclose if company made payment directly?
H d t d t thi t f d i t tl ?• How do you capture and report this type of spend consistently?
46
Meals: The most difficult of reportable spend to capturep p p
• When is food reportable?$• Coffee? Donut? How do you account for $100 aggregated
amount?• How do you account for multiple participants at a meal ordering
diff t l ?different meals?• When meal is bought in advance and there are no-shows, how
do you attribute spend to Physicians that do showD l id d t Ph i i ’ t ff t t f f• Do meals provided to a Physician’s staff count as a transfer of value to the Physician?
• Taxes? VAT?
• Room charge?
47
Relationship Management with Physicians-Consultantsy
• ContractsPrivacy clauses limit what a consultant can disclose• Privacy clauses limit what a consultant can disclose
• What adverse effects could spend reporting have on consultant who is limited in what they can disclosed?
• How do you maintain relationship?y p
• Meals• Opt in/out?• What if consultant opts in then refuses meal at event?• What if consultant opts in, then refuses meal at event?
• Requests by Physician on impact of Sunshine Act on them?• How does team of non-lawyers respond?
• Physician dispute of potential reportable spend
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Parting Thoughtsg g
• “Global” makes compliance with the Physician Sunshine A t i fi it l li t dAct infinitely more complicated.
• Careful relationship management will be crucial to successsuccess
