sunshine act and other laws affecting vendor relations

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The Sunshine Act and Other Laws Affecting Vendor Relations

Kelly S. McIntosh

February 13, 2014

Roadmap

Here Comes the Sun – New Transparency for Vendor Relationshipsp

To Whom Does the Sunshine Act Apply?

What is the Disclosure Process?

What are the Penalties and Consequences?

Other Laws and Legal Considerations for Vendor RelationsRelations– Conflicts of Interest

– Drug Samples

– Fraud and Abuse Laws

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Preliminaries

Presentation will be recorded and available for download at www.hhhealthlawblog.comg

If you have questions, please submit them using chat line or e-mail me at [email protected].

If you experience technical problems during the program, please contact Luke Kelly at [email protected]

Preliminaries

This program offers an overview of legal considerations for vendor relations, but the applicability to specific arrangements and providers will vary

This program does not establish an attorney-client relationship

This program does not constitute the giving of legal advice

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History of the Sunshine Act

History of the Sunshine Act

March 2010 – Affordable Care Act Enacted– Section 6002 – Provisions known as “Sunshine Act”Section 6002 Provisions known as Sunshine Act

December 19, 2011 – CMS publishes Sunshine Act proposed rule– 76 Fed. Reg. 78742

February 8, 2013 – CMS publishes Sunshine Act final rulefinal rule– 78 Fed. Reg. 9458

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Key Terms

Is there an Applicable Manufacturer or Applicable GPO?– Applicable Manufacturers are entities that produce,

prepare, propagate, compound, or controvert a covered product, unless only for the entity’s use Operating in the US

Applies to certain entities under common ownership (5% direct pp p (or indirect ownership)

Distributors, wholesalers or repackagers that do not hold title to Covered Products are excluded

Key Terms

Is there an Applicable Manufacturer or Applicable GPO?– Applicable group purchasing organizations (GPOs) are

entities that purchase, or arrange for purchase of, a covered product, unless only for the GPO’s use Operating in the US

CMS specifically referenced physician-owned distributors p y p y(PODs) in this category

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Key Terms

Is it a Covered Product?Is it a Covered Product?– Covered drugs, devices, biologicals or medical supplies

include in effect any product that is a prescribed drug or FDA approved or cleared device or medical supply which is available for payment under Medicare, Medicaid or CHIP.

Key Terms

Is there a Covered Recipient?– Covered Recipients include teaching hospitals andCovered Recipients include teaching hospitals and

physicians (except manufacturer employees) Residents are exempted

Teaching hospital listing:– http://www.cms.gov/Regulations-and-

Guidance/Legislation/National-Physician-Payment-Transparency-Program/Teaching-Hospitals.html

– List organized by state and includes hospital names addressesList organized by state and includes hospital names, addresses and taxpayer identification numbers

– Updated listing will be available approximately 90 days prior to the start of each data collection period

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Disclosure of Compensation

Applies to Applicable M f t t GPOManufacturers – not GPOs

Direct and indirect transfers of value– Value is referred to as having “discernible economic

value on the open market”

Not the same definition used in other laws such as– Not the same definition used in other laws, such as fraud and abuse laws


For each covered recipient, the following information must be disclosed:

▪ Name ▪ Form of payment

▪ Address ▪ Nature of payment

▪ NPI number ▪ Covered product

▪ Specialty ▪ Eligibility for delayed publication

▪ State license number ▪ Payment to third parties

▪ Amount of transfer of value ▪ Ownership statement

▪ Date of transfer ▪ Optional contextual information

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“Nature of Payment” identifiers:▪ Cash or cash equivalent ▪ Education

▪ In-kind items or services ▪ Research

▪ Ownership interest ▪ Charitable contribution

▪ Return on investment ▪ Royalty or license

▪ Consulting fee ▪ Ownership interest

▪ Fee for other type of service ▪ Compensation for speaking at

▪ Honoraria non-certified CME

▪ Gift ▪ Compensation for speaking at

▪ Entertainment certified CME

▪ Food and beverage ▪ Grant

▪ Travel and lodging ▪ Space rental or facility fee


No “other” category of payment identifiers –eliminated in final rule

Food and beverages– The value of group meals can be divided by the

individuals actually partaking

– Buffets at large events can be disregarded

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CME– Payments for speaking at events certified/accredited by

specified accrediting bodies do not need to be disclosedspecified accrediting bodies do not need to be disclosed if Applicable Manufacturer does not pay the speaker directly or select the speaker

Research– Required information is different

Name of research institution or individual receiving payment

Name of study

Covered products subject to the study

Amount of payment

Principal investigator information

clinicaltrials.gov identifier (optional)


Limitations on reporting:– If less than 10% of total gross revenue comes from

Covered Products, only payments related to Covered Products must be disclosed

– If the Applicable Manufacturer has separate operating divisions that do not manufacture any Covered Products, only payments related to divisions that do manufacture Covered Products must be disclosed

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Exclusions from reporting:– Indirect transfers where the identity of the Covered

Recipient is unknown to the Applicable Manufacturer

– Transfers of value of less than $10 (not to exceed an aggregate of $100 in a year) Amount will increase each year based on CPI

Items of less than $10 value provided at large-scale events do not need to be tracked (ex. pens distributed at a conference)

– Samples and coupons for patient use

– Educational materials for patients


Exclusions from reporting:– Short-term loans (not exceeding 90 days)

– Items or services under warranty

– Discounts

– In-kind items used for charity care

– Dividends on publicly traded stock

P t l t d l i l t l l d i i t ti– Payments related exclusively to legal or administrative proceedings

– Transfers of value in a personal relationship

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Disclosure of Ownership

Applicable Manufacturers and Applicable GPOs must disclose

Applies to physicians and their family members– Similar to the definition of ownership or investment

interest used in the Stark Law

The following information must be disclosed:▪ Name ▪ Dollar amount of investment

▪ Address ▪ Current value and terms ofAddress Current value and terms of

▪ NPI number ownership interest

▪ Specialty ▪ Direct and indirect transfers of

▪ State license number value made to or on behalf of

the physician

Timing and Form of Reports

Required to be submitted by the 90th day of each calendar year

Payments reported for previous calendar year– For 2013 reporting, the period to be covered in reporting

is from August 1, 2013 to December 31, 2013

First annual report due March 31, 2014

BUT

Just last week, CMS released information on the two-step process for submitting data in the 2013 program cycle

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Requires Applicable Manufacturers to register in two separate systems

Phase 1 – February 18, 2014 to March 31, 2014 –Applicable Manufacturers may register in the CMS Enterprise Portal (EIDM system) and submit corporate profile information and aggregate 2013 payment data.

Phase 2 - Begins in May 2014 and extends for no fewer than 30 days - includes registration in the Open Payments system, submission of detailed 2013 payment data, and legal attestation to the accuracy of the data.


After the conclusion of Phase 2, by August 1, 2014, information will be available for healthcare providers and manufacturers to review and correctproviders and manufacturers to review and correct inaccuracies

CMS notes that no action is needed from Covered Recipients at this time.

More information on Phase 1 and Phase 2 and l t l t il blsample templates available:

– https://www.cms.gov/Regulations-and-Guidance/Legislation/National-Physician-Payment-Transparency-Program/Data-Submission-and-Attestation.html

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Attestation required– Information timely, accurate and completeInformation timely, accurate and complete

Optional to file assumptions document– Not publicly available even if filed

– Enforcement agencies can obtain from CMS

Disclosure of research payments may be postponed until 4 years from transfer or until FDApostponed until 4 years from transfer or until FDA approval of the product, whichever is earlier– Responsibility of Applicable Manufacturer to notify CMS

if a payment is eligible for delayed publication


After reporting, CMS notifies Covered Recipients of information available for reviewof information available for review– Physicians and teaching hospitals can voluntarily

register with CMS to facilitate notification

45 day review period

Additional 15 days to resolve disputes

CMS makes data publicly available by September CMS makes data publicly available by September 30th each year

First CMS report to Congress: April 1, 2015

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CMS must publish the data online, available publicly

Must be searchable and understandable

Must be able to be aggregated and downloaded

Must include any enforcement activities taken

Will not include physician NPI numbers

Dispute Process

Covered Recipients provide notice of dispute to CMS

CMS forwards the dispute to the reporting entity

Disputes not timely resolved result in CMS’ indication that the data is the subject of a dispute

If a dispute is resolved after the dispute period, the initial data will be reported with the dispute notedinitial data will be reported with the dispute noted and the correction will be published when CMS next publishes data

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Civil Monetary Penalties

Failure to report (without intent) = fines up to $10,000 per instance with a cap of $150,000$ , p p $ ,

Failure to report (with intent) = fines up to $100,000 per instance with cap of $1,000,000

Records must be maintained for 5 years - CMS has the right to conduct audits

Resources

CMS Resources:– http://www.cms.gov/Regulations-and-

Guidance/Legislation/National-Physician-payment-Transparency-Program/index.html

– Questions can be submitted to: [email protected]

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Other Laws on Vendor Relations

AKSStarkDrug

Samples

Sunshine Act

Conflicts of Interest

Samples

PHS Financial Conflicts of Interest

Institutions which receive research funding fromInstitutions which receive research funding from the Public Health Service (PHS) are subject to the related Financial Conflicts of Interest (FCOI) rules– Most recent final rule issued August 25, 2011 (76 Fed.

Reg. 53256)

Require the management and disclosure of FCOI

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Investigators must disclose “significant financial interests” to their institutions and update within 30 pdays of any new interest

Financial interests must be disclosed regardless of if related to PHS-funded research

Includes:– Amounts over $5000Amounts over $5000

– Ownership interest valued at over $5000 in publicly traded company or any value in privately held entity

– Intellectual property rights


Each institution must:– Have a conflicts of interest policy and provide educationHave a conflicts of interest policy and provide education

and training to investigators

– Designate an official to review disclosures

– Determine if any significant financial interest could affect PHS-funded research

Website disclosure of financial interests must be made

Disclosures to PHS

Both PHS FCOI and Sunshine Act may apply!

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Other Conflicts of Interest and Clinical Trial Resources Conflicts of Interest Policies and Guidance

– FDAhtt // fd /R l t I f ti /G id / 12204 http://www.fda.gov/RegulatoryInformation/Guidances/ucm122045.htm

– National Institutes of Health http://www.nih.gov/about/ethics_COI.htm

http://grants.nih.gov/grants/policy/coi/resources.htm

– Office for Human Research Protectionshtt // hh / h / hi /h bj t /fi lt /f id df http://www.hhs.gov/ohrp/archive/humansubjects/finreltn/fguid.pdf

Medicare Clinical Trial Policies– http://www.cms.gov/Medicare/Coverage/ClinicalTrialPoli

cies/index.html?redirect=/clinicaltrialpolicies/

Drug Samples

The sale, purchase, or trade (or offer to sell, purchase, or trade) of prescription drug samples is p , ) p p g pprohibited– Under the Prescription Drug Marketing Act of 1987

(PDMA), as modified by the Prescription Drug Amendments of 1992 (PDA) and the FDA Modernization Act of 1997 (FDAMA)

Criminal and civil penalties for violations

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Federal Fraud & Abuse Laws

Stark Law– Prohibits physicians from referring designated health

i h l h i if h h i i hservices to a health care entity if the physician has an ownership interest in or compensation arrangement (direct or indirect) with the entity and no exception applies Strict liability civil statute

Anti-Kickback Statute (AKS)– Prohibits knowingly and willfully offering, soliciting,

paying or receiving remuneration in exchange for referring or arranging for services payable by a Federal health care program Intent-based criminal statute

Federal Fraud & Abuse Laws

Arrangements to Avoid– Benefits tied to or tracked with referrals of vendor

dproducts

– Gifting cash or cash equivalents

Some possible exceptions to the Stark Law and Safe Harbors under the AKS –▪ Non-Monetary Compensation (Stark) ▪ Personal Services

▪ Medical Staff Incidental (Stark and AKS)Medical Staff Incidental (Stark and AKS)

Benefits (Stark)

– Remember that any analysis and the applicability of an exception or safe harbor will be fact-specific based on the parties and nature of the arrangement

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State Laws

States may have laws that regulate vendorStates may have laws that regulate vendor arrangements and require disclosures

Need to determine the extent to which an applicable state law is preempted by the Sunshine ActAct

Consequences

Heightened scrutiny– Public perception and media access

– Source for government investigations AKS and false claims theories of liability

Off-label promotion

– Final rule on Sunshine Act does note that “financial ties alone do not signify an inappropriate relationship”

Changes in ArrangementsChanges in Arrangements– Average hourly payment to physicians for consulting

dropped from $604/hr in 2006 to $299/hr in 2011. Cutting Edge Key Opinion Leader Fair-Market Value and

Aggregate Spend study press release 6/14/11

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Prepare

Create policies and processes to track vendor arrangements

Provide training

Audit and evaluate overall compliance of arrangements

Calendar upcoming dates and time periodsCalendar upcoming dates and time periods– Reporting for Applicable Manufacturers

– Review for Covered Recipients

Additional Resources

OIG Compliance Resources– Draft OIG Compliance Program Guidance for Recipients

f PHS R h A dof PHS Research Awards http://oig.hhs.gov/fraud/docs/complianceguidance/PHS%20Rese

arch%20Awards%20Draft%20CPG.pdf

– OIG Compliance Program Guidance for Pharmaceutical Manufacturershttp://oig.hhs.gov/authorities/docs/03/050503FRCPGPharmac.pdf

Roadmap for New Physicians: Avoiding Medicare Fraud and Abuse– http://oig.hhs.gov/compliance/physician-

education/roadmap_web_version.pdf

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Additional Holland & Hart Resources Healthcare Update and Health Law Blog

– Under “Publications” at www.hollandhart.com.

– www.hhhealthlawblog.com

– E-mail me at [email protected]

Future Webinars– February 27 – Identifying and Responding to HIPAA

B hBreaches

– March 13 – Fraud and Abuse Laws: FCA, Stark, AKS and CMP

– March 27 – Wage/Hour Laws

Additional Holland & Hart Resources

Past webinars covering related topics availablePast webinars covering related topics available through the Health Law Blog:– Stark

– Anti-Kickback Statute

– Civil Monetary Penalties laws

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Questions?

K ll S M I t hKelly S. McIntosh

Holland & Hart LLP5441 Kietzke Lane, Second Floor

Reno, Nevada 89511(775) 327-3004

ksmcintosh@hollandhart [email protected]