1 Colorado Bar Association Health Law Section April 20, 2013 CMS Physician Payment Sunshine Act Final Rule: Sunshine or Black Hole? Michael M. Schmidt Michael M. Schmidt, P.C. Denver, Colorado

2 ACA Section 6002-Overview *Applicable Manufacturer and Applicable GPOs collect information on payments and/or ownership interests for and entire calendar year (except Aug 1-Dec 31, 2013) *Submit data for entire year to CMS by the 90 th day of the following year. *CMS aggregates all data by individual physician or teaching hospital.

3 *Allow MFG’s and applicable GPO’s physicians and teaching hospitals access to their data for review/correction: * 45 days to review and initiate disputes (if necessary) * 15 days to resolve disputes Publish data online by June 30 th (Sept. 30, 2014)

4 Who is required to report? *First, Applicable manufacturers of covered drugs, devices, biologicals and medical supplies: Covered products are those available for payment under Medicare, Medicaid or CHIP. Report all payments or other transfers of value (1) to covered recipients and (2) physician ownership and investment interests.

5 Who is required to report? Second, applicable Group Purchasing Organizations (GPOs) Report physician ownership and investment interests in such entities and payments and transfers of value to such physicians (including indirect or deemed payments or transfers of value). GPOs include physician owned distributors (PODs) that purchase products for resale.

6 Covered Recipients Covered Recipient is defined as physicians and teaching hospitals. Teaching hospital defined as any institution that receives GME, IME or inpatient psych IME. Physician defined under 1861(r) of the SSA. Excludes physicians that are employees of the applicable manufacturer.

7 Covered Recipients Payments or other transfers of value made to covered recipients are reportable. Ownership or investment interests held by physicians and their immediate family members are reportable. Final rule excludes residents from reporting requirements.

8 What Information Must be Reported? For each payment or transfer of value, the following must be reported: *Covered recipient name and address *Physician specialty, NPI, state license and number *Amount of payment *Date of Payment *Form of Payment *Nature of Payment *Name of Drug, Device, Biological, or Medical Supply associated with payment and NDC if applicable *Allowed to provide a short context for each transaction

9 What information must be reported? For each ownership and investment interest, applicable manufacturers and GPOs must report: *Physician name, address, specialty, NPI and state license state and number *Dollar amount, value, and terms of ownership or investment interest *Whether interest is held by an immediate family member of the physician *Any payments or other transfers of value made to the physician owner or investor

10 Forms and Nature of Payment *Describes how the payment was made and the reason for making the payment *Required to select the category that best matches the payment *Changes in the final rule: *Provided additional category explanations *Provided multiple categories for reporting continuing education payments (accredited and non-accredited) *Allocation and reporting of meals and food *Added “space rentals or facility fees” for teaching hospitals

11 *Payments related to research must be reported in a separate report that includes the name of the institution receiving the payments and the principal investigators *Delayed Publication Rule: Allowed for certain research, development and clinical investigation payments…. Payments or Transfers of Value for Research

12 Delayed Publication Rule Payment must be reported for the year that the payment occurred by applicable manufacturer, but not published publicly until the later of: *FDA approval, licensure, or clearance *Four years after the date of the payment *Responsibility of applicable manufacturer to notify CMS that a payment is eligible for delayed publication and for such payments, when FDA approval, licensure or clearance has been obtained or four years has elapsed since the payment was made.

13 Exclusions CMS lacks statutory authority to add exclusions; CMS provides more information and detail on statutory exclusions. *Final rule clarified exclusion for payments made indirectly through a third party when applicable manufacturer is unaware of the identity of the covered recipient. *Added a time period for awareness (two quarters of the next reporting period).

14 Exclusions (continued) *Defined “indirect payments or other transfers of value” where the MFG or GPO makes a payment or transfers value to a covered recipient/physician owner/investor, through a third party, where such MFG/GPO: requires, instructs, directs, or otherwise causes the third party to provide the payment/transfer the value to a covered recipient/physician owner/investor.

15 Awareness Retained proposed interpretation of awareness based on the False Claims Act: (1) means that a person…(i) has actual knowledge of the information; (ii) acts in deliberate ignorance of the truth or falsity of the information or; (iii) acts in reckless disregard of the truth or falsity of the information, and (2)Requires no specific intent to defraud.

16 45 Day Review and Correction Period *MFGs, GPOs, covered recipients, and physician owners/other investors may review the information and the MFG or GPO can submit corrections before CMS makes the information publicly available. *New process that permits CMS to help manage the dispute process but not get involved in the arbitrating of disputes. (At least that what CMS has stated.) *Physicians/Teaching Hospitals will be able to initiate dispute process when reviewing their information. *Unresolved disputes will be published using the MFGs or GPOs account of the transaction; but will be marked as disputed.

17 Penalties CMPs on MFGs and GPOs for failing to submit required information: $1,000-$10,000 for each payment or ownership Interest not reported as required. Annual max=$150k Knowing failure to submit raises the penalties to $10,000-$100,000 for each payment or ownership Interest not reported subject to an annual max=$1mm

18 Getting Started: Operational Issues Official Program Name: National Physician Payments Transparency Program: Open Payments CMS program website: Help Desk/Questions: Responsible for implementation: Dr. Shantanu Agrawal

19 Key Implementation Dates Final data templates and teaching hospital list to be released in May Data collection to begin on August 1, 2013 and deadline for 2013 submission is March 31, Registration with CMS Open Payments System will open January 1, 2014.

20 BLACK HOLE ISSUES 1.Confidentiality. Although not required to be stated, those in the industry will be able to figure out what projects the physician will be working on under the contract. 2.Noncompete Violations. This reporting will trigger a significant amount of work for litigators as they attempt to enforce non-compete clauses in inventors’ and KOLs’ contracts.

21 BLACK HOLE ISSUES 3. Disputes Over Amounts Reported to CMS. 4. Another unfunded mandate by the Federal Government. CMS’ own estimates, which typically are on the low end, state that the total costs of complying with these final rules will be at least $269 million during the first short year and $180 annually thereafter.

22 Colorado Bar Association Health Law Section April 20, 2013 CMS Physician Payment Sunshine Act Final Rule: Sunshine or Black Hole? Michael M. Schmidt Michael M. Schmidt, P.C. Denver, Colorado