As part of the final 2015 Medicare physician fee schedule rule, CMS is adopting – with certain refinements – its proposed changes to the regulations implementing the Physician Payment Sunshine Act. By way of background, the Sunshine Act requires pharmaceutical and medical device manufacturers and group purchasing organizations to submit to CMS certain information on payments and transfers of value to physicians and teaching hospitals, as well as physician ownership information. This data is being made publicly available on the CMS “Open Payments” website, http://go.cms.gov/openpayments.
Specifically, In the final rule, published on November 13, 2014, CMS adopted the following provisions pertaining to the Sunshine Act regulations:
- CMS deleted the reporting exclusion for payments made to speakers at accredited continuing medical education events. Importantly, CMS points out that such payments may still be excluded from reporting, since “payments or other transfers of value, including payments made to physician covered recipients for purposes of attending or speaking at continuing education events, which do not meet the definition of an indirect payment, as defined at §403.902, are not reportable.” Under §403.902, indirect payments refer to payments or other transfers of value made by an applicable manufacturer to a covered recipient through a third party, where the applicable manufacturer 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(s).
- The Final Rule requires the reporting of the marketed name and therapeutic area or product category of the related covered drug, device, biological, or medical supply, unless the payment or other transfer of value is not related to a particular covered or non-covered drug, device, biological or medical supply. Previously, for devices or medical supplies manufacturers had the option of reporting the therapeutic area or product category instead of the marketed name. In the Final Rule, CMS also removed language allowing manufacturers the option to report “up to five” related covered products. It is not clear from the Final Rule whether such an option will still be available in practice, or if manufacturers will only be able to report a single, related covered product. Reporting marketed names for non-covered drugs, devices, biologicals, or medical supplies will continue to be optional. CMS also acknowledges that a payment or other transfer of value associated with a research payment regarding a device or medical supply may not have a marketed name. Therefore, CMS is specifying that manufacturers will continue to have an option to report either a device or medical supply marketed name, therapeutic area or product category when reporting research payments.
- CMS is requiring applicable manufacturers to report stocks, stock options, or any other ownership interest as distinct categories.
- CMS is deleting the definition of “covered device” as duplicative of the definition of “covered drug, device, biological or medical supply.”
CMS is implementing data collection requirements for these provisions beginning January 1, 2016, for reporting to CMS in 2017.
CMS has released a beta version of its Open Payments search tool, which is intended to facilitate public review of payments and transfers of value made by drug and device manufacturers and group purchasing organization (GPOs) to physicians and teaching hospitals, as well as physician ownership information. The tool allows the public to search identified data for physicians, teaching hospitals, or companies. CMS is also reminding applicable manufacturers and GPOs of an October 31, 2014 deadline for making corrections to any 2013 Open Payments disputed records for publication on or before December 31, 2014 (although data corrections can be performed at any time). Disputes that remain unresolved as of October 31, 2014 will display as disputed in the Open Payments database.
Despite a series of technical problems and data disparities leading up to the launch, CMS met its schedule to release the first round of “Open Payments” data on September 30, 2014. Note that initial use of the database of financial payments made by drug and device manufacturers and group purchasing organization to physicians and teaching hospitals has been hampered by large file sizes, multiple databases, and confusing instructions. CMS has stated that it plans to launch a more user-friendly search tool later this month.
The first wave of data details 4.4 million payments valued at nearly $3.5 billion attributable to 546,000 individual physicians and almost 1,360 teaching hospitals during the last five months of 2013 (future annual updates will include 12 months of data). Because CMS identified payment records that appeared to have inconsistent physician information (e.g. a National Provider Identifier for one doctor and a license number for another) that could not be matched, CMS has temporarily “suppressed” the personally-identifiable information for those records. In fact, CMS estimates that about 40% of the records published initially are de-identified, and additional disputed data was not published, which could skew initial attempts to draw conclusions about payment patterns. CMS cautions that financial ties between manufacturers and providers “do not necessarily signal wrongdoing” or conflicts of interest, given that some relationships may lead to the development of beneficial new technologies and therapies. CMS encourages patients to discuss these financial relationships with their health care providers.
On August 28, 2014, CMS announced the latest changes to the deadlines associated with the Sunshine Act “Open Payments" System review and dispute process resulting from additional system down-time. Specifically, because the system will be periodically unavailable on August 30 and September 5, CMS is making the following changes to the data review and correction periods:
- Review and dispute (45 days): 7/14/2014 – 8/3/2014, 8/14/2014 – 9/10/2014
- Correction period (15 days): 9/11/2014 – 9/25/2014
CMS is still standing by its September 30, 2014 target date for public release of the data, although it remains to be seen whether continuing questions about the data integrity and the shrinking window to resolve all technical issues will permit CMS to meet this deadline.
* Note that CMS announced on September 9 that it was extending the review and dispute period for one more day, through September 11, 2014.
CMS Revises Sunshine Act "Open Payments" System Review/Dispute Deadlines Amid Concerns about Data Accuracy
CMS has reopened the Open Payments system after it was taken offline temporarily to “resolve a data integrity issue.” According to a CMS press release, applicable manufacturers and group purchasing organizations (GPOs) had submitted intermingled data (e.g., wrong state license number or national provider identifier) for doctors with the same last and first names, which erroneously linked payments in the Open Payments system. CMS has enhanced its algorithms and validation checks in an attempt to resolve the issues and removed incorrect payment transactions. CMS states that it will remove the questionable data from the current review and dispute process and will not publish this data this year; according to multiple press reports, this has resulted in the removal of one-third of the records from the system.
CMS has also extended the Open Payments review and dispute deadline and the following 15-day corrections period deadline for each day the Open Payments system was offline. The review and dispute period now ends September 8, 2014, the correction period will run through September 9-23, 2014, and the public website launch date remains September 30, 2014.
CMS contends that its correction efforts underscores that it “is committed to ensuring the integrity of data made available to the public.” Nevertheless, the scope of the reported errors and the exclusion of millions of records raise broader questions about the accuracy and completeness of the database and heighten concerns about the potential for public and press misinterpretation of the incomplete data set.
CMS has taken the Open Payments system offline temporarily “to investigate a reported issue,” according to a recent CMS email announcement. As a result, physicians, teaching hospitals, and authorized representatives may not register and review data related to payments by applicable manufacturers and applicable group purchasing organizations at this time. The shut-down of the system reportedly results from the discovery of errors in payments attributed to a doctor, which underscores the importance of careful review of system data during the dispute and correction period. While this window was scheduled to run through August 27, 2014, CMS stated in its email that it will extend the Open Payments review and dispute deadline and the following 15-day corrections period deadline for each day the Open Payments system is offline.
CMS has made a series of announcements related to the Sunshine Act Open Payments system, including information about the Open Payments review, dispute and correction process that runs from July 14 through August 27, 2014. This period allows physicians and teaching hospitals to review and initiate any disputes they may have regarding the data reported about them by applicable manufacturers and applicable group purchasing organizations. CMS has also extensively updated the Open Payments User Guide, which is intended to provide industry, physicians, and teaching hospitals with a comprehensive understanding of the Open Payments system and reporting requirements.
CMS Proposes Changes to Sunshine Act "Open Payments" Regulations in 2015 Medicare Physician Fee Schedule Rule
Today the Centers for Medicare & Medicaid Services (CMS) issued an advance copy of the CY 2015 Medicare Physician Fee Schedule (PFS) proposed rule, which includes certain changes to the regulations implementing the Physician Payment Sunshine Act, also known as the Open Payments program. These proposed changes come just three days after the inaugural deadline for applicable manufacturers and group purchasing organizations (GPOs) to report to CMS detailed information regarding payments and transfers of value made to physicians and teaching hospitals, as well as physician ownership information.
As previously reported, the Physician Payment Sunshine Act and related regulations require pharmaceutical and medical device manufacturers and GPOs to register with and submit to CMS data on their financial relationships with physicians and teaching hospitals. This financial data will be made publicly available on the CMS Open Payments website.
In the PFS proposed rule, CMS proposes the following changes to the Physician Payment Sunshine Act regulations:
- Deleting the definition of “covered device” as duplicative of the definition of “covered drug, device, biological or medical supply”
- Deleting the reporting exclusion for payments made to speakers at accredited continuing medical education events when certain requirements are met. Although CMS is deleting this express exclusion, it notes that such payments may still be excluded generally from reporting under the separate exclusion for indirect payments, which applies in those instances in which the applicable manufacturer is unaware of the identity of the covered recipient. In other words, the practical impact of this change may not be significant in the long run.
- Requiring the reporting of the marketed name of the drug, device, biological, or medical supply related to the payment being reported. Previously, CMS finalized that for drugs and biologicals, manufacturers must report the market name of a related product, but that for devices and medial supplies, manufacturers could report either the name under which the product is marketed or the general therapeutic area or product category associated with the device or medical supply.
- Requiring manufacturers to report stocks, stock options or any other ownership interest as distinct categories.
The proposed rule will be published in the Federal Register on July 11, 2014, and comments are due to CMS by September 2, 2014.
CMS is inviting comments on the Physician Payment Sunshine Act “Open Payments Program” dispute resolution and corrections process. As previously reported, the Physician Payment Sunshine Act requires pharmaceutical and medical device manufacturers and group purchasing organizations (GPOs) to register with and submit to CMS data on their financial relationships with physicians and teaching hospitals. This financial data will be made publicly available on the CMS Open Payments website. On May 5, 2014, CMS published a notice soliciting additional feedback on the dispute resolution and corrections process, under which covered recipients and physician owners or investors have an opportunity to dispute certain information regarding a payment or other transfer of value. Comments will be accepted until June 2, 2014.
While attention has been focused on Medicare physician payment data released by CMS yesterday, upcoming Sunshine Act data will shine a new spotlight on financial relationships between physicians and pharmaceutical and medical device companies – with potential FCA implications.
Last week marked the deadline for pharmaceutical and medical device manufacturers and group purchasing organizations (GPOs) to register with and submit aggregate 2013 payment and investment interest data to the Centers for Medicare & Medicaid Services (CMS) on certain financial relationships between themselves and physicians and teaching hospitals, as required by the Physician Payment Sunshine Act.1 In May, manufacturers and GPOs will be required to submit to CMS detailed 2013 payment data. With some exceptions, CMS will be making these data public by September 1, 2014. While the publicly available data are intended to provide more transparency for patients – to allow them to have a better understanding of the financial relationships between physicians and pharmaceutical and medical device companies – patients will certainly not be the only group interested in this public information. The Department of Health and Human Services (HHS) Office of the Inspector General (OIG), Department of Justice (DOJ), and relators’ attorneys will likely utilize these data to initiate investigations and support complaints under the federal False Claims Act (FCA). As with the recent release of the 2012 Medicare Part B Physician Fee Schedule data, members of the media will likely make inferences about certain financial relationships.
The U.S. government recovered $3.8 billion in settlements and judgments from civil cases involving fraud against the government in the fiscal year ending Sept. 30, 2013.2 Fiscal 2014 looks to be a record-breaking year, with ever-increasing civil settlements by major pharmaceutical companies.3
As the reporting deadlines approach, it is worth considering an interesting, and largely unknown, potential implication of the public availability of these data: How will it affect future FCA litigation? The publically available Sunshine Act data could become relevant to FCA litigation in a variety of ways; two in particular are discussed below.
Anti-Kickback Statute Violations
The data could give rise to suspicions of violations of the federal Anti-kickback Statute (AKS). The AKS makes it a criminal offense to knowingly and willfully offer or pay remuneration to induce the referral of, or arrange for the provisions of, federal health care program business.4 In other words, the law prohibits any person or entity from giving, receiving – or offering to give or receive – anything of value in return for or to induce referrals for businesses covered by Medicare, Medicaid, or any other federally funded health care program. Violators of the AKS face imprisonment, criminal, and civil fines, as well as exclusion from federal health care programs.5
It is easy to see how publishing information regarding payments from pharmaceutical and medical device manufacturers to physicians and teaching hospitals could implicate the AKS, and by extension, the FCA. The Patient Protection and Affordable Care Act (ACA) made explicit that violations of the AKS are also violations of the FCA.6 Any payment from a pharmaceutical or medical device manufacturer to a physician who prescribes a product manufactured by the company providing the payment could be viewed as potentially inappropriate remuneration intended to influence prescribing behavior.
Publically available information reported as a result of the Sunshine Act may also have off-label promotion implications. Notably, reports to CMS must include the name of the drug or the type of device that forms the basis of the payment.7 Tying the payment to a particular drug or type of device could raise suspicions of off-label promotion. A pharmaceutical or medical device manufacturer that promotes its products for uses for which the product has not yet been approved by the United States Food and Drug Administration (FDA), i.e., off-label uses, is at risk of FCA liability. A false claim can arise when a manufacturer promotes a product for off-label, non-covered uses (that is, for a use that both has not been approved by FDA and is not covered by the federal health care programs). Payments going to physicians who specialize in an area that is outside the scope of a pharmaceutical or medical device’s approved indication could necessarily raise suspicions that the manufacturer is promoting the product for unapproved uses.
Besides the risk of government identifying potential issues for further investigation and prosecution as a result of reported Sunshine Act data, private parties may also mine the publically available data. One substantial impediment to relators’ attorneys using Physician Sunshine Payment data in FCA litigation is the limitation that publicly available data cannot form the basis of a whistleblower claim.8 This is known as the public disclosure bar, although the effectiveness of this defense has been diminished with recent FCA amendments.
That said, the Sunshine Act data, even if not the basis of a claim, could nonetheless impact the litigation in many ways. For example, it could provide additional evidence for the government to review in reaching its decision whether to intervene in a qui tam action. Both OIG and DOJ could review the data before it is publicly available to assist in the determination that a given matter warrants intervention. Additionally, the publicly available data – beyond providing flavor in support of an FCA claim and assisting with meeting the heightened pleading standard associated with fraud allegations9 – could be a potential mine for plaintiff attorneys to locate areas of focus. Relators’ attorneys will no doubt track the data to ascertain potential problem drugs or companies about which they can then dedicate efforts to uncovering fraud and abuse in the federal health care system.
It remains to be seen how all of these risks will play out going forward. Courts will have to decide how these new data will fit into FCA litigation. OIG and DOJ will have to determine how much to rely on the new information. And relators’ attorneys will need to make decisions about how many resources to dedicate to mining the Sunshine Act data.
One potential consequence that we are already starting to see occur is that pharmaceutical and medical device manufacturers may halt or limit payments to physicians, and/or that physicians themselves will be reluctant to accept such payments, e.g., for research, for expenses associated with training on a device, and the like. Companies may decide to do so for a variety of reasons, including avoiding the administrative burdens associated with tracking and reporting such payments for purposes of the Sunshine Act, fear of FCA litigation, or for public relations reasons. Many physicians simply do not want their names publicized. It remains to be seen how these trends will evolve.
1 42 C.F.R. § 403.908(a).
2 DOJ Press Release, available at: http://www.justice.gov/opa/pr/2013/December/13-civ-1352.html. 3 See, e.g., DOJ Press Release, available at: http://www.justice.gov/opa/pr/2013/November/13-ag-1170.html.
4 42 U.S.C. § 1320a-7.
6 42 U.S.C. § 1320a-7b(g). Note that manufacturers may submit “assumptions documents” as part of Sunshine reporting. Although CMS stated in the preamble to the Sunshine regulations its belief that the contents of such documents “should not be made public,” it acknowledged that it could provide access to the documents during an audit or investigation by other HHS divisions, the Office of Inspector General, or the Department of Justice.
7 42 C.F.R. 403.94(c)(8).
8 31 U.S.C. § 3730(e)(4).
9 Fed. R. Civ. P. Rule 9(b).
This post was written by Katie C. Pawlitz.
On February 7, 2014, CMS announced a two-phase registration and data submission process for the 2013 Open Payments Program, the reporting mechanism for the Physician Payment Sunshine Act. Under Phase I, which begins February 18, 2014 and runs through March 31, 2014, applicable manufacturers and applicable group purchasing organizations will register for Open Payments and submit to CMS corporate profile information and aggregate 2013 payment data. Phase 2 begins in May, extends no fewer than 30 days, and includes submission of detailed 2013 payment data and legal attestation to the accuracy of the data. Both phases of data submission will be complete by August 1, at which point the dispute resolution process will begin. According to CMS, this phased approach to Open Payments registration and data submission is for the 2013 program year only.
Under the “Sunshine Act” provisions of the Affordable Care Act, certain manufacturers of drugs, devices, biologicals, and medical supplies covered by Medicare, Medicaid and CHIP must report annually to the Department of Health and Human Services (HHS) certain payments or transfers of value they have made to physicians and teaching hospitals. CMS has announced that Sunshine Act reporting thresholds are being adjusted slightly for 2014 to reflect changes in the consumer price index. Specifically, a payment or other transfer of value is excluded from reporting requirements for 2014 if it is less than $10.18 (compared to $10.00 for 2013), unless the aggregate amount transferred to, requested by, or designated on behalf of a covered recipient exceeds $101.75 in a calendar year (up slightly from $100.00 for 2013).
A recent OIG report links the growing presence of physician-owned distributorships, or PODs, to increased spinal surgery volumes and potentially increased Medicare costs. The OIG notes a “substantial presence” of PODs in the spinal device market, with PODs supplying spinal devices for 19% of the spinal fusion surgeries billed to Medicare in FY 2011. According to the OIG, hospitals that purchased devices from PODs performed more spinal surgeries in 2012 than hospitals that did not purchase from PODs, and hospitals increased the rate of growth in the number of spinal surgeries after they began purchasing from PODs. Hospitals identified surgeon preference as the strongest influence on their decisions to purchase spinal devices from PODs. The OIG also disagrees with PODs’ claims that their devices cost less than those from other suppliers; rather, in the categories examined by the OIG, the devices cost the same as or more than devices from companies not owned by physicians. This fact, coupled with increased volumes, according to the OIG, could increase overall Medicare costs over time. In addition, the OIG raises concerns about inconsistencies in hospital policies regarding physician disclosure of ownership to either hospitals or their patients of interests in PODs (although the OIG suggests that the new “Sunshine Act” disclosure rules may improve the ability of hospitals and patients to identify physicians’ investment in device companies). For a case urging an alternative perspective on PODs, see the report on our sister blog, http://www.lifescienceslegalupdate.com/, about a recent complaint filed in the U.S. District Court for the Central District of California that seeks a declaration that the OIG’s Special Fraud Alert on PODs unfairly and unconstitutionally burdens First Amendment rights of free speech and due process. The complaint defends the lawfulness of the physician-owned model, and characterizes the Fraud Alert as the result of a multi-year lobbying campaign by “Big Corporations” forced to compete with small physician-owned entities. For more details, see our full report.
Data collection under the ACA Physician Payment Sunshine Act begins on August 1, 2013. To assist covered manufacturers of pharmaceuticals or medical devices with reporting obligations, CMS has announced new “OPEN PAYMENTS” mobile applications that could be used to track payments and other financial transfers. While physicians are not required to report any information, CMS notes that they could use this technology to help validate reports submitted by manufacturers about payments the physicians have received. In addition, CMS is compiling answers to frequently-asked-questions on the Sunshine Act. On June 22, 2013, CME released a notice in the Federal Register concerning the collection of information under the Sunshine Act, specifically related to the following subjects: registration; attestation; dispute resolution and corrections; record retention; and submitting an assumptions document. Comments are due to CMS by September 20, 2013. Finally, CMS is hosting an educational call on August 8, 2013 for physicians and teaching hospitals on the Sunshine Act policy, with a focus on third party payments, indirect payments, and the Physician Resource Toolkit.
CMS has released a list of teaching hospital “covered recipients” to which payments and other transfers of value must be reported by applicable drug and device manufacturers under the ACA Physician Payment Sunshine Act Final Rule, as discussed in a posting on our Life Sciences Legal Update blog. The posting also discusses industry efforts to obtain CMS clarification on various outstanding questions related to the reporting requirements. In addition, CMS has announced a May 22 National Provider Call on the Sunshine Act reporting requirements, directed to physicians and teaching hospitals and covering the Final Rule, key dates, the role of covered recipients, and resources available to covered recipients.
In case you missed them, Reed Smith attorneys have recently prepared the following Client Alerts on major regulatory issues:
The Centers for Medicare & Medicaid Services (CMS) has published the long-awaited Final Rule to implement the “Sunshine” provisions of the Affordable Care Act of 2010 (ACA). The Sunshine provisions – intended to provide increased transparency regarding the scope and nature of financial and other relationships among manufacturers, physicians, and teaching hospitals - require that certain manufacturers of drugs, devices, biologicals, and medical supplies covered by Medicare, Medicaid and CHIP report annually to the Department of Health and Human Services (HHS) certain payments or transfers of value they have made to physicians and teaching hospitals. In addition, they require manufacturers and certain group purchasing organizations (GPOs) to report to HHS information on physician ownership and investment interests.
While the Final Rule provides needed clarity on some troubling aspects of the proposal, it leaves a number of questions unanswered. Please click here to read our detailed analysis of the Sunshine provisions, including an overview and summary of the Final Rule as well as discussion of the important issues that stakeholders should be considering as they prepare for Sunshine implementation.
The Centers for Medicare & Medicaid Services (CMS) released late today its final rule implementing the physician payment transparency provisions of the Patient Protection and Affordable Care Act (Section 6002), commonly referred to as the "Physician Payments Sunshine Act." Among other things, the Act requires drug, device, biological or medical supply manufacturers to report payments or other transfers of value to physicians and other covered recipients. In addition, the Act requires manufacturers and group purchasing organizations (GPOs) to report certain information regarding ownership or investment interests held by a physician in the manufacturer or GPO.
The official version of the final rule, titled “Transparency Reports and Reporting of Physician Ownership of Investment Interests” (the “Final Rule”), will be published in the Federal Register on February 8, 2013. A proposed rule was previously published in the Federal Register on December 19, 2011, for which CMS received over 300 comments from a wide range of stakeholders.
The Final Rule provides important guidance to manufacturers and GPOs regarding the Physician Payments Sunshine Act, resolves several questions remaining after publication of the Proposed Rule, and raises some new ones. Notably, CMS has announced that manufacturers and GPOs will not be required to collect required information until August 1, 2013. Manufacturers and GPOs will be required to report the data for August through December of 2013 to CMS by March 31, 2014 and CMS will release the data publicly by September 30, 2014.
We are in the process of conducting a full review of the lengthy Final Rule and will release shortly a Client Alert providing a detailed analysis of the Rule. In the meantime, please contact Elizabeth Carder-Thompson (202-414-9213), Katie C. Pawlitz (202-414-9233), Nancy E. Bonifant (202-414-9353) or any other member of the Reed Smith Health Care Group with whom you work, if you would like additional information or if you have any questions.