The shifting guidance on whether the industry should report mere funding of educational events, the likely enforcement ahead by federal and state agencies, and maps showing the “hotspots” of consulting, food and beverage, and travel and lodging payments: here’s what you should know now about the Sunshine Act / Open Payments database.
- The indirect-payment exclusion appeared to cover more ground than we thought: With the finalized changes to the Sunshine Act regulations, CMS appeared to be showing a willingness to back off its incredibly narrow interpretation of the “indirect-payments” exclusion by suggesting that payments to speakers at educational events should be excluded from reporting if applicable manufacturers are not actively involved in selecting, paying, or setting criteria for the speakers. That is, mere funding and knowledge would not be enough to trigger a reporting duty.
- That is, until CMS again changed course: Recently CMS issued guidance stating that “Starting in 2016, when an applicable manufacturer provides an indirect payment or other transfer of value to a continuing education organization for a continuing education event to physicians, and knows or finds out the identity of the physician attendees/speakers within the reporting year or by the end of the second quarter of the following reporting year, that payment must be reported to CMS in 2017.” So does this mean that payments for educational events need to be reported even if they aren’t directed by manufacturers and GPOs to specific doctors? Not if the payments were truly “unrestricted.” But CMS gives the following example of a reportable payment, even though the applicable manufacturer was not actively involved in selecting, paying, or setting criteria for the speakers:
- An applicable manufacturer provides a payment to an accredited continuing education organization for a continuing education event for physicians. The applicable manufacturer does not pay the physician speaker directly, nor does the manufacturer select the speaker or provide the continuing education organization with a distinct, identifiable set of individuals to be considered as speakers for the continuing education. The applicable manufacturer is able to determine who the physician speaker was by the end of the reporting year or by the second quarter of the following reporting year.
Understandably, the moving target of CMS’s approach to indirect payments has prompted requests for clarification. Stay tuned for further guidance from CMS on this issue.
- The government is exploring how to use the data to support kickback allegations: According to government representatives speaking at a national aggregate spend conference, the data will serve as a touchstone to corroborate allegations of kickbacks or other improper physician interactions.
- The government could use the data for industry sweeps: And if past experience is any guide, outliers will likely pay the heaviest fines in resolving alleged industry misconduct.
- The government might focus on “hotspots” in the nation: As shown by the below maps, certain regions have a high volume of consulting payments, food and beverage payments, and travel and lodging payments – all of which could provoke questions about the legitimacy of these payments.
- The government expects you to disclose potential problems: The government has advised that any kickbacks that companies identify in the data – and potentially, any kickbacks that could have been identified in the data – will receive the best treatment if they are proactively self-disclosed. Particularly because some companies have dedicated employees who focus only on data collection and reporting, this expectation will require integration with the compliance / legal function and likely coordination with outside counsel.
- States with transparency laws, like Vermont and Massachusetts, may use the data to identify companies that should be filing state reports: As Vermont’s AG has warned in resolving voluntary reports of noncompliance in late 2013 / early 2014, entities will pay steep fines if they do not proactively report and fully cooperate.
- But enforcement agencies may not have the full picture: We understand significant portions of data – particularly any data updated after resolving physician disputes – have not yet been published in the database, and that some data has been mis-attributed to the wrong manufacturer, teaching hospital, or physician. As a result, federal and state enforcement agencies do not yet have a full picture of reported payments to physicians and teaching hospitals, which may affect how they interpret the available data.
