Overview of National Physician Payment Transparency Program: Open Payments

1. Overview of National Physician Payment Transparency Program: Open Payments Georgia Academy of Health Care Attorneys 2013 Health Care Law Update & Annual Meeting Michael H. Park May 3, 2013

2. Physician Payments Sunshine Act • New federal transparency requirements (ACA § 6002): • Applicable drug and device manufacturers report payments or other transfers of value to physicians and teaching hospitals • Applicable drug and device manufacturers and group purchasing organizations (GPOs) report information regarding physician ownership or investment interests and payments or other transfers of value provided to such physicians • New federal policy builds on: • Legislative history • MedPAC recommendations • IOM Report • PhRMA Code on Interactions with Healthcare Professionals • AdvaMed Code of Ethics • State law requirements

3. Overview • Transparency Reports • Reports on Payments and Other Transfers of Value • Reports on Physician Ownership and Investment Interests • Review and Correction • Public Availability • Delayed Publication • Penalties

4. Timeline

5. Reports on Payments and Other Transfers of Value: Overview • Applicable Manufacturers • Covered Drugs/Devices • Covered Recipients • Payments or Other Transfers of Value • Forms of Payment Categories • Nature of Payment Categories • Exclusions

6. Applicable Manufacturers • Definition of “applicable manufacturer”: • (1) Operates in U.S. (physical location in U.S. or otherwise conducts activities in U.S.) AND • (2) Engages in production, preparation, propagation, compounding, or conversion of at least one covered drug, device, biological, or medical supply OR • Operates under common ownership with an applicable manufacturer and provides assistance or support to such entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered drug, device, biological, or medical supply

7. Covered Drug, Device, Biological, or Medical Supply • “Covered” drug/device: • Any drug, device, biological, or medical supply for which payment is available under Medicare or Medicaid, either separately, as part of a fee schedule payment, or as part of a bundled payment rate • But limited to: • Drugs or biologicals that require a prescription to be dispensed • Devices or medical supplies that require premarket approval by or premarket notification to the Food and Drug Administration

8. Covered Recipients • Payments or transfers to the following “covered recipients” must be reported: • A physician (to be identified based on National Provider Identifier (NPI) and specialty), other than a physician who is an employee of an applicable manufacturer • As defined under section 1861(r) of the Social Security Act, “physicians” include: doctors of medicine or osteopathy; doctors of dental surgery/dental medicine; doctors of podiatric medicine; doctors of optometry; and licensed chiropractors • A teaching hospital (defined as an institution that receives Medicare Graduate Medical Education (GME), Indirect Medical Education (IME), or psychiatric hospitals IME payments) • CMS plans to publish a list of such hospitals annually

9. Payments or Other Transfers of Value • Must report direct and indirect payments or other transfers of value to covered recipients including direct and indirect payments or other transfers of value provided to third parties at request or designated on behalf of covered recipient • “Payment or other transfer of value” includes all payments or other transfers of value given to a covered recipient • Limitationson reporting apply in certain circumstances • Revenue from covered products less than 10% of total gross revenues • Applicable manufacturers that provide assistance or support • Separate operating divisions • Covered product manufactured under written agreement and applicable manufacturer does not hold FDA approval, license or clearance and not involved in sale or distribution of covered product

10. Forms of Payments • Manufacturers must describe the form of a payment or transfer as: • Cash or a cash equivalent; • In-kind items or services; • Stock, a stock option, or any other ownership interest; or • Dividend, profit, or other return on investment • Manufacturers must choose one and only one form of payment to describe each payment or transfer

11. Nature of Payment • Applicable manufacturers should make a “reasonable determination” about the nature of the payment or other transfer of value and categorize it as only one of list of nature of payment categories • CMS will allow applicable manufacturers to submit a document describing the assumptions used in categorizing the nature of payments • Special rules provided for reporting payments related to: • Research payments; • Payments or other transfers of value related to continuing education programs; and • Food and beverage

12. Nature of Payment Categories • Consulting fees • Compensation for services other than consulting, including serving as faculty or speaking at event other than continuing education program • Honoraria • Gift • Entertainment • Food and beverage • Travel and lodging • Education • Research • Charitable contribution • Royalty or license • Current or prospective ownership or investment interest • Compensation for serving as faculty or as a speaker for accredited or certified continuing education program • Compensation for serving as faculty or as a speaker for accredited or certified continuing education program • Grant or • Space rental or facility fees (teaching hospital only)

13. Exclusions From Reporting • Indirect payments or other transfers of value where applicable manufacturer unaware of recipient; • Transfers of value less than $10, unless aggregate amount transferred to, requested by or designated on behalf of covered recipient exceeds $100 in calendar year(increased by CPI-U in subsequent years); • Product samples, including coupons and vouchers, intended for patient use and not intended to be sold; • Educational materials that directly benefit patients or are intended for patient use; • Loan of covered device or medical supply for short-term trial period (90 days or less) for evaluation by covered recipient;

14. Exclusions From Reporting (cont’d) • Items or services provided under contractual warranty, including replacement of covered device, where terms of warranty are set forth in purchase or lease agreement; • Transfer of anything of value to covered recipient when covered recipient is a patient and not acting in professional capacity of a covered recipient; • Discounts, including rebates; • In-kind items used for provision of charity care; • Dividend or other profit distribution from, or ownership or investment interest in, a publicly traded security or mutual fund;

15. Exclusions From Reporting (cont’d) • In case of applicable manufacturer that offers self-insured plan, payments for provision of health care to employees under plan; • In case of covered recipient who is licensed non-medical professional, a transfer of anything of value to covered recipient if transfer is payment solely for non-medical professional services of the licensed non-medical professional; • In case of covered recipient who is a physician, a transfer of anything of value to the covered recipient if transfer is payment solely for services of the covered recipient with respect to a civil or criminal action or an administrative proceeding; and • Payment or transfer of value to covered recipient made solely in context of personal, non-business-related relationship

16. Reports on Physician Ownership and Investment Interests: Overview • Reporting Entities • Applicable manufacturers • Applicable group purchasing organizations (GPOs) • Physicians and Immediate Family Members • Ownership or Investment Interests

17. Reporting Entities • Applicable manufacturers and applicable group purchasing organizations (GPOs) must report information concerning ownership and investment interests held by physicians and/or their immediate family members in such applicable manufacturers and applicable GPOs, and payments or other transfers of value to such owners or investors • “Applicable GPO” defined as entity that: • (1) Operates in the United States, or in a territory, possession or commonwealth of the United States, and • (2) Purchases, arranges for or negotiates the purchase of a covered drug, device, biological, or medical supply for a group of individuals or entities, and not solely for use by the entity itself.”

18. Physicians and Immediate Family Members • “Physician” • Use of definition of “physician” under SSA §1861(r) • Requirement to report physician ownership and investment interests includes any physician, including physician employee of applicable manufacturer or applicable GPO • “Immediate Family Member” • Use of “Immediate family member” definition under physician self-referral law, including: (1) spouse; (2) natural or adoptive parent, child, or sibling; (3) stepparent, stepchild, stepbrother, or stepsister; (4) father-, mother-, daughter-, son-, brother-, or sister-in-law; (5) grandparent or grandchild; or (6) spouse of a grandparent or grandchild

19. Reports on Ownership or Investment Interests • Similar to the physician self-referral law, ownership and investment interests may be direct or indirect, may be through debt, equity or other means, and may include, but are not limited to: • Stock or stock options (other than those received as compensation, until they are exercised); • Partnership shares; • Limited liability company memberships; and • Loans, bonds, or other financial instruments that are secured with an entity’s property or revenue or a portion of that property of revenue

20. Reports on Ownership or Investment Interests • Ownership or investment interests shall not include: • An ownership or investment interest in a publicly traded security or mutual fund; • An interest in an applicable manufacturer or applicable GPO arising from a retirement plan offered by that applicable manufacturer or applicable GPO to the physician (or immediate family member) through the physician’s (or immediate family member's) employment with that manufacturer or GPO; • Stock options and convertible securities received as compensation, until the stock options are exercised or the convertible securities are converted to equity; or • An unsecured loan subordinated to a credit facility

21. Report Submission • Applicable manufacturers/GPOs to submit reports electronically to CMS by March 31, 2014 and by the 90th day of each calendar year thereafter • Only those applicable manufacturers/GPOs with disclosures to make for the previous calendar year required to register and submit reports • Annual registration period to open at beginning of the calendar year during which the report to be made • CMS to provide reporting templates (research payment data, non-research payment data and ownership and investment data) • Assumptions document may be submitted • Authorized representative to submit a signed attestation

22. Report Format for Payments and Other Transfers of Value • Information submitted to include: • Applicable manufacturer/GPO name; • Covered recipient’s or physician owner’s name and address, • For physicians only: NPI; specialty; and state professional license number; • Amount, date, form, and nature of payment/transfer or value in U.S. dollars; • Name of associated covered drug, device, biological, or medical supply if any; • Name of entity that received the payment/transfer of value, if not provided to the covered recipient directly; • Whether the payment/transfer of value was provided to a physician holding ownership or investment interests in the applicable manufacturer; • Whether the payment/transfer of value should be granted delay in publication; and • Additional context for payment or other transfer of value

23. Report Format for Physician Ownership or Investment Interest • Information submitted to include: • Applicable manufacturer/GPO name; • Ownership or investment physician’s name, address, NPI, specialty and state professional license number • Whether the ownership or investment interest is held by a physician or an immediate family member of a physician; • Dollar amount invested; • Value and terms of each ownership or investment interest; and • Payments/transfers of value provided to physician owner or investoror made on behalf of physician owner or investor

24. 45-Day Review and Correction Period • Applicable manufacturers, GPOs, covered recipients and physician owners/investors must have opportunity to review data submitted for at least 45 days prior to publication (actually will be at least 60 days prior to publication) • For covered recipients and physician owners/investors, they may register with CMS to receive notifications and agency will notify them through public postings and CMS listserves • Applicable manufacturers/GPOs and covered recipients and physician owners or investors may log into secure website to view information pertaining only to them and review data submitted by or about them for previous reporting year

25. 45-Day Review and Correction Period • During 45-day review and correction period, covered recipients and physician owners/investors can dispute reported information, and CMS will notify applicable manufacturers/GPOs so parties can resolve dispute during review and correction period • After 45-day review and correction period, applicable manufacturers/GPOs have additional 15 days to correct information before the information is made public • If dispute not resolved by 15 days after review and correction period, reported information will appear on public database and will be flagged as contested • Information corrected after 60-day period for current and previous year will be updated at least once a year

26. Public Availability:Payments and Other Transfers of Value • Information about payments/transfers of value will be available on a website in downloadableand searchable format and includes: • Applicable manufacturer’s name; • Covered recipient’s name, specialty (physician only); address; • Amount of payment/transfer of value in U.S. dollars; • Date, form, and nature of payment/transfer of value; • Name of associated covered drug, device, biological, or medical supply and NDC of drug and biological, if applicable; • Name of the entity that received the payment/transfer of value, if not provided to the covered entity directly; and • Optional statement providing context for payment/transfer of value

27. Public Availability:Research Payments and Other Transfers of Value • Following information at a minimum will be provided: • Name of research institution/entity receiving payment; • Total amount of research payment; • Name of study; • Name of related covered drugs, devices, biologicalsor medical supplies and NDCs of related covered drugs and biologicals, if any; • Principal investigator(s) (including name, specialty and address); • Context of research; and • ClinicalTrials.gov identifier (optional)

28. Public Availability:Physician Ownership and Investment Interests • Information about physician ownership/investment interests will be available on a website in downloadable and searchable format and includes: • Applicable manufacturer/GPO’s name; • Ownership/investment physician’s name, specialty, address; • Whether the ownership/investment interest is held by a physician or an immediate family member of a physician; • Dollar amount invested and value; • Terms of each ownership/investment interest; and • Any payments/transfers of value provided to the physician owner/investor

29. Delayed Publication for Payments Made Under Product Research or Development Agreements and Clinical Investigations • Applicable manufacturer must indicate on report whether payment/transfer of value should be granted a delay in publication • Such payments/transfers of value must be reported each year with an indication that publication should remain delayed and with any updated information on the payment/transfer of value • Following FDA approval, licensure, or clearance, an applicable manufacturer must report on the next submission that the payment no longer should be granted a delay • If a report includes a date more than four years prior to the current year, the payment/transfer of value will be published automatically

30. Delayed Publication for Payments Made Under Product Research or Development Agreements and Clinical Investigations • Delayed publication applies to payments for services in connection with research on “medical technology,” including development of new drugs, devices, biologicals or medical supplies and new applicationsfordrugs, devices, biologicals or medical supplies • Delayed publication also applies to payments for services in connection the development of, or a clinical investigation for, newdrugs, devices, biologicals or medical supplies (not new applications) • A product research or development agreement needs to include written agreement between the applicable manufacture and covered recipient or written research protocol, or both

31. Penalties • Civil Monetary Penalties (CMPs) may be imposed on applicable manufacturers/GPOs for failure to report and for knowing failure to report in timely, accurate or complete manner • Failure to report • Each instance subject to CMP of at least $1,000, but not more than $10,000 with annual maximum of $150,000 • Knowing failure to report • Each instance subject to CMP of at least $10,000, but not more than $100,000 with annual maximum of $1,000,000 • Total combined annual penalty maximum of $1,150,000

32. Penalties • Criteria for determining the amount of a CMP: • Length of time an applicable manufacturer/GPO failed to report; • Amount of payment/transfer of value or ownership/investment interest; • Level of culpability; • Nature and amount of information reported in error; and • Degree of diligence exercised in correcting information • Applicable manufacturers/GPOs required to retain records for 5 years • Secretary, CMS and OIG permitted to audit, evaluate, inspect for compliance with timely, complete, accurate information requirements

33. Potential Issues • Implementation ongoing (e.g. development of template and website) • Unanticipated consequences? • Interest in changing/adding to requirements • If changes/additions are made, would it be done on administrative or legislative basis?

34. Being Prepared As Covered Recipient • Who should care? • Physicians • Teaching hospitals • Hospitals with medical staff that receives payments • Open Payments website • http://www.cms.gov/Regulations-and-Guidance/Legislation/National-Physician-Payment-Transparency-Program/index.html • Registration to receive notifications to commence later in 2013 • Establish policies and procedures to collect data on payments and transfers of data • Explore use pre-submission review process • Establish policies and procedures to review data and resolve disputes

35. Questions? Michael H. Park, J.D., M.P.H. Alston & Bird, LLP 950 F St., NW Washington, DC 20004 (202) 239-3300 michael.park@alston.com