Managing and Monitoring Compliance with the    PPACA’s Sunshine Provisions: Legal, Compliance, and Operational Considerati...
Federal Sunshine Provisions   Patient Protection and Affordable Care Act    (PPACA)    – Signed into law March 23, 2010  ...
Overview of State and Federal          Sunshine Laws                           Preemption by                              ...
PPACA Applicability/RequirementsTRANSACTIONS ($)                   $            Payments or     (Minus         Transfers o...
PPACA Applicability/RequirementsDISCLOSURE           Payments or       (Minus        Transfers of Value   Exclusions)     ...
Disclosures Required by    PPACA Sunshine Provisions Any “applicable manufacturer” must  report any “payment or transfer ...
Broad Scope - Required Reporting         of “Transfer of Value”“Transfer of value” (cash and cash equivalents, in-kind ite...
Selected Exclusions from              “Transfers of Value”   A transfer of value of less than $10 (unless the aggregate t...
Additional Requirement: Disclosure of   Physician Ownership Interests   Manufacturers and GPOs must disclose to the HHS  ...
State “Sunshine Laws”             & Industry Codes Current States with Relevant Laws California*                   • Mass...
Timeline of PPACA Sunshine        Law Implementation 2011                  1                                             ...
Timeline Update   10/1/11 – Deadline came and went    – No procedures published for manufacturers to submit      informat...
Timeline of PPACA Sunshine            Law Implementation   2012                                                 2        ...
Timeline of PPACA Sunshine       Law Implementation 2013               3                                    3            ...
Timeline of PPACA Sunshine       Law Implementation 2014   and Subsequent Years         ch d nd       ea 0 th a          ...
A Sun Tan or A Sun Burn?Realizing the Potential Benefits of Transparency Informed public Deterrence of improper payments...
A Sun Tan or A Sun Burn (cont.)?Challenges Facing Manufacturers - Legal Limitations in PPACA § 6002 sunshine  provisions...
A Sun Tan or A Sun Burn (cont.)?Operational and Reputational Challenges Data analysis and data quality Relationships wit...
Operating and Strategic Considerations   The enactment of many public disclosure regulations    threatens to change how t...
Operating and Strategic Considerations    Key Questions to Investigate   What are the “what-if” scenarios after governmen...
Aggregate Spend Reporting and Tracking   Aggregate spend tracking requirements have    necessitated the development of pr...
Aggregate Spend Tracking & Reporting   Common Implementation Activities                  Systems Customer                 ...
Aggregate Spend Reporting and          Tracking – Touch Points   To fully comply with payment disclosure requirements,   ...
Aggregate Spend Reporting and          Tracking – Touch Points (cont.)               Identifying HCP Spending Across Compa...
Proactive Compliance Management       ON‐GOING                       REPORTING                       PREDICTIVE       PLAN...
Business Unit Responsibility   70.00%   60.00%   50.00%   40.00%   30.00%   20.00%   10.00%    0.00%Source: Huron Consulti...
Current Methods Used To Satisfy                   Reporting   35.00%   30.00%   25.00%   20.00%   15.00%   10.00%    5.00%...
Planned Reporting Methods For New Laws   60.00%   50.00%   40.00%   30.00%   20.00%   10.00%    0.00%Source: Cegedim Relat...
Confidence That Reporting Is Fully Compliant   50.00%   45.00%   40.00%   35.00%   30.00%   25.00%   20.00%   15.00%   10....
Level of Concern In Preparing for Sunshine Provisions 7.40 7.20 7.00 6.80 6.60 6.40 6.20 6.00          Proper ID of    Col...
Operational Challenges   Determining who “owns” aggregate spend reporting and    tracking within the organization   Deve...
Potential Provider Implications   Despite enforcement actions against manufacturers, many    providers believe they are i...
Provider Implications (cont.)   As a result of increased regulation and based on recent    vendor settlements with the go...
Concluding ThoughtsQuestions & Answers                       34
Contact Information                Gary Keilty             Huron Healthcare     gkeilty@huronconsultinggroup.com          ...
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Slides on Compliance with PPACA Sunshine Provisions

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Slides on Managing and Monitoring Compliance with the PPACA’s Sunshine Provisions: Legal, Compliance, and Operational Considerations

Presentation by David Sclar, Gary Keilty, and Andrew VanHaute from October 2011

Slides on compliance with sunshine provisions.

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Slides on Compliance with PPACA Sunshine Provisions

  1. 1. Managing and Monitoring Compliance with the PPACA’s Sunshine Provisions: Legal, Compliance, and Operational Considerations October 17, 2011 Washington, D.C. Speakers: Gary Keilty, Huron Healthcare David Sclar, Ropes & Gray LLP Andrew VanHaute, AdvaMed
  2. 2. Federal Sunshine Provisions Patient Protection and Affordable Care Act (PPACA) – Signed into law March 23, 2010 – Section 6002: Transparency Reports and Reporting of Physician Ownership of Investment Interest – Section 6004: Prescription Drug Sample Transparency 2
  3. 3. Overview of State and Federal Sunshine Laws Preemption by PPACA State Sunshine Laws Disclosure RequirementsRequirements Not Preempted:• Behavioral prohibitions• Code of Conduct• Training and internal auditing• Representative licensing• Lobbying registration, fees 3
  4. 4. PPACA Applicability/RequirementsTRANSACTIONS ($) $ Payments or (Minus Transfers of Value Exclusions) 4
  5. 5. PPACA Applicability/RequirementsDISCLOSURE Payments or (Minus Transfers of Value Exclusions) Disclose Posted Online 5
  6. 6. Disclosures Required by PPACA Sunshine Provisions Any “applicable manufacturer” must report any “payment or transfer of value” to any “covered recipient” “Applicable manufacturer”: – Manufacturer of any drug, device, biological or medical supply reimbursed under Medicare, Medicaid, or CHIP “Covered recipients”: – Physicians – Teaching Hospitals 6
  7. 7. Broad Scope - Required Reporting of “Transfer of Value”“Transfer of value” (cash and cash equivalents, in-kind items orservices, stock and other forms defined by the HHS Secretary): – Consulting fees – Education – Compensation for – Research non-consulting – Royalty or license services – Current or prospective – Honoraria ownership or investment – Gift interest – Entertainment – Direct compensation for serving – Food as faculty or speaker for – Travel medical education program – Grant – Others defined by the Secretary 7
  8. 8. Selected Exclusions from “Transfers of Value” A transfer of value of less than $10 (unless the aggregate to the covered recipient exceeds $100 in that calendar year) Product samples not intended to be sold and intended for patient use. (But see § 6004 for prescription drug samples) Educational materials that directly benefit patients or are intended for patient use Short-term loans of a device for evaluation purposes, not to exceed 90 days Items or services provided under a contractual warranty. Transfer of value when the covered recipient is a patient and not acting in his/her professional capacity Discounts and rebates 8
  9. 9. Additional Requirement: Disclosure of Physician Ownership Interests Manufacturers and GPOs must disclose to the HHS Secretary: – $ invested by each physician owner or investor – Value/terms ownership or investment interests – Payments/transfers of value to such physicians – Any other information specified by the Secretary Disclose by March 31, 2013 and the 90th day of each calendar year Secretary will make this information publicly available 9
  10. 10. State “Sunshine Laws” & Industry Codes Current States with Relevant Laws California* • Massachusetts Connecticut* • Minnesota District of Columbia • Nevada* Maine Repealed July 2011, effective • Vermont September 28, 2011 • West Virginia * Law does not require disclosures (not preempted by PPACA sunshine provisions) Voluntary Industry Codes of Behavior PhRMA Code AdvaMed Code of Ethics 10
  11. 11. Timeline of PPACA Sunshine Law Implementation 2011 1 1 /1 /1 D e TB at 1 4 /2 0/ D 3 1 CMS issuesCMS held a interim final Secretary shall establishSpecial Open regulations for procedures forDoor Forum on 2012 (Maybe) manufacturers to submit§ 6002 of thePPACA information and for the data to be made public (CMS missed deadline)Note: State laws are already effective and ongoing 11
  12. 12. Timeline Update 10/1/11 – Deadline came and went – No procedures published for manufacturers to submit information and for the data to be made public 10/3/11 - Senators Grassley and Kohl letter to CMS Administrator Berwick expressing “severe disappointment that deadline was missed”* Letter demands of CMS: – By 10/7/11 – Schedule a meeting with the Senators’ staff to provide an in-depth briefing – By 10/14/11 - Answer questions regarding 1) agency’s timetable for implementing Sunshine provisions and 2) why deadline was missed*http://grassley.senate.gov/news/Article.cfm?customel_dataPageID_1502=37211 12
  13. 13. Timeline of PPACA Sunshine Law Implementation  2012 2 D e /1 TB at 2 /1 1 D 3 /1 2/ 1 1Beginning of CMS issues final End of firstfirst reporting regulations reportingperiod and (Maybe) periodpreemption ofstate laws 13
  14. 14. Timeline of PPACA Sunshine Law Implementation 2013 3 3 /1 /1 1 0 /3 /3 3 9 First manufacturer HHS will make report due information (covering 2012 public through transfers of value) a website 14
  15. 15. Timeline of PPACA Sunshine Law Implementation 2014 and Subsequent Years ch d nd ea 0 th a ye ay ar of e 9 /14 th 31 3/ 4 /1 30 6/ Manufacturer HHS will make report due information (covering previous public through calendar year’s a website transfers of value) 15
  16. 16. A Sun Tan or A Sun Burn?Realizing the Potential Benefits of Transparency Informed public Deterrence of improper payments Lower health care costs Data for prosecuting of violations of federal health care laws Business opportunity for industry to track expenses and monitor conflicts of interest 16
  17. 17. A Sun Tan or A Sun Burn (cont.)?Challenges Facing Manufacturers - Legal Limitations in PPACA § 6002 sunshine provisions Preemption and variance among PPACA and state laws Changing laws and regulatory guidance Proposed laws in additional states Government investigation of outliers anticipated 17
  18. 18. A Sun Tan or A Sun Burn (cont.)?Operational and Reputational Challenges Data analysis and data quality Relationships with providers Negotiations with vendors (e.g., CROs) Protection of trade secrets Public opinion Organizational change management 18
  19. 19. Operating and Strategic Considerations The enactment of many public disclosure regulations threatens to change how the public views the relationship between HCPs and Life Sciences (“LS”) manufacturers Ultimately this shift in public perception could force LS manufacturers and their competitors to change, possibly significantly, their go-to-market strategy 19
  20. 20. Operating and Strategic Considerations Key Questions to Investigate What are the “what-if” scenarios after government disclosure regulations are enacted and what are their relative likelihood of occurring? Which product lines and HCP segments are most at risk from the public disclosure regulations? What current sales and marketing operations could be impacted by these scenarios? What external factors influence these scenarios and what can be done now to pro-actively monitor the situation on the ground and prepare for the future? 20
  21. 21. Aggregate Spend Reporting and Tracking Aggregate spend tracking requirements have necessitated the development of processes and systems to track aggregate spending at an enterprise level Most life sciences companies have experienced significant implementation challenges, since very few organizations had existing systems and processes that were interoperable at the enterprise level Most systems were historically designed and implemented to meet very specific functional needs or departmental requirements (e.g., sales force automation, grants management, T&E, etc.). As a result, capturing all data necessary for reporting represents a challenge for most life science organizations 21
  22. 22. Aggregate Spend Tracking & Reporting Common Implementation Activities Systems Customer Touch and Mapping Analysis Master Points Processes Identify touch- points with Identify notable Gain HCPs and HCOs gaps between understandingCustomUpdate/Acquir of systems and across all key  Map the touch- the currenter Mastere Customer processes functional areas points to the processMaster so all assessment currentHCPs can be Develop and inventory Determine all complete Businessuniquely channels inventory of Systems andidentified and Develop a where activities and processesaggregated vision for the payments may expenditure company’s occur types tracking points IMPLEMENTATION PROCESS 22
  23. 23. Aggregate Spend Reporting and Tracking – Touch Points To fully comply with payment disclosure requirements, manufacturers must identify all of the circumstances under which healthcare entities are given payments, gifts or other economic benefits Many manufacturers have found, however, that HCP spending is widely spread across the organization and is tracked in a variety of systems 23
  24. 24. Aggregate Spend Reporting and Tracking – Touch Points (cont.) Identifying HCP Spending Across Company Identifying HCP Spending Across Company Field Sales Field Sales Medical & Medical & Third- Third- (Non- (Non- Clinical Clinical Marketing Marketing Party Party Distributor) Distributor) Affairs Affairs Vendors Vendors Meals Advisory Advisory Travel & Meals Meals/Gifts Meals/Gifts Travel & Boards Boards HospitalitySample HospitalityFocusAreas Gifts Gifts Consulting Consulting Peer to Peer Peer to Peer Service Fee Service Fee Services Services Meetings Meetings Grants Payments Payments Grants Publications Publications Advisory Advisory Practice Practice & Speaking Boards Consulting & Speaking Boards Consulting Aids Aids Services Services Medical Medical Consulting Consulting Education Education Services Services 24
  25. 25. Proactive Compliance Management ON‐GOING  REPORTING PREDICTIVE PLANNING “How do we  “How do we  “How do we  report spend?” spend more  continually  effectively?” determine  spend?” STEPS  Customer Master   Sales & Marketing  Business Process Analysis Integration Decisioning Customer Touch Point   Commercial Data Center  Identification  Aggregate Spend Reporting  Tool Implementation of Excellence (CoE) OUTCOMES As‐Is / To‐Be Strategy  Transparency and Visibility   Most effective use of  for Ethics & Compliance commercial budget Gap Analysis to determine  issues across various   Seamless integration of tools   Promotional Mix  division / functions in an  needed for reporting  Optimization with rich  organization processes “Reporting” data  Roadmap created to   Scalability of solution to  blueprint next steps   handle pending and future  state and federal legislation 25
  26. 26. Business Unit Responsibility 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%Source: Huron Consulting Group Survey 26
  27. 27. Current Methods Used To Satisfy Reporting 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00%Source: Cegedim Relationship Management 2011 Survey 27
  28. 28. Planned Reporting Methods For New Laws 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%Source: Cegedim Relationship Management 2011 Survey 28
  29. 29. Confidence That Reporting Is Fully Compliant 50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Very Confident Somewhat  Neutral Not Very/Not at All  Confident ConfidentSource: Cegedim Relationship Management 2011 Survey 29
  30. 30. Level of Concern In Preparing for Sunshine Provisions 7.40 7.20 7.00 6.80 6.60 6.40 6.20 6.00 Proper ID of  Collecting All   Data Integrity Certification  Handling  Spend Recipients Relevant Spend  Before Posting Inquiries Post  Data PostingSource: Cegedim Relationship Management 2011 Survey. Scale 1 to 10 (10 highest) 30
  31. 31. Operational Challenges Determining who “owns” aggregate spend reporting and tracking within the organization Development of standard operating procedures Employee Education Training Compliance auditing and monitoring activities 31
  32. 32. Potential Provider Implications Despite enforcement actions against manufacturers, many providers believe they are immune to enforcement initiatives in this area or have not focused attention to these risks Enforcement agencies and counsel representing patients in private law suits have begun to broaden their focus on providers with regards to conflicts of interest with physicians All providers need to develop and enhance their physician conflicts of interest policies; however, a growing number of providers, in particular academic medical centers, have enhanced this process 32
  33. 33. Provider Implications (cont.) As a result of increased regulation and based on recent vendor settlements with the government, providers also need to develop a comprehensive and effective compliance program for their organization in connection with potential physician conflicts of interests 33
  34. 34. Concluding ThoughtsQuestions & Answers 34
  35. 35. Contact Information Gary Keilty Huron Healthcare gkeilty@huronconsultinggroup.com 813.309.1139 David Sclar Ropes & Gray LLP David.Sclar@ropesgray.com 212.596.9660 Andrew VanHaute AdvaMed AVanHaute@advaMed.org 202.434.722535 35

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