The Sunshine Act One Year In Webinar

Polsinelli PC. In California, Polsinelli LLP
October 22, 2015
The Sunshine Act (Open Payments):
One Year In …
Presenters:
Jeffrey Fitzgerald, Shareholder
Lauren Groebe, Associate

real challenges. real answers. sm
Today’s Objectives
Review Key Elements of the Sunshine Act /
Open Payments Program
Overview of Data Collected, Perception and
Program Updates
Highlight Enforcement Mechanisms and
Compliance Implications / Tips
2

Review of the Sunshine Act /
Open Payments Program
Key Elements
3

Background
Physician Payment Sunshine Act / Sunshine Act / Open
Payments
Enacted as Section 6002 of March 23, 2010 Affordable
Care Act; February 8, 2013 Final Rule implemented and
clarified Section 6002
– CMS administers / enforces the program
Program Goals
– Increase transparency in financial relationships between (1)
industry and group purchasing organizations and (2) physicians and
teaching hospitals through annual reporting on a public website
– Discourage inappropriate relationships and enable patients to make
more informed treatment decisions by assessing potential conflicts
of interest
4

The Final Rule - Plain English
Unless an exception applies, Applicable Manufacturers
(and applicable GPOs) must report
– payments or transfers of value made to Covered
Recipients, and
– ownership or investment interests held by
physicians or their immediate family
to CMS within certain timeframes on an annual basis.
5

Key Definitions / Concepts
Applicable Manufacturers (AM)
Payments or Transfers of Value
Covered Recipients
Ownership and Investment Interests
Data Reporting and the Review, Dispute
and Correction Process
6

Who is an Applicable Manufacturer ?
An entity operating in the United States:
that engages in the production, preparation, propagation,
compounding or conversion of a covered drug, device,
biological or medical supply
OR
that exists under common ownership with an applicable
manufacturer who also provides assistance or support with
respect to the production, preparation, propagation,
compounding, sale, or distribution
“Covered drug, biological, device or medical supply” means payment for the
product is available under Medicare, Medicaid, CHIP either separately or
under a bundled payment, and requires premarket approval by FDA. 7

Distributor as an Applicable Manufacturer?
Yes! Two ways …
1. If a distributor holds title to any covered drug, device,
biological, or medical supply in the distribution chain;
or
2. If a distributor does not hold title, but is under common
ownership and provides assistance or support
Consider application to physician owned distributors
(PODs) and also wholesalers
8

What is reported?
Direct and indirect payments and transfers of value
made to Covered Recipients
– What are indirect payments? Payments through a third party
where the AM “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”
Indirect Payments Reporting Exception: third party indirect
payments or transfer of value when AM is unaware of the
identity of the Covered Recipient
– Unaware = does not “know”
– Know = actual knowledge or acts in deliberate ignorance
or reckless disregard of the identity
9

Amount of Payment or Transfer
Discernible economic value on the open market in the
United States
Must be reported even if the item has no value to the
recipient or is not formally requested by the recipient
– (ex: A textbook the physician already owns)
Value includes tax, shipping
If made to a group of Covered Recipients, distribute the
amount among those who requested it, on whose behalf
made and intended to benefit
10

Form of Payment or Transfer
Reportable forms of payments or transfers of value
– Cash or cash equivalent
– In-kind items or services
– Stock, stock-option or other ownership interest
– Dividend, profit or other return on investment
11

Nature of Payments or Transfers
12
Consulting fee
Compensation for services
Honoraria
Gift
Entertainment
Food and beverage
Travel and lodging
Education
Charitable contribution
Royalty or license
Current or prospective
ownership/investment
Compensation as faculty or
speaker at continuing
education program
Grant
Space rental or facility fee
(teaching hospital only)
*Research (a category separate from the “general payment”
categories above; made in connection with research agreement or
research protocol)

Non-Reportable Exceptions
Existing personal relationships
Payments/Transfers of value
<$10 & annual aggregate <
$100
– Includes CPI inflator
beginning in 2014
Educational materials that
directly benefit patients
Charity care – in kind item for
the provision of charity care
Discounts & Rebates
Product samples intended for
patient use, coupons and
vouchers
13
Short-term loan of a
covered device (less than
90 days)
Contractual warranties,
maintenance agreements
Covered Recipient acting
as patient
Provision of healthcare
services to employees
Nonmedical professionals
Civil or criminal actions or
civil proceedings
Indirect payments made to
speakers**
** Amended to be reportable under certain circumstances.

Key Provisions – Covered Recipient
Physicians: legally authorized doctors of medicine and
osteopathy, dentists, podiatrists, optometrists and chiropractors to
– Excludes
Medical students, residents, PAs and NPs
Bona fide employee of the applicable manufacturer reporting the
payment or transfer of value
Teaching hospitals: which CMS has defined as any institution
that receives indirect medical education (“IME”), direct graduate
medical education (“GME”), or psychiatric hospital IME payments
during the last calendar year
– CMS lists those hospitals meeting this definition annually on the
Open Payments website
14

Also Reported?
Ownership and Investment Interests
Covered Recipients are physicians who are owners or
investors of an AM and their immediate family members
– Immediate family member is the physician’s (1) spouse; (2)
natural or adoptive parent, child, or sibling; (3) step-parent, step-
child, step-brother, or step-sister; (4) father, mother, daughter,
son, brother, or sister-in-law; (5) grandparent or grandchild; or
the (6) spouse of a grandparent or grandchild
These interests may be direct or indirect and through
debt, equity or other means
– Includes stock, partnership cares, LLC membership,
loans/bonds, etc.
There are exceptions / non-reportable interests
15

Data Collection and Reporting Timeline
Data Collection
– AMs collect data throughout calendar year (i.e., a “program year”)
Data Submission
– AMs submit to CMS preceding calendar year data by on / before
the 90th day of the year
Data Review, Dispute and Correction Period
– Covered Recipient – 45 day window
– AMs – 45 day window + 15 day correction period
CMS publishes data on June 30th of each year
16

Data Review, Dispute and
Correction Period
Opportunity for Covered Recipients to review, then affirm and/or
dispute records submitted by AMs
– Data records only made available for review/ dispute in the calendar year
that they were submitted
CMS will not mediate – the parties’ responsibility!
Covered Recipients must register in the CMS Enterprise Portal and in
the Open Payments system to engage in the review/ dispute process
– Provides email alerts; monitoring mechanisms; status updates
– Verification may take time – one time registration
Covered Recipients not required to affirm the data; un-affirmed
records still published by CMS
17

Data Review, Dispute and
Correction Period - Mechanics
A 60-day window:
– 45 days for data review/dispute by Covered Recipients; AMs can
also make corrections
– 15 days immediately following the 45-day period for AMs to
continue to make corrections
Data corrections made after the 60-day window will not
be reflected in the initial publication (the June posting)
Data corrections are not updated immediately (may be
refreshed)
If dispute not resolved, the lasted attested to data
submitted by the AM will be published, but that data will
be identified as “disputed”
18

Data Collection Overview,
Perception and Program
Updates
19

Today’s Open Payments Data Landscape
Two report cycles completed; full year of
implementation complete (second year coming
to close)
CMS has publically published two datasets –
2013 and 2014 program years
Datasets downloadable and searchable by
physicians, teaching hospitals, or companies
making payments by name, city, state, and
specialty
A “treasure trove” of data?
20

Open Payments CMS Data Overview
2013 Program Year
Totals (*partial year)
2014 Program Year
Totals
Total US Dollar Value
Reported
$3.43 Billion $6.49 Billion
Total Records
Published
4.30 Million 11.41 Billion
Total Companies
Making Payments
1,347 1,444
Total Physicians with
Payment Records
470,000 607,000
Total Teaching
Hospitals with
Payment Records
1,019 1,121
21
• All numbers above 10,000 have been rounded.
• Published 6/30/15, available at https://openpaymentsdata.cms.gov/.

2014 Open Payments Data Overview -
Dollars
Total US Dollar Value Reported $6.49 Billion
General Payments Breakdown $2.56 Billion
*$5.06 Million Disputed
Research Payments Breakdown $3.23 Billion
*$13.16 Million Disputed
Ownership or Investment Interest
Breakdown
$703 Million
*$0 Disputed
22

2014 Open Payments Data Overview -
Records
Total Records Published 11.41 Million
General Payments Breakdown 10.82 Million
*1,723 Disputed
Research Payments Breakdown 585,000
*846 Disputed
Ownership or Investment Interest
Breakdown
4,785
*0 Disputed
23

Perception and Reaction
A mixed review? Time will tell?
Covered Recipient Awareness
– Some research firms indicate physicians have
little familiarity with Open Payments
– CMS announced that for the 2014 reporting
year “registered physicians and teaching
hospitals reviewed nearly 30% of the total
value of the reported data.”
Represents very small number of total
records and value
24

Perception and Reaction
Public Perception
– Varying media exposure, commentary
– Use of datasets unclear
CMS has stated that the Open Payments website
has had a total of 6.5 million hits; full data set
downloaded 50,000 times
– Integrity of data called into question
25

Regulatory Action Highlights -Reporting
Effective 2016, payments provided to physicians
for speaking at a continuing medical education
event are reportable when
– AM provides an indirect payment or transfer of value
to a continuing education organization for payment to
a known (or can be identified) physician speaker at a
continuing education event
– Payment must be reported to CMS in 2017,
regardless of the accreditation status of the
organization
– Announced in 2015 Medicare Physician Fee
Schedule, November 2014 26

Regulatory Action Highlights - CMS
April 2015 - CMS Annual Report to Congress
– Key components included:
Engagement and outreach efforts are a priority
for CMS
Data integrity improvements
Action plan for enforcing penalties for AM /
GPO non-compliance
– CMS consulted with the Office of the Inspector
General (OIG) to develop the report
27

Regulatory Action Highlights –
On the Horizon?
October 2015 - Sen. Charles Grassley (R-Iowa)
and Sen. Richard Blumenthal (D-Conn)
introduced a bill that would expand the reporting
requirements to include NPs and PAs
Some states already require similar reporting
requirements (ex., Massachusetts)
Recommend AMs and Covered Recipients
monitoring the Open Payments website for CMS
alerts, updates, webinars
28

Enforcement Mechanisms
and Compliance
Implications / Tips
29

Open Payments is a “self-reporting” program
with CMS oversight
CMS can issue civil monetary penalties (CMPs)
for non-compliance
CMPs range from:
– $1,000 to $10,000 for each payment or transfer of value, or
ownership or investment interest, not reported timely, accurately,
or completely (up to $150,000), and
– $10,000 to $100,000 for each “knowing” failure to report timely,
accurately, or completely (up to $1,000,000)
30

To date, no CMPs imposed on AMs / GPOs
CMS has proposed targets audits to identify AMs
and GPOs that should have submitted payment
information but did not for program year 2013
– What do AM audits / enforcement actions mean for
Covered Recipients and data reporting?
31

Compliance Implications
KEY: Open Payments information is publically
available on the Internet
– The vast amount of information will continue to grow
year over year
What does this mean for look back periods?
Information permanently posted?
Notably, CMS emphasized that compliance with the
reporting requirements does not exempt AMs, GPOs,
Covered Recipients, and others from potential liability
under the Anti-Kickback Statute or the False Claims Act
32

Key Compliance Implications
1. Consider who is looking at the data
– State and Federal Agencies / Competitors / Third
Parties
Using data to evaluate behaviors, trends, investigate certain
AMs and / or Covered Recipients (ex. PODs)
– What are the fraud and abuse implications?
2. Identify what, if any, other reporting and
disclosure obligations impacted
– State disclosure / transparency laws
– Conflict of interest policies
33

Suggested Compliance Tips
1. Evaluate how to internally / personally track and
audit reportable payments and transfers of value
2. Register on the Open Payments portal / website
3. Identify key persons to monitor Open Payment
submission dates
4. Closely monitor data reported and engage in the
Dispute and Review status
5. Consistently evaluate if Open Payments applies
to you (business model changes may trigger
reporting requirements)
34

Resources
Open Payments Homepage
– http://www.cms.gov/openpayments/
Open Payments Resource Page
– http://www.cms.gov/OpenPayments/About/Resources.html
Open Payments Help Desk
– Live Support,1-855-326-8366
– openpayments@cms.hhs.gov
35

Questions?
36

Presenter Profiles
37
Jeffry Fitzgerald, Esq.
jfitzgerald@polsinelli.com
303.583.8205
Jeff is a shareholder practicing in the Denver office and represents health care
providers in disputes with federal and state licensure bodies, professional
licensure boards, and other regulators and law enforcement agencies. He also
assists health care companies that have proactively discovered potential
compliance issues. Jeff uses his experience in resolving investigations to
develop practical solutions that bring finality and risk reduction to compliance
problems.
Lauren Groebe, Esq.
lgroebe@polsinelli.com
816.572.4588
Lauren is an associate in the Kansas City office and works with clients on
operational, compliance, and regulatory issues with a focus on the
National Physician Payment Transparency Program, 340B Program,
Health Insurance Portability and Accountability Act, provider-based rules
and regulations, corporate compliance, Medicare and Medicaid
enrollment, and state licensure issues.

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