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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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Managing and Monitoring Compliance with the Managing and Monitoring Compliance with the PPACAPPACA’’s Sunshine Provisions: Legal, s Sunshine Provisions: Legal,
Compliance, and Operational Considerations Compliance, and Operational Considerations
October 17, 2011October 17, 2011Washington, D.C.Washington, D.C.
Speakers:Speakers:Gary Keilty, Gary Keilty, Huron HealthcareHuron HealthcareDavid Sclar, David Sclar, Ropes & Gray LLPRopes & Gray LLP
Andrew VanHaute, Andrew VanHaute, AdvaMedAdvaMed
2
Federal Sunshine ProvisionsFederal Sunshine Provisions
Patient Protection and Affordable Care Act Patient Protection and Affordable Care Act (PPACA)(PPACA)
–– Signed into law March 23, 2010Signed into law March 23, 2010–– Section 6002: Transparency Reports Section 6002: Transparency Reports
and Reporting of Physician and Reporting of Physician Ownership of Investment InterestOwnership of Investment Interest
–– Section 6004: Prescription Drug Sample Section 6004: Prescription Drug Sample TransparencyTransparency
3
Overview of State and Federal Overview of State and Federal Sunshine LawsSunshine Laws
Preemption by PPACA
Requirements Not Preempted:• Behavioral prohibitions• Code of Conduct • Training and internal auditing• Representative licensing• Lobbying registration, fees
State Sunshine LawsDisclosure Requirements
4
PPACA Applicability/RequirementsPPACA Applicability/RequirementsTRANSACTIONS ($)
Payments or Transfers of Value
$
(Minus Exclusions)
5
PPACA Applicability/RequirementsPPACA Applicability/Requirements
DISCLOSURE
Payments or Transfers of Value
Disclose PostedOnline
(Minus Exclusions)
6
Any Any ““applicable manufacturerapplicable manufacturer”” must must report any report any ““payment or transfer of payment or transfer of valuevalue”” to any to any ““covered recipientcovered recipient””
““Applicable manufacturerApplicable manufacturer””::–– Manufacturer of any drug, device, biological Manufacturer of any drug, device, biological
or medical supply reimbursed under or medical supply reimbursed under Medicare, Medicaid, or CHIPMedicare, Medicaid, or CHIP
““Covered recipientsCovered recipients””::–– PhysiciansPhysicians–– Teaching HospitalsTeaching Hospitals
Disclosures Required by Disclosures Required by PPACA Sunshine ProvisionsPPACA Sunshine Provisions
7
– Consulting fees– Compensation for
non-consultingservices
– Honoraria– Gift– Entertainment– Food– Travel
Broad Scope Broad Scope -- Required Reporting Required Reporting of of ““Transfer of ValueTransfer of Value””
– Education
– Research
– Royalty or license
– Current or prospective ownership or investment interest
– Direct compensation for serving as faculty or speaker for medical education program
– Grant
– Others defined by the Secretary
“Transfer of value” (cash and cash equivalents, in-kind items or services, stock and other forms defined by the HHS Secretary):
8
A transfer of value of less than $10 (unless the aggregate to A transfer of value of less than $10 (unless the aggregate to the covered recipient exceeds $100 in that calendar year)the covered recipient exceeds $100 in that calendar year)
Product samples not intended to be sold and intended for Product samples not intended to be sold and intended for patient use. patient use. (But see (But see §§ 6004 for prescription drug samples)6004 for prescription drug samples)
Educational materials that directly benefit patients or are Educational materials that directly benefit patients or are intended for patient useintended for patient use
ShortShort--term loans of a device for evaluation purposes, not to term loans of a device for evaluation purposes, not to exceed 90 daysexceed 90 days
Items or services provided under a contractual warranty.Items or services provided under a contractual warranty. Transfer of value when the covered recipient is a patient Transfer of value when the covered recipient is a patient
and not acting in his/her professional capacityand not acting in his/her professional capacity Discounts and rebatesDiscounts and rebates
Selected Exclusions from Selected Exclusions from ““Transfers of ValueTransfers of Value””
9
Manufacturers and GPOs must disclose to the HHS Manufacturers and GPOs must disclose to the HHS Secretary:Secretary:–– $ invested by each physician owner or investor$ invested by each physician owner or investor–– Value/terms ownership or investment interestsValue/terms ownership or investment interests–– Payments/transfers of value to such physiciansPayments/transfers of value to such physicians–– Any other information specified by the SecretaryAny other information specified by the Secretary
Disclose by March 31, 2013 and the 90Disclose by March 31, 2013 and the 90thth day of each day of each calendar yearcalendar year
Secretary will make this information publicly availableSecretary will make this information publicly available
Additional Requirement: Disclosure of Additional Requirement: Disclosure of Physician Ownership InterestsPhysician Ownership Interests
10
State State ““Sunshine LawsSunshine Laws””& Industry Codes& Industry Codes
California* Connecticut* District of Columbia Maine
• Massachusetts• Minnesota• Nevada*• Vermont• West Virginia
Current States with Relevant Laws
* Law does not require disclosures (not preempted by PPACA sunshine provisions)
Repealed July 2011, effective September 28, 2011
Voluntary Industry Codes of BehaviorPhRMA Code AdvaMed Code of Ethics
11
Timeline of PPACA Sunshine Timeline of PPACA Sunshine Law ImplementationLaw Implementation
20112011
Note: State laws are already effective and ongoing
Secretary shall establish procedures for manufacturers to submit information and for the data to be made public (CMS missed deadline)
10/1
/11
Date
TBD
CMS issues interim final regulations for 2012 (Maybe)
3/24
/11
CMS held a Special Open Door Forum on § 6002 of the PPACA
12
10/1/11 10/1/11 –– Deadline came and wentDeadline came and went–– NNo procedures published for manufacturers to submit o procedures published for manufacturers to submit
information and for the data to be made publicinformation and for the data to be made public
Letter demands of CMS:Letter demands of CMS:–– By 10/7/11 By 10/7/11 –– Schedule a meeting with the SenatorsSchedule a meeting with the Senators’’ staff staff
to provide an into provide an in--depth briefingdepth briefing–– By 10/14/11 By 10/14/11 -- Answer questions regarding 1) agencyAnswer questions regarding 1) agency’’s s
timetable for implementing Sunshine provisions and 2) why timetable for implementing Sunshine provisions and 2) why deadline was misseddeadline was missed
Timeline UpdateTimeline Update
*http://grassley.senate.gov/news/Article.cfm?customel_dataPageID_1502=37211
10/3/11 10/3/11 -- Senators Grassley and Senators Grassley and Kohl letter to CMS Administrator Kohl letter to CMS Administrator Berwick expressing Berwick expressing ““severe severe disappointment that deadline disappointment that deadline was missedwas missed””**
13
Timeline of PPACA Sunshine Timeline of PPACA Sunshine Law ImplementationLaw Implementation
20122012
End of first reporting period
12/3
1/12
1/1/
12
Beginning of first reporting period and preemption of state laws
Date
TBD
CMS issues final regulations (Maybe)
14
Timeline of PPACA Sunshine Timeline of PPACA Sunshine Law ImplementationLaw Implementation
20132013
HHS will make information public through a website
9/30
/13
3/31
/13
First manufacturer report due (covering 2012 transfers of value)
15
Timeline of PPACA Sunshine Timeline of PPACA Sunshine Law ImplementationLaw Implementation
2014 and Subsequent Years2014 and Subsequent Years
HHS will make information public through a website
6/30/1
43/31/1
4 an
d
the 90t
h day
of eac
h year
Manufacturer report due (covering previous calendar year’s transfers of value)
16
A Sun Tan or A Sun Burn?A Sun Tan or A Sun Burn?
Realizing the Potential Benefits of TransparencyRealizing the Potential Benefits of Transparency Informed publicInformed public Deterrence of improper paymentsDeterrence of improper payments Lower health care costsLower health care costs Data for prosecuting of violations of federal Data for prosecuting of violations of federal
health care lawshealth care laws Business opportunity for industry to track Business opportunity for industry to track
expenses and monitor conflicts of interestexpenses and monitor conflicts of interest
17
A Sun Tan or A Sun Burn (cont.)?A Sun Tan or A Sun Burn (cont.)?
Challenges Facing Manufacturers Challenges Facing Manufacturers -- LegalLegal Limitations in PPACA Limitations in PPACA §§ 6002 sunshine 6002 sunshine
provisionsprovisions Preemption and variance among PPACA and Preemption and variance among PPACA and
state lawsstate laws Changing laws and regulatory guidanceChanging laws and regulatory guidance Proposed laws in additional statesProposed laws in additional states Government investigation of outliers anticipatedGovernment investigation of outliers anticipated
18
A Sun Tan or A Sun Burn (cont.)?A Sun Tan or A Sun Burn (cont.)?
Operational and Reputational ChallengesOperational and Reputational Challenges Data analysis and data qualityData analysis and data quality Relationships with providersRelationships with providers Negotiations with vendors (e.g., CROs)Negotiations with vendors (e.g., CROs) Protection of trade secretsProtection of trade secrets Public opinionPublic opinion Organizational change managementOrganizational change management
19
The enactment of many public disclosure regulations The enactment of many public disclosure regulations threatens to change how the public views the relationship threatens to change how the public views the relationship between HCPs and Life Sciences (between HCPs and Life Sciences (““LSLS””) manufacturers) manufacturers
Ultimately this shift in public perception could force LS Ultimately this shift in public perception could force LS manufacturers and their competitors to change, possibly manufacturers and their competitors to change, possibly significantly, their gosignificantly, their go--toto--market strategymarket strategy
Operating and Strategic ConsiderationsOperating and Strategic Considerations
20
What are the What are the ““whatwhat--ifif”” scenarios after government scenarios after government disclosure regulations are enacted and what are their disclosure regulations are enacted and what are their relative likelihood of occurring?relative likelihood of occurring?
Which product lines and HCP segments are most at risk Which product lines and HCP segments are most at risk from the public disclosure regulations?from the public disclosure regulations?
What current sales and marketing operations could be What current sales and marketing operations could be impacted by these scenarios?impacted by these scenarios?
What external factors influence these scenarios and what What external factors influence these scenarios and what can be done now to procan be done now to pro--actively monitor the situation on actively monitor the situation on the ground and prepare for the future?the ground and prepare for the future?
Operating and Strategic ConsiderationsOperating and Strategic ConsiderationsKey Questions to InvestigateKey Questions to Investigate
21
Aggregate spend tracking requirements have Aggregate spend tracking requirements have necessitated the development of processes and systems necessitated the development of processes and systems to track aggregate spending at an enterprise levelto track aggregate spending at an enterprise level
Most life sciences companies have experienced Most life sciences companies have experienced significant implementation challenges, since very few significant implementation challenges, since very few organizations had existing systems and processes that organizations had existing systems and processes that were interoperable at the enterprise levelwere interoperable at the enterprise level
Most systems were historically designed and Most systems were historically designed and implemented to meet very specific functional needs or implemented to meet very specific functional needs or departmental requirements (e.g., sales force automation, departmental requirements (e.g., sales force automation, grants management, T&E, etc.). As a result, capturing all grants management, T&E, etc.). As a result, capturing all data necessary for reporting represents a challenge for data necessary for reporting represents a challenge for most life science organizations most life science organizations
Aggregate Spend Reporting and TrackingAggregate Spend Reporting and Tracking
22
Aggregate Spend Tracking & Reporting Aggregate Spend Tracking & Reporting Common Implementation ActivitiesCommon Implementation Activities
IMPLEMENTATION PROCESS
Customer Master
Gainunderstanding of systems and processes
Determine all channels where payments may occur
Systems and
Processes
Identify touch-points with HCPs and HCOs across all key functional areas
Develop complete inventory of activities and expenditure typespoints
TouchPoints
Map the touch-points to the current Business Systems and processes
Mapping
Identify notable gaps between the current process assessment and inventory
Develop a vision for the company’s tracking
Analysis
Update/Acquire Customer Master so all HCPs can be uniquely identified and aggregated
Customer Master
23
Aggregate Spend Reporting and Aggregate Spend Reporting and Tracking Tracking –– Touch PointsTouch Points
To fully comply with payment disclosure requirements, To fully comply with payment disclosure requirements, manufacturers must identify all of the circumstances manufacturers must identify all of the circumstances under which healthcare entities are given payments, gifts under which healthcare entities are given payments, gifts or other economic benefitsor other economic benefits
Many manufacturers have found, however, that HCP Many manufacturers have found, however, that HCP spending is widely spread across the organization and is spending is widely spread across the organization and is tracked in a variety of systemstracked in a variety of systems
24
Aggregate Spend Reporting and Aggregate Spend Reporting and Tracking Tracking –– Touch Points (cont.)Touch Points (cont.)
Field Sales(Non-
Distributor)
Field Sales(Non-
Distributor)
Medical & Clinical Affairs
Medical & Clinical Affairs
MarketingMarketingThird-Party
Vendors
Third-Party
Vendors
MealsMeals
GiftsGifts
GrantsGrants
Practice Aids
Practice Aids
Advisory Boards
Advisory Boards
Consulting Services
Consulting Services
Publications & Speaking
Publications & Speaking
Medical Education
Medical Education
Sam
ple
Fo
cus
Are
as
Identifying HCP Spending Across CompanyIdentifying HCP Spending Across Company
Meals/GiftsMeals/Gifts
Peer to Peer Meetings
Peer to Peer Meetings
Advisory Boards
Advisory Boards
Consulting Services
Consulting Services
Travel & Hospitality
Travel & Hospitality
Service Fee Payments
Service Fee Payments
Consulting Services
Consulting Services
25
Proactive Compliance Management Proactive Compliance Management
As‐Is / To‐Be Strategy
Gap Analysis to determine issues across various division / functions in an organization
Roadmap created to blueprint next steps
Most effective use of commercial budget
Promotional Mix Optimization with rich “Reporting” data
ON‐GOING PLANNING
“How do we continually determine spend?”
REPORTING
“How do we report spend?”
PREDICTIVE
“How do we spend more effectively?”
Business Process Analysis
Customer Touch Point Identification
Customer Master Integration
Aggregate Spend Reporting Tool Implementation
Sales & Marketing Decisioning
Commercial Data Center of Excellence (CoE)
STEPS
OUTCOMES
Transparency and Visibility for Ethics & Compliance
Seamless integration of tools needed for reporting processes
Scalability of solution to handle pending and future state and federal legislation
26
Business Unit Responsibility Business Unit Responsibility
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
Source: Huron Consulting Group Survey
27
Current Methods Used To Satisfy Current Methods Used To Satisfy Reporting Reporting
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Source: Cegedim Relationship Management 2011 Survey
28
Planned Reporting Methods For New Laws Planned Reporting Methods For New Laws
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Source: Cegedim Relationship Management 2011 Survey
29
Confidence That Reporting Is Fully Compliant Confidence That Reporting Is Fully Compliant
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
Very Confident Somewhat Confident
Neutral Not Very/Not at All Confident
Source: Cegedim Relationship Management 2011 Survey
30
Level of Concern In Preparing for Sunshine Provisions Level of Concern In Preparing for Sunshine Provisions
6.00
6.20
6.40
6.60
6.80
7.00
7.20
7.40
Proper ID of Spend Recipients
Collecting All Relevant Spend
Data
Data Integrity Certification Before Posting
Handling Inquiries Post
Posting
Source: Cegedim Relationship Management 2011 Survey. Scale 1 to 10 (10 highest)
31
Determining who Determining who ““ownsowns”” aggregate spend reporting and aggregate spend reporting and tracking within the organization tracking within the organization
Development of standard operating proceduresDevelopment of standard operating procedures
Employee EducationEmployee Education
TrainingTraining
Compliance auditing and monitoring activitiesCompliance auditing and monitoring activities
Operational Challenges Operational Challenges
32
Despite enforcement actions against manufacturers, many Despite enforcement actions against manufacturers, many providers believe they are immune to enforcement providers believe they are immune to enforcement initiatives in this area or have not focused attention to these initiatives in this area or have not focused attention to these risksrisks
Enforcement agencies and counsel representing patients in Enforcement agencies and counsel representing patients in private law suits have begun to broaden their focus on private law suits have begun to broaden their focus on providers with regards to conflicts of interest with providers with regards to conflicts of interest with physiciansphysicians
All providers need to develop and enhance their physician All providers need to develop and enhance their physician conflicts of interest policies; however, a growing number of conflicts of interest policies; however, a growing number of providers, in particular academic medical centers, have providers, in particular academic medical centers, have enhanced this processenhanced this process
Potential Provider Implications Potential Provider Implications
33
As a result of increased regulation and based on recent As a result of increased regulation and based on recent vendor settlements with the government, providers also vendor settlements with the government, providers also need to develop a comprehensive and effective compliance need to develop a comprehensive and effective compliance program for their organization in connection with potential program for their organization in connection with potential physician conflicts of interestsphysician conflicts of interests
Provider Implications (cont.)Provider Implications (cont.)
34
Concluding ThoughtsConcluding Thoughts
Questions & AnswersQuestions & Answers
35
Contact InformationContact Information
Gary KeiltyHuron Healthcare
gkeilty@huronconsultinggroup.com813.309.1139
David SclarRopes & Gray LLP
David.Sclar@ropesgray.com212.596.9660
Andrew VanHauteAdvaMed
AVanHaute@advaMed.org202.434.7225
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