Slides on Compliance with PPACA Sunshine Provisions

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

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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

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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

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PPACA Applicability/RequirementsPPACA Applicability/RequirementsTRANSACTIONS ($)

Payments or Transfers of Value

$

(Minus Exclusions)

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PPACA Applicability/RequirementsPPACA Applicability/Requirements

DISCLOSURE

Payments or Transfers of Value

Disclose PostedOnline

(Minus Exclusions)

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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

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– 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):

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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””

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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

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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

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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

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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””**

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20122012

End of first reporting period

12/3

1/12

1/1/

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Beginning of first reporting period and preemption of state laws

Date

TBD

CMS issues final regulations (Maybe)

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20132013

HHS will make information public through a website

9/30

/13

3/31

/13

First manufacturer report due (covering 2012 transfers of value)

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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)

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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%


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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


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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)

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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

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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

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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.)

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Concluding ThoughtsConcluding Thoughts

Questions & AnswersQuestions & Answers

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Contact InformationContact Information

Gary KeiltyHuron Healthcare

[email protected]

David SclarRopes & Gray LLP

[email protected]

Andrew VanHauteAdvaMed

[email protected]

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