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What’s the Risk?Consulting Agreements with Vendors and Suppliers

2012 HCCA Compliance InstituteApril 30, 2012

Session 301Sara J. Herron, RN, MPH, Vice President, Acting Chief Compliance and Privacy Officer

Carrie Raines, MHA, Director, Corporate Compliance

Goals

1. Understand the importance of reviewing consulting agreements in the context of conflict of interest

2. Understand how to design or update policies and guidelines to support a formal consulting agreement review process

3. Understand how to establish a formalized process for consulting agreement reviews

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Consulting Agreements Defined

• Healthcare providers’ collaboration with industry can be valuable• Advances medical science• Benefits to patient care• Development of new technologies and products

• The risks involved with this collaboration stem from the compensation arrangements (often substantial), which may include • Stock options• Royalty agreements• Consulting agreements• Research grants

• The DOJ and OIG report viewing consulting agreements “with suspicion because of the potential conflict of interest that they create for physicians in contravention of the federal Anti-Kickback Statute (AKS).”**Physician Organizations Practice Group section newsletter published by the American Health Lawyers Association Newsletter August 4, 2010

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Common Consulting Activities

• Medical consulting for pharmaceutical or device manufacturers

• Speaker program contributor• Speaker training meetings• Marketing / Promotion activities• Product development• Education and training• Proctoring• Preceptorships• Advisory Boards / Focus Groups

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So what’s the risk?

• Drug Companies Hire “Troubled Doctors” as Experts

• - NPR Staff and ProPublica, October 19, 2010

• “ProPublica created a comprehensive database that represents the most accessible accounting yet of payments to doctors. Compiled from disclosures by seven companies, the database covers $257.8 million in payouts since 2009 for speaking, consulting and other duties.”

• Companies included in database: Lilly, Cephalon, AstraZeneca, GlaxoSmithKline, Johnson & Johnson, Merck and Pfizer.

• Searchable database provides brief description of types of services provided by physicians and provides payee information.

• The report highlighted certain physicians as being “troubled” or “not qualified” as well as others who were board-certified and considered thought leaders in their respective fields.

Increased disclosure of physicians’ relationships with pharmaceutical and device companies means heightened

scrutiny of such relationships to ensure compliance with legal requirements

such as Stark and Anti-Kickback.

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Carolinas HealthCare System – Who We Are

• 34 Affiliated Hospitals in NC and SC

• 2000+ Employed Physicians and Midlevel Providers

• 500 Care Locations

• 6300 Licensed Beds

• 48,000 Employees

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Where We Began (2003)

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Evolution of COI Management at CHS2004 – Present

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2002 PhRMA Code 2008 Revision

Financial payment when there is a written contract and legitimate need for and appropriate use of services.

• Social and entertainment events must be clearly subordinate in time and emphasis

• Criteria for selecting consultants must be directly related to the identified purpose.

•Modest meals or receptions during company‐sponsored meetings

•Payment for bona fide consulting or advisory arrangements

•Reasonable, fair market value compensation and reimbursement

Honoraria, or travel/lodging expenses paid to non‐faculty and non‐consultant attendees at meetings

•Payments for “sham” consulting or advisory agreements

•Consulting arrangements intendedas inducements or rewards for prescribing a particular medicine or course of treatment

ALLOWABLE

UNALLOWABLE

PhRMA Code Guidelines on Interactions with Healthcare Providers (Revised 2008)Consulting Fees

Compliance Environment Update:Notable Settlements and Events

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2006 Medtronic$40 million settlement to resolve allegations that it provided improper incentives to physicians

2008 Eli LillyFirst drug company to voluntarily disclose payments to physicians

2008 Cephalon$425 million settlement and 5-year CIA to resolve allegations of off-label promotion

2009 Eli Lilly$1.4 billion settlement and CIA to resolve allegations of off-label promotion

2011 Medtronic$23.5 million settlement to resolve allegations ofillegal kickbacks to physicians.

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Where We are Today (eForm)

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2010 Program Enhancement: Annual Conflict of Interest Disclosure eFormEmployee Benefits Compliance Department Benefits

Accessibility: Accessible through Synapse

Data collection: Utilize eForm Administration platform to view/print submissions.

Familiarity: Similar to other eForms used by all employees (OSR, PTO, etc.)

Review process: Ability toelectronically approve/reject form and supply response to user.

Ease of Use: Completion and submission of form improved through links to policy references, e-signature functionality, and help document with FAQs.

Reporting: Improved reporting capabilities from electronic platform will increase efficiency in tracking and reporting.

Future benefits: User can “copy” historical (2010) disclosure form data and update for current year (2011).

Overall improved efficiency: Distribution, tracking, follow-up, and analysis will be improved by electronic platform.

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2010 Conflict of Interest Policy Revision• Four existing policies merged:

• Conflict of Interest

• Business Gifts and Gratuities

• Conflicts of Interest and Conflicts of Commitment in Research

• Consulting Agreement Review Policy

• Benefits:

• Improved consistency of definitions, policy applicability and application

• Addition of Consulting Agreement Review Policy and Procedure:

• Heightened awareness of review process and requirements

• Incorporated into the Compliance Program policies

• Added element of accountability (through disciplinary action)

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Consulting Agreement Review Process

• Physician accountability for reviewing the contract

• Requires management review and preapproval

• Requires Corporate Compliance review and preapproval

• Allows for Office of General Counsel review and preapproval (as needed)

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Consulting Agreement Review and Approval Process Flowchart*

*Refer to Handout A

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Utilize a Review Checklist*

*Refer to Handout B15

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Case Study #1(Refer to “Agreement for Consulting Services” Handout)

A1

A2

A3

B1

B2

C3

E1

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B3

B4

C2

D1

D2

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Case Study #2(a) & 2(b)(Refer to “Master Services Agreement” and Letter)

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Challenges of Consulting Agreement Review

• Raising awareness about the process

• Holding physicians and their management teams accountable

• Reviewer is at the mercy of the employee to report

• Organizational hierarchies

• Communicating with the vendor representatives (as needed)

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Keys to Success

• Know your resources.

• Initiate review early to allow plenty of time for follow-up and questions (customer service).

• Be consistent in your guidance (a policy helps).

• Be organized so you can know which physicians are affiliated with which organizations.

• Tie your Consulting Agreement Review Process in with your Conflict of Interest Disclosure Review Process.

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What’s on the horizon…

• Physician Payment Sunshine Act

• Growing trend of health systems partnering with industry

• Savvier health care consumers

• More aggressive industry sponsors

• Increasing number of Corporate Integrity Agreements with Industry

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Considerations for Your OrganizationPolicy Development

1. Will we allow payment for travel time?

2. Will we allow training of vendor personnel?

3. What do we consider bona fide educational activities?

4. What’s the difference between marketing, promotions and sales?

5. How detailed will we be in our reviews?

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Considerations for Your Organization Implementation & Monitoring

1. How do we hold physicians accountable for reading the contracts?

2. If a physician doesn’t accept compensation for her services, is the risk minimized?

3. Will we allow payment for time/services which overlap a procedure for which the physician is already being compensated?

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Closing and Questions