June 12, 2013 4:10 pm
This article is provided to FT.com readers by BioPharm Insight—a news service focused on providing insight into the most price sensitive issues in the global pharmaceutical market. www.biopharminsight.com
Drug and device companies as well as physicians may come under federal law enforcement scrutiny next year when the Centers for Medicare & Medicaid Services (CMS) publicly discloses payments doctors receive from the industry, according to people following the issue. The stakes are particularly high, since public reporting of such data – some of which may be erroneous – could result in tarnished reputations for some providers, they noted.
Companies are scrambling to create data collection systems by 1 August that comply with a template the federal government revised as recently as last month, said Michaeline Daboul, CEO and president, MMIS, an online-technology provider, and the other industry experts interviewed. Even though Congress passed the Physician Payment Sunshine Act in March 2010 as part of healthcare reform, the CMS did not issue final regulations until February 2013, Daboul explained.
Thus, some providers are still figuring out how to aggregate payment information and put it into the proper format, while others are retooling systems they invested thousands of dollars into years ago, she added.
Some physicians are not familiar with the details of the new rules, added a Senate aide involved in crafting the sunshine law. A significant minority of physicians are also not aware of the fact that a company might be reporting their income in a publicly listed manner, the aide said.
The sunshine law requires US pharmaceutical, biologic and device manufacturers with products covered by Medicare, Medicaid or the Children’s Health Insurance Program to begin tracking certain payments of USD 10 or more to physicians and teaching hospitals. Smaller payments must also be reported if they combine for a total of USD 100 or more in a calendar year.
Specifically, manufacturers of covered drugs, devices, biologicals and medical supplies are required to submit, on an annual basis, information about certain payments or other transfers of value made to physicians and teaching hospitals during the course of the preceding calendar year, according to an MMIS brief. Applicable manufacturers and group purchasing organizations (GPOs) must also report certain information regarding the ownership or investment interests held by physicians or the immediate family members of physicians.
Where the outliers are
The CMS will begin publishing payment data in September 2014, but it remains largely unclear how the agency will present the payment information. Specifically, there are concerns about how the CMS will benchmark or compare various data points, Daboul said.
Payments seen as outliers may be perceived as kickbacks and invite scrutiny by the Department of Justice (DoJ) or the Office of Inspector General (OIG) in the US Department of Health and Human Services, the interviewed specialists said. Either agency can take the lead in pursuing suspected violations of the antikickback statute, agreed an OIG spokesperson. “As far as whether payments will be viewed as kickbacks, that is evidently a possibility,” he said.
Information posted to the CMS site “would not be sufficient in and of itself to bring any kind of legal case,” the OIG spokesperson said, but the data could be cause for further investigation. It is “certainly fair to assume that DoJ and the OIG will be taking a look” at the information, noted Andrew Van Haute, associate counsel, Advanced Medical Technology Association, a medical technology trade group. However, he added, the sheer act of disclosure does not mean investigations are warranted.
By and large, physician-company interactions are appropriate and can advance patient care and innovation, Van Haute said. Aside from patients and the general public, it is unclear who will have an interest in using the data, he added.
Manufacturers and healthcare providers could face multiple sources of scrutiny, countered Lewis Morris, former OIG chief counsel. The published data will likely be of interest to “whistleblowers and investigative reporters and law enforcement,” among other groups, he said.
This attention could be unjustified for those “outliers that really aren’t outliers and are just a matter of information being put into the wrong category,” pointed out Morris, who is now an attorney at Adelman, Sheff & Smith.
Amid fears of wide-ranging scrutiny, there is hope among drug and device companies that their payments will not be considered outliers when announced, said Mark Linver, managing director, drug consulting group Huron Life Sciences.
Toward that end, firms are struggling to ensure that all payment information is classified properly and cleanly. Some firms have proper systems in place, but others do not, Linver said.
Analyzing, fast and slow
Manufacturers and providers will have a 45-day period in which to dispute payment data, said Linver, Daboul and the Senate aide. That may not be enough time for the CMS to review potentially thousands of disputed transactions, though, they noted. The average physician has relationships with seven companies, Daboul said.
After the 45-day dispute period, parties reporting data to the CMS have an additional 15 days to submit revised data to the agency, noted David Sclar, healthcare attorney in the life sciences practice group at Cooley.
If the parties cannot reach a timely resolution to the dispute, the CMS will publish the originally submitted data and mark it as “disputed,” Sclar said.
Disputed information, though, could open drug and device developers to physician lawsuits, Daboul noted. Van Haute said he has not been contacted about legal concerns related to Sunshine data disclosure.
A CMS spokesperson said the 45-day period will allow enough time to resolve payment disputes. “This timeline, as defined in the final rule, will provide manufacturers and CMS time to address operational and implementation issues in a thoughtful manner, and the ability to ensure the accuracy of the data that is collected and released publicly,” the spokesperson said.
Applicable manufacturers and GPOs must notify the CMS immediately upon discovering errors or omissions in their reports and must then submit the corrected information as soon as possible, the MMIS brief states. The CMS will update its website at least once annually with corrected information.
There is broad understanding that Sunshine implementation will involve some complications, according to Morris. Based on his conversations with the DoJ and the OIG, he said it is unlikely that enforcers “are going to be handing out traffic tickets the first day that the rule goes into effect.”
Morris also cautioned government officials, industry attorneys and other interested parties against making snap judgments immediately after the CMS posts the data.
“There are some extremely well-reimbursed physicians and experts who earn every penny of it,” Morris said.
For more information or to inquire about a trial please email firstname.lastname@example.org or call Americas: +1 212-500-1384 or Europe: 44 (0)20 7059 6202
Copyright The Financial Times Limited 2014. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.