Life Science Compliance Update

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July 17, 2013

Physician Payment Sunshine Act: Open Payment - Questions and Answers by Topic Category

 Updated: October 30th, 2013: As we have reported numerous times, the Centers for Medicaid and Medicare Services issued answers to the many questions that interested parties have asked about Open Payments (Physician Payment Sunshine Act). You can find our previous stories here:

The following CMS "Frequently Asked Questions" and their subsequent answers are posted below in categories organized by the question's subject matter. Note: Some questions are listed under multiple topic areas. This should help companies and other interested parties find the answers to the questions that affect them.

APPLICABLE MANUFACTURER 

NEW! An entity leases employees to an applicable manufacturer for operational purposes, and continues to pay all salaries for the leased employees. Would this assistance and support be enough to consider the entity an applicable manufacturer if the entity is also under common ownership with the applicable manufacturer? (posted October 2013)

Yes, the act of an entity leasing employees to an applicable manufacturer that it is also under common ownership with may constitute assistance and support necessary to consider the entity an applicable manufacturer if the service or services provided by the employees that are leased are necessary or integral to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale or distribution of a covered drug, device, biological or medical supply.

NEW! Does Open Payments require an entity to report payments or other transfers of value provided to covered recipients or physician owners or investors retroactively once the entity becomes an applicable manufacturer, once the entity has a least one covered drug, biological, device or medical supply? (posted October 2013)

No, Open Payments does not require retroactive reporting. Entities determined to be applicable manufacturers because they have least one product that became a covered drug, have a grace period of 180 days following a drug, device, biological or medical supply becoming covered to begin complying with the data collection and reporting requirements.

NEW! Are all applicable manufacturers and applicable group purchasing organizations required to register for Open Payments? (posted October 2013)

No, only applicable manufacturers and applicable group purchasing organizations that have reportable payments or other transfers of value, ownership or investment interest, or both are required to register.

Will CMS issue opinions exempting applicable manufacturers or applicable group purchasing organizations from Open Payments reporting requirements? (New Aug. 8, 2013)

No, CMS is not issuing advisory opinions exempting applicable manufacturers or applicable group purchasing organizations from Open Payments reporting requirements.

Is there a required relationship between the "applicable manufacturer" of a covered device and the entity that provides "necessary and integral assistance or support"?  

An entity can be considered an applicable manufacturer under prong 2 of the definition at 42 C.F.R. § 403.902 if it is under common ownership with an applicable manufacturer under prong 1 of the definition, and it provides assistance or support to the prong 1 applicable manufacturer with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered drug, device, biological or medical supply. "Common ownership" refers to circumstances where the same individual, individuals, entity, or entities directly or indirectly own 5 percent or more total ownership of two entities, including, but not limited to, parent corporations, direct and indirect subsidiaries, and brother or sister corporations. A prong 2 applicable manufacturer is only required to report payments or other transfers of value that are related to a covered drug, device, biological, or medical supply for which it provided assistance or support to the prong 1 applicable manufacturer under common ownership.

Is leasing included in the actions that constitute "assistance or support" to determine if an entity is considered an applicable manufacturer under prong 2 of the definition for an applicable manufacturer at 42 C.F.R § 403.902?  (New Aug. 8, 2013)

Assistance or support, as defined at 42 C.F.R § 403.902, is conduct that is necessary or integral to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered product.  An example of assistance or support considered necessary or integral, would be an entity that produces the active ingredient for a covered drug, which is then included in the final product.  (78 Fed. Reg. 9463) Based on the limited information supplied in this question, it is difficult to determine whether the provision of a leasing device constitutes assistance or support.  However, leasing a device may constitute assistance or support if supplying the device would be necessary or integral to the applicable manufacturer who could not produce the product without the leased device.

The definition of an applicable manufacturer excludes distributors or wholesalers that do not hold title to any covered drug, device, biological or medical supply. What is the meaning of "hold title" in this context?

A distributor holds title to products once it takes ownership of a particular inventory of products from the seller and possesses the right to re-sell the inventory of the products that it has purchased. Holding title to a covered product in this context is distinct from holding FDA approval, licensure or clearance for a covered product.

Distributors and wholesalers (which include repackagers, relabelers, and kit assemblers) that hold title to a covered drug, device, biological or medical supply meets the definition of an applicable manufacturer. Distributors and wholesalers that do not hold title of a covered product will not be subject to the reporting requirements, unless they are under common ownership with an applicable manufacturer and provide assistance or support with respect to a covered drug, device, biological, or medical supply.

Applicable manufacturers with less than total (gross) revenue have limited reporting requirements regarding payments or other transfers of value provided to covered recipients. Does total (gross) revenue include both domestic sales and global sales, or only domestic sales?

Both domestic and global sales are included in the company's total (gross) revenue. Applicable manufactures with less than 10 percent of total (gross) revenue from covered drugs, devices, biological or medical supplies during the previous fiscal year are required to report only payments or other transfers of value specifically related to covered drugs, devices, biologicals or medical supplies. Applicable manufacturers with less than 10 percent of total gross revenue from covered products during the previous year must register with CMS and attest that less than 10 percent of total (gross) revenues are from covered products, along with their attestation of the submitted data.

Is a blood center an applicable manufacturer?

Yes, a blood center is considered to be an applicable manufacturer if the blood center operates in the United States and is engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply covered by Medicare, Medicaid, or CHIP. Additionally, a blood center is considered to be an applicable manufacturer if the blood center is under common ownership, as defined in 42 CFR 403.902 with an applicable manufacturer, and the blood center provides assistance or support to the applicable manufacturer. Assistance and support provided by the blood center to the entity must pertain to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale or distribution of a covered drug, device, biological, or medical supply. A covered drug or biological is any drug or biological for which: (1) Payment is available under Medicare, Medicaid, or the Children's Health Insurance Program (CHIP), either separately (such as through a fee schedule or formulary) or as part of a bundled payment (such as under a hospital inpatient /outpatient prospective payment system; and (2) Requires a prescription to be dispensed.

Are entities currently in the research and development phase for drugs which, are at the time not approved by the FDA, subject to Open Payments reporting requirements?

An applicable manufacturer, as defined by 42 CFR 403.902, is an entity that is engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply, or is under common ownership with an applicable manufacturer and provides assistance or support to such entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale or distribution of a covered product. A covered drug is any drug for which (1) payment is available under Medicare, Medicaid, or the Children's Health Insurance Program (CHIP), either separately (such as through a fee schedule or formulary) or as part of a bundled payment, and (2) requires a prescription to be dispensed

The question of whether you fall within the definition of an "applicable manufacturer" depends in part on whether payment is available for any of your products under Medicare, Medicaid, or CHIP. While most products for which payment is available under these programs will have already received FDA clearance or approval, there are some exceptions. See 78 FR 9465. For that reason, we did not set FDA approval or clearance as a bright line test for determining whether a product is considered to be a "covered" product. If payment is not currently available under Medicare, Medicaid, or CHIP for your product at this time, then you would not be considered an applicable manufacturer for purposes of the reporting requirements; however, if payment is available (for example, under the Medicare Clinical Trial Policy), then you would be considered an applicable manufacturer. Note that the preamble addresses the situation where an entity with no covered products becomes an applicable manufacturer because, for example, its only product receives FDA approval. See 78 FR 9463. In that situation, an entity has a grace period of 180 days following its product becoming "covered" to begin complying with the data collection and reporting requirements.

Is a manufacturer of dental alloys considered an applicable manufacturer for purposes of Open Payments?  Are payments or other transfers of value provided to dental labs reportable or only payments or other transfers of value provided to dentists? (New Aug. 8, 2013)

A manufacturer of dental alloys is considered an applicable manufacturer, as defined by 42 C.F.R  § 403.902, if it is an entity that is engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply (prong 1 of the definition).  Additionally, a manufacturer of dental alloys is considered an applicable manufacturer if all of the following criteria are met: the manufacturer of dental alloys provides assistance or support to an entity that meets prong 1 of the definition of an applicable manufacturer of a covered drug, device, biological, or medical supply; the manufacturer of dental alloys and the entity are under "common ownership" (as defined in 42 C.F.R. § 403.902); and the manufacturer of dental alloys' act of providing alloys to the entity constitutes "assistance or support" to the entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered drug, device, biological or medical supply. 

The final rule defines assistance or support as being necessary or integral to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered product.  As an example of assistance or support that would be considered necessary or integral, the preamble mentions an entity that produces the active ingredient for a covered drug, which is then included in the final product.  (78 Fed. Reg. 9463.)  It seems likely that a manufacturer of dental alloys under common ownership with an applicable manufacturer, which provides alloys that is included in the final product, would be considered to be providing necessary and integral support with respect to the production of that product.  Similar to the example in the preamble, supplying alloys would be necessary or integral since the applicable manufacturer could not produce the product without it. 

CME PROGRAMS

NEW! Is a meeting a reportable event if an applicable manufacturer located in the United States conducts the meeting in a foreign country? (posted October 2013)

Yes. Any payments or other transfers of value provided by an applicable manufacturer to covered recipients (or physician owners or investors), wherever made, are required to be reported.

NEW! Is the loan of a covered device by an applicable manufacturer for training purposes at a CME or non-CME event considered a payment or other transfer of value to covered recipients? (posted October 2013)

No. A loan of a covered device by an applicable manufacturer for training purposes at a CME or non-CME event is not considered a payment or other transfer of value provided to a covered recipient if the device was loaned to the CME vendor for training covered recipients at a CME event and the covered recipient did not take possession of the covered device.

NEW! If an applicable manufacturer provides compensation to a non-US speaker for a CME in the US, does the payment or other transfer of value provided to the speaker need to be reported? (posted October 2013)

Yes. If the non-US speaker meets the definition of a physician covered recipient and the event does not meet the criteria specified at 42 C.F.R § 403.904(g)(ii)-(iii) the payment or other transfer of value provided to the speaker needs to be reported, unless the non-US speaker is a physician employee of the applicable manufacturer. In the latter case, the physician employee would have to fulfill the definition of employee as set forth at Section 1877(h) of the Social Security Act.

Are payments provided as compensation to speakers at CME events run by CME providers that that are accredited or certified by accreditation or certification bodies other than those enumerated in 42 CFR § 403.904(g)(1)(i) eligible for the exclusion from reporting (assuming they also meet the other requirements for exclusion in § 403.904(g)(1))?

No, the list of accrediting or certifying bodies in the final rule at 42 CFR § 403.904(g)(1)(i) is exhaustive; in order to qualify for the exclusion in § 403.904(g)(1), CME events must be run by CME providers that are accredited or certified by one of the accreditation or certification entities in § 403.904(g)(1)(i) and, accordingly, meet the accreditation or certification requirements and standards of any of those specific entities.

Payments to speakers at CME events that are not run by CME providers accredited or certified by one of the entities in § 403.904(g)(1) -- or that don't meet either or both of the other two requirements for exclusion in § 403.904(g)(1) -- are reportable payments or other transfers of value for Open Payments. We will consider modifications to this provision in possible future rulemaking.

Are payments provided to physicians for speaking at a continuing medical education event reportable?

Speaker compensation at continuing education event such as Continuing Medical Education (CME) conference is not required to be reported by an applicable manufacturer if all of the following criteria are met:

(1) the CME program meets the accreditation or certification requirements and standards of the Accreditation Council for Continuing Medical Education, the American Academy of Family Physicians, the American Dental Association's Continuing Education Recognition Program, the American Medical Association, or the American Osteopathic Association,

(2) the applicable manufacturer does not select or suggest the covered recipient speaker nor does it provide the third party vendor with distinct, identifiable individuals to be considered as speakers for the accredited or certified continuing education programs; AND

(3) the applicable manufacturer does not directly pay the covered recipient speaker.

Are payments for travel, lodging and meals to speakers and faculty of accredited or certified CME events that meet all three conditions established in the final rule included in the total compensations that are exempt from reporting?

Yes. Lodging, travel and meals for speakers of an accredited or certified CME event meeting all three requirements in 42 CFR 403.904(g)(1) will be deemed to be included in the total speaker compensation and, therefore, exempt from reporting under Open Payments. However, travel, lodging and meals and all other natures of payments provided in conjunction with the accredited or certified CME event (with the exception of educational materials included in the tuition fees for an accredited or certified CME program that meets all three exemption conditions, such as handouts, web downloads or printed slides) will need to be reported for physician attendees (who are not speakers).

These payments would need to be reported under the appropriate nature of payment categories, such as food and beverage, travel and lodging, or entertainment, as appropriate. The excluding characteristic for meals is when allocating the cost of the meal among covered recipients in a group setting where the cost of each individual covered recipient's meal is not separately identifiable.

Are educational materials or items associated with an accredited or certified CME program that meets all three conditions, such as slides or handouts, included in the tuition fees for continuing education events excluded from reporting?

Yes. Educational materials that are included in the tuition fees for an accredited or certified CME program that meets all three exemption conditions, such as handouts, web downloads or printed slides, are excluded from reporting under Open Payments provided that the content does not contain any CME sponsor information, the content is related to the CME program, the value is de minimis, and the funds used for the materials came from the same CME program grant.

If an applicable manufacturer supports an unaccredited educational program at a large annual conference and serves buffet meals, but also provides payment for general sponsorship or has an exhibit booth, will the awareness standards be applicable to the buffet meals provided at the unaccredited program?

The question of whether an applicable manufacturer must report a buffet meal provided to physician attendees at an unaccredited educational program taking place at a large annual conference requires a fact-specific inquiry as to whether it is difficult for the manufacturer "to definitively establish the identities of the physicians, who partake in the food or beverage." (78 Fed. Reg. 9479) The preamble explains that the exception in 42 CFR 403.904(h)(2) only applies to situations where an applicable manufacturer provides a large buffet meal, snacks or coffee that are made available to all conference attendees and where it would be difficult to establish the identity of the physicians, who partook in the meal or snack. This exception does not apply to meals provided to select attendees at a conference where the sponsoring applicable manufacturer can establish the identity of the attendees.

CORRECTIONS AND DISPUTES

When can covered recipients and physician owners or investors initiate a dispute?

Covered recipients and physician owners or investors may initiate disputes at any time after the 45 day review and correction period begins, but before the end of the calendar year. Note that any changes resulting from disputes initiated after the 45 day review period may not be made until the next time the data is refreshed. If a dispute is not resolved by 15 days after the end of the 45 day period, we will report the applicable manufacturer or applicable GPO's version of the payment or other transfer of value (or ownership or investment interest), but will mark it as disputed.

Do covered recipients have two years from the date the review and correction period begins to initiate a dispute?

No, covered recipients have only until the end of the calendar year to initiate a dispute. (42 CFR 403.908(g)(3)(v)) For example, if an applicable manufacturer reports to CMS on March 31, 2014 all reportable payments or other transfers it provided to covered recipients during the previous year, covered recipients only have until December 31, 2014 to initiate a dispute.

Are applicable manufacturers or applicable group purchasing expected to resubmit an entire report with corrections and/or updates or should a resubmitted report only reflect the changes from the originally submitted report (i.e., corrected or previously missed payments or transfers of value)?

Applicable manufacturers and applicable group purchasing organizations submitting a report will have the ability to retract and resubmit an entire report, submit corrections to a group of records, retract a group of records, or append a group of records that were omitted from the original report submission. Applicable manufacturers and applicable group purchasing organizations will have the ability to make corrections and additions after the data submission deadline; however, they may be subject to penalties for submitting data after the deadline. Therefore, applicable manufacturers should register and submit data early to ensure correction activities are completed prior to the deadline.

COVERED RECIPIENTS 

NEW! Are applicable manufacturers required to report a physician's name and taxonomy code as listed in the National Plan & Provider Enumeration System (NPPES)? (posted October 2013)

Applicable manufacturers and applicable group purchasing organizations (GPO) are required to report a physician's National Provider Identifier (NPI) and name as listed in NPPES and include first and last name, middle initial, and suffix (for all that apply). Applicable manufacturers and applicable GPOs may use their internal information when reporting a physician's taxonomy code. However, the NPPES provider taxonomy code list should be used as the list of accepted physician specialties.

NEW! Is an applicable manufacturer required to report all taxonomy codes for a physician or just the primary taxonomy codes? (posted October 2013)

Applicable manufacturers will report only one taxonomy code per physician. Additionally, applicable manufacturers may use their internal data to determine a physician's taxonomy code. However, the National Plan & Provider Enumeration System provider taxonomy code list should be used as the list of accepted specialties.

NEW! Is a hospital that is not listed on the Open Payments teaching hospital list considered a teaching hospital covered recipient for purposes of Open Payments? (posted October 2013)

No. A teaching hospital covered recipient for the purposes of Open Payments is defined at 42 C.F.R. § 403.902 as any institution that received a payment under 1886(d)(5)(B), 1886(h), or 1886(s) of the Social Security Act during the last calendar year for which such information is available. The teaching hospital list posted at http://go.cms.gov/openpayments is the final list of all teaching hospital covered recipients for the purposes of Open Payments for the reporting year specified on the list, and the list will be refreshed every year.

NEW! How should an applicable manufacturer report a payment or other transfer of value provided to a teaching hospital that is on the Open Payments teaching hospital list if the applicable manufacturer refers to the teaching hospital by a different name or the manufacturer's internal records have a different address? (posted October 2013)

An applicable manufacturer must report identifiers for a teaching hospital as they appear on the teaching hospital list. If there are minor discrepancies in the hospital name and/or address, the name and address provided on the teaching hospital list should be used. The reported Taxpayer Identification Number (TIN) must match exactly the TIN provided on the teaching hospital list.

Should applicable manufacturers and applicable group purchasing organizations use the information found in NPPES if they ascertain that their information regarding physicians' unique identifiers is more accurate that what is listed in NPPES? (New Aug. 8, 2013)

Applicable manufacturers and applicable group purchasing organizations may obtain information regarding physicians' unique identifiers from their internal sources however the information must be reported accurately as listed in NPPES.

Is a physician located outside of the United States considered a physician covered recipient for purposes of Open Payments? (New Aug. 8, 2013)

If a physician maintains a current state license to practice medicine in any state in the United States, the physician will be considered a covered recipient for purposes of Open Payments.  Within Open Payments, the term "physician" has the same meaning as under Section 1861(r) of the Social Security Act, which generally includes doctors of medicine, osteopathy, dentists, podiatrists, optometrists and chiropractors who are legally authorized to practice by a state.  A current state license would render the physician "legally authorized" to practice medicine, regardless of the extent to which they do so.  Therefore, a physician who maintains an active license to practice in the United States would be considered a covered recipient, and payments made to such a person would have to be reported, even for services rendered (such as speaking at a public seminar) outside of the U.S.  An exception to this covered recipient classification is when a physician is a bona fide employee of an applicable manufacturer that is required to submit reporting information under subsection (a) of Section 1128G of the Social Security Act.

Are dental schools that are affiliated with universities and health care institutions, but do not match the name or address information provided on CMS' teaching hospital list, still considered teaching hospitals for the purposes of reporting? (New Aug. 8, 2013)

The teaching hospital list compiled by CMS is a complete list of teaching hospital covered recipients.  Applicable manufacturers and applicable group purchasing organizations should collect the TIN from a hospital, or in this case, dental school, that they believe is affiliated with a teaching hospital in order to correctly identify the teaching hospital's name and address from the list.  Additionally, as discussed in the proposed and final rule, a teaching hospital is any institution that received payments under sections 1886(d)(5)(B), 1886(h) or 1886(s) of the Act.

DATA COLLECTED

Will data collection templates be released?

Yes, data collection templates will be released by CMS. The 2013 reporting period data collection templates can be found on the OPEN PAYMENTS website. Please note that the 2013 reporting period data collection templates are currently undergoing final clearance (Paperwork Reduction Act) but the linked templates are what CMS intends to use for 2013 data collection.

Data collection templates for future reporting years will be released for applicable manufacturers and GPOs by October 1 of each year.

Will CMS notify physicians and teaching hospitals that applicable manufactures or applicable GPO's reported data about them?

Physicians, teaching hospitals, and physician owners or investors will receive a general notification when the reported information is ready for review. However, the physician, teaching hospital, and physician owners or physician investors will only receive this notification if

they have previously registered with CMS. We encourage physicians, teaching hospitals, and physician owners or physician investors to register to allow for notification. Additionally, CMS will utilize a general online posting (http://go.cms.gov/openpayments) and notifications on CMS' listserve(s).

DATE OF PAYMENT

If a medical professional society's annual conference is held prior to August 1, 2013 and a physician received a direct payment for consulting or other service, is the date of payment the date of the event?

Applicable manufacturers must report the date that a payment or transfer of value was provided to the covered recipient. In certain circumstances, applicable manufacturers have flexibility to determine the methodology for reporting when the date of the transfer of value was "provided." For example, in the instance of travel benefits, there is flexibility for reporting travel because the purchase date (of airline tickets, for example) may be different than the date the transfer of value is actually "provided" to the covered recipient (i.e., when the physician takes the flight). Applicable manufacturers have some flexibility to choose which payment date they will use in this type of situation; however, the methodology used must be consistent within a single nature of payment category (such as travel).

If a physician provides a consulting or other service prior to August 1, 2013, but an applicable manufacture does not pay the physician for the service until August 1, 2013 or after, such payment would be reported because the payment was provided to the physician after the start of the reporting requirements. Applicable manufactures do not have flexibility to designate the date of the physician's service as the "date of payment." Rather, the date of payment would be the date the applicable manufacturer post-marked the check or funds transfer to the physician to compensate him/her for the services rendered.

DISTRIBUTORS

NEW! Is a distributor required to report food and beverages that are provided during an open house for a new distributorship center opened by a distributor? (posted October 2013)

Yes. If the distributor meets the definition of an applicable manufacturer, as defined by 42 C.F.R § 403.902, food and beverages provided to covered recipients and physician owners or investors are required to be reported. The applicable manufacturer should divide the value of the food by the number of those who partook in the food. The value of the food still needs to be accounted for even if the event is a large scale event as long as the applicable manufacturer can identify the covered recipients of the food.

The definition of an applicable manufacturer excludes distributors or wholesalers that do not hold title to any covered drug, device, biological or medical supply. What is the meaning of "hold title" in this context?

A distributor holds title to products once it takes ownership of a particular inventory of products from the seller and possesses the right to re-sell the inventory of the products that it has purchased. Holding title to a covered product in this context is distinct from holding FDA approval, licensure or clearance for a covered product.

Distributors and wholesalers (which include repackagers, relabelers, and kit assemblers) that hold title to a covered drug, device, biological or medical supply meets the definition of an applicable manufacturer. Distributors and wholesalers that do not hold title of a covered product will not be subject to the reporting requirements, unless they are under common ownership with an applicable manufacturer and provide assistance or support with respect to a covered drug, device, biological, or medical supply.

Is a distributor for an applicable manufacturer responsible for reporting to CMS payments or other transfers of value to health care professionals? (New Aug. 8, 2013)

 If a distributor holds title to any covered drug, device, biological, or medical supply, the distributor meets the definition of an applicable manufacturer as defined at 42 C.F.R. § 403.902, and is subject to Open Payments reporting requirements.  A distributor holds title to products once it takes ownership of a particular inventory of products from the seller and possesses the right to re-sell the inventory of the products that it has purchased.  Applicable manufacturers that have products with titles held by distributors do not need to report payments or other transfers of value made by the distributor to covered recipients.  The distributor that holds title will be subject to the same reporting requirements as applicable manufacturers, and thus will be responsible for reporting the transfer of value.

Are distributions to physician owners of LLC units in a physician owned distributor (POD) considered reportable payments or other transfers of value or are they incidents of ownership and not considered reportable? (New Aug. 8, 2013)

If a POD falls within the definition of an applicable manufacturer or applicable group purchasing organization (or both), then they must report distributions provided to physician owners of LLC units in the POD for purposes of Open Payments. 

What should distributors, which offer a multitude of covered and non-covered products, report in the Product Indicator data element regarding related covered drug, device, biological or medical supply? (New Aug. 8, 2013)

Distributors that are considered applicable manufacturers because they hold title to a covered drug, device, biological or medical supply may report "None" in the Product Indicator indicating that the payment or other transfer of value was not associated with any covered drugs, device, biological or medical supply if the payment or other transfer of value was related to the distributor's full line of products, rather than any specific covered products.

Is a distributor considered an applicable manufacturer if it holds title to devices and drugs and distributes and sells medical devices and drugs from a manufacturer to hospitals and ambulatory surgery centers or covered recipients for use in surgical procedures, and payment for all products is limited to commercial insurance and private payer only? (New Aug. 8, 2013)

An applicable manufacturer, as defined by 42 C.F.R  § 403.902, is an entity that is engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply, or is under common ownership with an applicable manufacturer and provides assistance or support to such entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale or distribution of a covered product or a distributor or wholesaler (including, but not limited to, repackagers, relabelers, and kit assemblers) that do not hold title to any covered drug, device, biological or medical supply.  A "covered device" (including a medical supply that is a device) is any device for which (1) payment is available under Medicare, Medicaid, or the Children's Health Insurance Program (CHIP), either separately (such as through a fee schedule or formulary) or as part of a bundled payment, and (2) by law, requires premarket approval by or premarket notification to the FDA. 

The question of whether a distributor falls within the definition of an applicable manufacturer, as defined in 42 C.F.R. § 403.902, depends in part on whether payment is available for any of the distributor's products under Medicare, Medicaid, or CHIP.  A distributor is not considered an applicable manufacturer for purposes of Open Payments if the distributor only distributes and sells a manufacturer's medical devices and drugs and payment is not available under Medicare, Medicaid, or CHIP.  However, it is worth noting that under the final rule, if an entity manufactures at least one covered drug, device, biological, or medical supply, then it qualifies as an applicable manufacturer and must report all payments or transfers of value to covered recipients, regardless of whether or not they are related to a covered product.  Similarly, if a distributor distributes at least one covered drug, device, biological or medical supply, then it qualifies as an applicable manufacturer and must report all payments or transfers of value to covered recipients, regardless of whether or not they are related to a covered product.

Is a payment or other transfer of value provided by an applicable manufacturer's distributor to a covered recipient considered a reportable indirect payment if the payment or other transfer of value is from the distributor's own resources and the distributor does not hold title to any of the applicable manufacturer's products? (New Aug. 8, 2013)

Yes, if the applicable manufacturer requires, instructs, directs, or otherwise causes the distributor to provide the payment or transfer of value, in whole or in part, to a covered recipient or a physician owner or investor.

DRUGS AND DEVICES – "Covered Products"

NEW! How should an applicable manufacturer determine which National Drug Code(s) (NDC) to report for a payment or other transfer of value that is associated with a covered drug or biological? (posted October 2013)

Applicable manufacturers and applicable group purchasing organizations are required to report any 10-digit NDC corresponding to the covered drug or biological, which includes the labeler code (assigned by the FDA) and the product and package code (assigned by the labeler) that matches a covered drug or biological that is associated with a payment or other transfer of value. Once reported, Open Payments will identify the associated drug or biological using the provided NDC and provide just the marketed covered drug or biological name on its website.

NEW! Is an applicable manufacturer with both covered and non-covered products required to report payments or other transfers of value associated with a non-covered device, for example a device that is still in its development phase, which does not have pre-market approval by, nor required to have premarket notification to, the FDA and even when the device will only be used in the preclinical laboratory setting and not on humans? (posted October 2013)

Yes, applicable manufacturers of at least one covered drug, device, biological or medical supply are required to report all payments or other transfers of value, unless the applicable manufacturer meets one of the reporting limitations, as described in 42 C.F.R. § 403.904(b); in that case the applicable manufacturer is only required to report payments or other transfer of value related to covered drugs, devices, biological, or medical supplies. Reporting limitations include: (1) applicable manufacturers with total revenue from covered drugs, devices, biological, or medical supplies constituting less than 10 percent of total revenue during the fiscal year preceding the reporting year, (2) an entity meets the definition of an applicable manufacturer because it is under common ownership with such applicable manufacturer and provides assistance and support to such applicable manufacturer, (3) the applicable manufacturer has separate operating divisions that do not manufacture any covered drugs, devices, biologicals or medical supplies, and (4) the applicable manufacturer is only manufacturing a covered drug, device, biological, or medical supply because it is under written agreement to manufacture the covered drug, device, biological, or medical supply, does not hold the FDA approval, licensure, or clearance for the covered drugs, device, biological, or medical supply, and is not involved in the sale marketing, or distribution of the covered drugs, device, biological, or medical supply. In the instance of pre-clinical research, applicable manufacturers only need to report the research institution, principal investigator(s) (including their name, National Provider Identifier, State professional license number(s), specialty and business address) and total payment. See 78 FR 9484.

NEW! What value should an applicable manufacturer assign to clinical study drugs that are provided to principal investigators as part of the research agreement? (posted October 2013)

Applicable manufacturers are not required to assign a specific value to clinical study drugs that are provided to principal investigators, rather applicable manufacturers should report the total amount of the research payment, including all research-related costs for activities outlined in a written agreement, research protocol or both, as specified in 42 C.F.R. § 403.904(f)(1)(ii).

Is a medical device considered eligible for payment by Medicare, Medicaid, or CHIP for purposes of Open Payments reporting requirements if a test performed using the device is eligible for payment, but not the device itself (e.g., MRI machines, CT, x-rays, ultrasounds machines)?

Yes, if a medical device is used to perform a service that is reimbursable under Medicare, Medicaid, or CHIP, the device is considered a covered device for purposes of Open Payments, so long as it is of the type that by law requires premarket approval by or premarket notification to the FDA, per the definition in 42 C.F.R. § 403.902.

Are drugs or biologicals that are reimbursed by Medicare, Medicaid, or CHIP but do not require a prescription and are not over-the-counter products considered covered drugs or biologicals for Open Payments?

Yes, drugs and biologicals that are reimbursable under Medicare, Medicaid, or CHIP and that are not over-the-counter products are considered covered drugs or biologicals for Open Payments. The limiting clause requiring a "prescription to be dispensed" in order for a drug or biological to fall within the definition of a "covered drug, device, biological, or medical supply" in 42 C.F.R. § 403.902 is only intended to exclude over-the-counter (OTC) drugs, not those that require administration or authorization by a physician. 78 Fed. Reg. 9465.

Is study equipment, implantable devices, instrumentation, or other supplies provided to a covered recipient by an applicable manufacturer in connection with a FDA approved clinical trial for use solely in a research project considered a transfer of value?

Yes, payments or other transfers of value made in connection with an activity that meets the definition of research and that are subject to a written agreement, a research protocol or both should be included in the total amount of the research payment. Payments or other transfers of value that are not included in the written agreement or research protocol should be reported separately in the appropriate nature of payment category.

EDUCATIONAL MATERIALS, TEXTBOOKS, JOURNAL REPRINTS

What items or materials are considered education materials and are not reportable transfers of value?

Education materials and items that directly benefit patients or are intended to be used by or with patients are not reportable transfers of value. Additionally, the value of an applicable manufacturer's services to educate patients regarding a covered drug, device, biological, or medical supply are not reportable transfers of value. For example, overhead expense, such as printing and time development of educational materials, which directly benefit patients or are intended for patient use are not reportable transfers of value.

How should applicable manufacturers or applicable group purchasing organization determine the value of journal reprints provided to covered recipients?

The value of a journal reprint should reflect the cost that an applicable manufacturer or applicable group purchasing organization paid to acquire the reprint from the publisher or other distributor. Applicable manufacturers and applicable group purchasing organizations may submit an assumptions document clarifying any assumptions made to determine the value of journal reprints.

Are items or materials used to educate physicians, which may indirectly benefit patients, included in the education materials exclusion?

No, the education material exclusion is limited to materials and items directly benefiting patients or intended for patient use as required by the Affordable Care Act Section 6002. Education materials, such as medical textbooks or journal reprints, that are educational to covered recipients but are not intended for patient use or directly beneficial to patients are not included in the exclusion.

Are educational materials or items associated with an accredited or certified CME program that meets all three conditions, such as slides or handouts, included in the tuition fees for continuing education events excluded from reporting?

Yes. Educational materials that are included in the tuition fees for an accredited or certified CME program that meets all three exemption conditions, such as handouts, web downloads or printed slides, are excluded from reporting under Open Payments provided that the content does not contain any CME sponsor information, the content is related to the CME program, the value is de minimis, and the funds used for the materials came from the same CME program grant.

Is a newsletter created by an ad agency on behalf of a pharmaceutical client that is an applicable manufacturer, consisting of a few journal abstracts on the disease state and information on patient adherence, a reportable payment or other transfer of value?  If so, what "nature of payment" category should the newsletter be reported in?  Additionally, can the ad agency as a third party collect and maintain the physician information that is required for reporting? (New Aug. 8, 2013)

Yes, a newsletter consisting of a few journal abstracts provided to physician covered recipients from an applicable manufacturer (directly or indirectly) is considered a reportable payment or other transfer of value for purposes of Open Payments if the newsletter is valued at $10 or more or the aggregate amount of payments or transfers of value provided to a covered recipient exceeds $100 in a calendar year.  Applicable manufacturers must select the "nature of payment" category that they believe most accurately describes a payment or other transfer of value.  (42 C.F.R. § 403.904(e)(2))  Therefore, applicable manufacturers must select the "nature of payment" category that best describes the provision of the newsletter to a covered recipient.  The "nature of payment" category applicable to newsletters created by advertising or marketing agencies is "gift," depending on the circumstances of the transfer of value.  Third parties, such as an ad agency, can maintain the information collected that is required for reporting by applicable manufacturers.

Is a textbook donation to a medical center library for the general use of all employees reportable? (New Aug. 8, 2013) 

The textbook donation would be considered a reportable event if: 1) The medical center library is part of a teaching hospital; or 2) The donation was an indirect payment or transfer of value to a designated physician or group of physicians.  Payments or other transfers of value provided to a third party at the request of or designated by the applicable manufacturer on behalf of a covered recipient, must be reported in the name of the covered recipient, as well as the name of the entity that received the payment at the covered recipient's request or designated on the covered recipient's behalf according to 42 C.F.R. § 403.904(c)(10).  Additionally, an indirect payment, defined at § 403.902, is a  payment or other transfer of value made by an applicable manufacturer to a covered recipient through a third party, where the applicable manufacturer 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.  However, CMS does not believe that a payment that ultimately is passed on to a covered recipient has to be reported if the applicable manufacturer "did not intend or expect that a covered recipient would receive any portion of the payment or other transfer of value."  (78 Fed. Reg. 9489). 

EMPLOYEMENT RECRUITMENT

Are applicable manufacturers required to report meals, travel, lodging, and other similar expenses made in connection with interviewing prospective employees?

Yes, compensation paid by an applicable manufacturer to a physician for expenses made in connection with interviewing the physician for possible employment is considered a reportable payment or other transfer of value. 

EXEMPTIONS                                                                                             

With respect to the 90-day supplies of single-use/disposable evaluation products that are exempted from reporting, is the 90-day supply calculated on a per-patient basis? Or is it the aggregate supply that would be expected to be used within a 90-day period regardless of the number of patients that are treated?

The 90-day supply should be calculated for exclusion purposes not on a per-patient basis but rather on a per-covered recipient usage basis regardless of the number of patients that are treated during that 90-day period. The Open Payments reporting exclusion for providing a 90-day supply of single-use/disposable devices for the purpose of enabling covered recipients to evaluate the items is limited to the aggregate supply that covered recipients would be expected to use during 90 days of average use.

Note -that there are two exceptions: 1) when an applicable manufacturer or applicable group purchasing organization gives a payment/other transfer of value to an immediate family member of a physician on behalf of or at the request of a physician owner or investor (i.e., a third party payment to the family member), or 2) when the payment is provided to the immediate family member of a physician as an indirect payment to be passed through to the physician. In those two scenarios, the payment or transfer of value to the immediate family member of a physician owner/investor must be reported, regardless of whether or not the immediate family member is also an owner/investor.

For purposes of the 90-day exclusion for a loan of a covered device, does the loan begin when an applicable manufacturer provides the covered device to a covered recipient or when the covered device is first used by a covered recipient? (New Aug. 8. 2013)

The Open Payments reporting exclusion for providing a covered device or device under development for 90 days to permit evaluation of the device or medical supply by the covered recipient begins when an applicable manufacturer provides the covered device to a covered recipient.

If the same medical device is loaned to three different teaching hospitals for a

period of 30 days each is that considered one loan subject to the short term loan

exclusion?   If three identical devices are loaned to three different teaching

hospitals is that considered three separate loans subject to the short term

exclusion? (New Aug. 8. 2013)

The short term loan exclusion to permit evaluation of the device or medical supply by the covered recipient applies on a per-covered recipient basis.  Therefore, if a manufacturer loans a medical device (whether the same device or not) to different teaching hospital recipients, each for a period of 90 days or less, each loan would be eligible for the exclusion in 42 C.F.R. 403.904(i)(5). 

Are free repairs or services, and/or additional training offered by applicablemanufacturers included in the contractual warranty exclusion in 42 C.F.R. 403.904(i)(6) ? (New Aug. 8. 2013)

Repairs or services and/or additional training provided under a contractual warranty (including a service or maintenance agreement) will also be subject to the exclusion, where the terms of the warranty are set forth in the purchase or lease agreement.

Are payments from an applicable manufacturer to covered recipients in order to purchase products or materials considered payments that are reportable under Open Payments -- for example, an applicable manufacturer purchasing materials, such as reagents, from a teaching hospital?

Yes. There is no reporting exclusion for payments made by applicable manufacturers or applicable group purchasing organizations to covered recipients for the purpose of purchasing products or materials. 

FELLOWS AND RESIDENTS

Does the exemption for reporting payments to medical residents also include payments to "Fellows"?

No. The final rule exempted payments to medical residents from the reporting requirements solely due to operational and data accuracy concerns regarding aggregation of payments or other transfers of value to residents, many of whom have neither a National Provider Identifier (NPI) nor a State professional license. Because these same concerns do not generally apply to physicians in Fellowship training, payments to Fellows are not exempt from the reporting requirements.

GROUP PRACTICES

If an applicable manufacturer makes a payment or transfer of value to a group practice rather than a specified physician, how should the applicable manufacturer correctly report the payment or transfer of value? Should the payment be reported in the name of one physician or to all the physicians included in the group practice?

A payment or other transfer of value provided to a group practice (or multiple covered recipients generally) should be attributed to each individual physician covered recipient who requested the payment, on whose behalf the payment was made, or who are intended to benefit from the payment or other transfer of value. Payments or other transfers of value do not necessarily need to be reported in the name of all members of a practice, rather, applicable manufacturers should divide payments or other transfers of value in a manner that most fairly represents the situation.

For example, many payments or other transfers of value may need to be divided evenly, others may need to be divided in a different manner to represent who requested the payment, on whose behalf the payment was made, or who was intended to benefit from the payment or other transfer of value. 

GROUP PURCHASING ORGANIZATION

The final rule states in 42 CFR 403.902 that an "applicable group purchasing organization" is one that purchases, arranges for or negotiates the purchase of a covered product for a "group" of individuals or entities. How many individuals or entities are necessary to be considered a group for the purpose of this definition?

Regarding the definition of "applicable group purchasing organization," a 'group' consists of two or more individuals and/or entities. 

IMMEDIATE FAMILY

Are payments or other transfers of value made, by an applicable manufacturer or applicable group purchasing organization, to a physician's immediate family who hold an ownership or investment interest in an applicable manufacturer or applicable group purchasing organization considered reportable for the purposes of Open Payments?

Generally, no. Pursuant to 42 C.F.R. 403.906(a)(1), applicable manufacturers and applicable group purchasing organizations are required to report annually on ownership and investment interests held by a physician or an immediate family member of a physician. Such ownership and investment interests must be reported under the name of the physician -- even if it is the physician's immediate family member that holds the ownership or investment interest -- with an indication of whether the interest is held by the physician or an immediate family member. Under § 403.906(b), however, applicable manufacturers and applicable group purchasing organizations must report the dollar amount invested by a physician or a physician's immediate family member, but for payments or other transfers of value, they are only required to report those to a physician owner/investor (not to an immediate family member of a physician, who has an ownership/investment interest).

MEALS, TRAVEL, and LODGING

NEW! Is a distributor required to report food and beverages that are provided during an open house for a new distributorship center opened by a distributor? (posted October 2013)

Yes. If the distributor meets the definition of an applicable manufacturer, as defined by 42 C.F.R § 403.902, food and beverages provided to covered recipients and physician owners or investors are required to be reported. The applicable manufacturer should divide the value of the food by the number of those who partook in the food. The value of the food still needs to be accounted for even if the event is a large scale event as long as the applicable manufacturer can identify the covered recipients of the food.

Are payments for travel, lodging and meals to speakers and faculty of accredited or certified CME events that meet all three conditions established in the final rule included in the total compensations that are exempt from reporting?

Yes. Lodging, travel and meals for speakers of an accredited or certified CME event meeting all three requirements in 42 CFR 403.904(g)(1) will be deemed to be included in the total speaker compensation and, therefore, exempt from reporting under Open Payments. However, travel, lodging and meals and all other natures of payments provided in conjunction with the accredited or certified CME event (with the exception of educational materials included in the tuition fees for an accredited or certified CME program that meets all three exemption conditions, such as handouts, web downloads or printed slides) will need to be reported for physician attendees (who are not speakers).

These payments would need to be reported under the appropriate nature of payment categories, such as food and beverage, travel and lodging, or entertainment, as appropriate. The excluding characteristic for meals is when allocating the cost of the meal among covered recipients in a group setting where the cost of each individual covered recipient's meal is not separately identifiable.

If an applicable manufacturer supports an unaccredited educational program at a large annual conference and serves buffet meals, but also provides payment for general sponsorship or has an exhibit booth, will the awareness standards be applicable to the buffet meals provided at the unaccredited program?

The question of whether an applicable manufacturer must report a buffet meal provided to physician attendees at an unaccredited educational program taking place at a large annual conference requires a fact-specific inquiry as to whether it is difficult for the manufacturer "to definitively establish the identities of the physicians, who partake in the food or beverage." (78 Fed. Reg. 9479) The preamble explains that the exception in 42 CFR 403.904(h)(2) only applies to situations where an applicable manufacturer provides a large buffet meal, snacks or coffee that are made available to all conference attendees and where it would be difficult to establish the identity of the physicians, who partook in the meal or snack. This exception does not apply to meals provided to select attendees at a conference where the sponsoring applicable manufacturer can establish the identity of the attendees.

Are applicable manufacturers required to report meals, travel, lodging, and other similar expenses made in connection with interviewing prospective employees?

Yes, compensation paid by an applicable manufacturer to a physician for expenses made in connection with interviewing the physician for possible employment is considered a reportable payment or other transfer of value.

If a medical professional society's annual conference is held prior to August 1, 2013 and a physician received a direct payment for consulting or other service, is the date of payment the date of the event?

Applicable manufacturers must report the date that a payment or transfer of value was provided to the covered recipient. In certain circumstances, applicable manufacturers have flexibility to determine the methodology for reporting when the date of the transfer of value was "provided." For example, in the instance of travel benefits, there is flexibility for reporting travel because the purchase date (of airline tickets, for example) may be different than the date the transfer of value is actually "provided" to the covered recipient (i.e., when the physician takes the flight). Applicable manufacturers have some flexibility to choose which payment date they will use in this type of situation; however, the methodology used must be consistent within a single nature of payment category (such as travel).

If a physician provides a consulting or other service prior to August 1, 2013, but an applicable manufacture does not pay the physician for the service until August 1, 2013 or after, such payment would be reported because the payment was provided to the physician after the start of the reporting requirements. Applicable manufactures do not have flexibility to designate the date of the physician's service as the "date of payment." Rather, the date of payment would be the date the applicable manufacturer post-marked the check or funds transfer to the physician to compensate him/her for the services rendered.

OPEN PAYMENT AND RELATED LEGISLATION

What is the relationship between Open Payments and the Federal Anti-Kickback statute, False Claims Act or similar legislation?

Compliance with Open Payments reporting requirements does not exempt applicable manufacturers, applicable group purchasing organizations, covered recipients, physician owners or investors, immediate family members, other entities, and other persons from any potential liability associated with payments or other transfers of value, or ownership or investment interests under the Federal Anti-Kickback statute, False Claims Act or similar laws. As noted in the preamble of the rule, however, the inclusion of a payment or other transfer of value or ownership or investment interest in Open Payments is not, by itself, an indicator of wrongdoing or illegal conduct.

PROMOTIONAL SPEAKING

Which nature of payment category should applicable manufacturers report payments to physician covered recipients for promotional speaking?

Applicable manufacturers and applicable group purchasing organizations should consider the purpose and manner of the payment or other transfer of value and make a reasonable determination. A payment for promotional speaking may be included in the "compensation for services other than consulting" or "honorarium" nature of payment category depending on the specific facts. Applicable manufacturers and applicable group purchasing organizations may submit an assumptions document clarifying any assumptions made to determine the nature of payment category.

PAYMENTS: DIRECT & INDIRECT

NEW! Are Federal, state, and local taxes withheld from a physician owner or investor considered reportable payments or other transfers of value? (posted October 2013)

No, Federal, state, and local taxes withheld from a physician owner or investor are not considered reportable payments or other transfer of value.

NEW! Are independent sales representatives that are responsible for taking product orders from covered recipients and may receive a commission, but who do not hold title to any covered drugs, devices, biological, or medical supply and are not employees of applicable manufacturers required to report payments or other transfers of value provided to covered recipients or physician owners or investors? (posted October 2013)

Independent sales representatives are only required to report payments or other transfers of value provided to covered recipients or physician owners or investors if they meet the definition of an applicable manufacturer, as defined by 42 C.F.R § 403.902 or if they are under common ownership with an applicable manufacturer and provide assistance and support to such applicable manufacturer with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale or distribution of a covered drug, device, biological or medical supply. However, applicable manufacturers requiring, instructing, directing or otherwise causing independent sales representatives to provide payments or other transfers of value, in whole or in part, to a covered recipient or physician owner or investor, known as indirect payments defined at § 403.902, are required to be reported by the applicable manufacturer.

NEW! Is a donation provided to a teaching hospital's foundation by an applicable manufacturer reportable? (posted October 2013)

Yes, if an applicable manufacturer provides a payment or other transfer of value to a teaching hospital's foundation at the request of or designated on behalf of the teaching hospital covered recipient. An applicable manufacturer will also need to report the donation as a payment or other transfer of value made to a teaching hospital covered recipient if the applicable manufacturer requires, instructs, directs, or otherwise causes the teaching hospital's foundation to provide the donation, in whole or in part, to the teaching hospital covered recipient.

NEW! Is an applicable manufacturer required to report payments provided to a physician covered recipient for a claim settlement, for example, costs relating to a defective product? (posted October 2013)

No, legal proceedings that require physician involvements are excluded, including, legal defense, prosecutions, settlement or judgment of a civil or criminal action and arbitration or other legal action.

NEW! Does Open Payments require an entity to report payments or other transfers of value provided to covered recipients or physician owners or investors retroactively once the entity becomes an applicable manufacturer, once the entity has a least one covered drug, biological, device or medical supply? (posted October 2013)

No, Open Payments does not require retroactive reporting. Entities determined to be applicable manufacturers because they have least one product that became a covered drug, have a grace period of 180 days following a drug, device, biological or medical supply becoming covered to begin complying with the data collection and reporting requirements.

Is a payment or other transfer of value considered indirect if an applicable manufacturer utilizes a market research company's services to conduct double-blinded market research with primary care physicians, which includes paying physicians for participating? (New Aug. 8, 2013)  

No, a payment or other transfer of value provided to a market research company to conduct double-blinded market research with physicians is not considered an indirect payment.  The applicable manufacturer clearly intends a portion of the payment to be provided to physicians, but given that the reason for the third party's involvement is specifically to maintain the anonymity of the respondents and sponsor, we do not intend this to be considered a reportable indirect payment or other transfer of value.  Additionally, under section 1128G(e)(10)(A) of the Social Security Act, Open Payments excludes reporting of payments when an applicable manufacturer is unaware of the covered recipient, and the payment to the covered recipient is made indirectly through a third party, such as the market research company, in the above facts.

Are tax and payments for shipping and handling including in calculating value for a payment or other transfer of value? (New Aug. 8, 2013) 

Yes, tax and payments for shipping and handling are included in the total payment or other transfer of value for Open Payments.

Are payments provided to a consulting firm or third party, whom in turn provide the payment (in whole or part), to a physician reportable under the OPEN PAYMENTS?

Yes, OPEN PAYMENTS requires reporting of both direct and indirect payments and other transfers of value provided by an applicable manufacturer or applicable group purchasing organization to a covered recipient. An indirect payment is a payment or transfer of value made by an applicable manufacturer, or an applicable group purchasing organization, to a covered recipient, or a physician owner or investor, through a third party, where the applicable manufacturer, or applicable group purchasing organization, 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(s), or a physician owner or investor.

If a covered recipient does not accept an offered payment or other transfer of value from an applicable manufacturer, but an applicable manufacturer provides the payment or other transfer of value to a separate covered recipient without the prior covered recipient's knowledge, what name should the applicable manufacturer report the payment or other transfer of value under?

The applicable manufacturer should report the payment or other transfer of value under the name of the covered recipient who accepted the payment or other transfer of value.

Are payments for medical research writing and/or publication included in reporting research payments?

Under OPEN PAYMENTS, a payment reported as research falls within a research payment category if it is subject to either: 1) a written agreement; 2) a contract; or 3) a research protocol. Payments for medical research writing and/or publication would be included in the research payment, if the activity (here, medical research writing/publication) was included in the written agreement or research protocol and paid as a part of the research payment.

To determine if an applicable manufacture (or applicable group purchasing organization) has met the $100 aggregate threshold for reporting small payments to a covered recipient or physician owner/investor, is it required to aggregate small payments or other transfers of value different across different nature of payment categories?

Yes. To determine if payments or other transfers of value exceed the $100 threshold and must be reported, applicable manufacturers and applicable group purchasing organizations must aggregate payments of less than $10 across multiple nature of payment categories. For example, if the applicable manufacturer provides a physician with multiple separate payments valued under $10 each and the cumulative amount of those separate payments exceeds $100 during the year (e.g. 6 hot dogs - $9 per hot dog, 3 sporting tickets - $9 per ticket, and 3 cab fares - $9 per cab), the threshold will have been met and these payments must be reported.

Are awards from specialty societies provided to physician covered recipients considered indirect payments if the awards are funded by grants from applicable manufacturers? (New Aug. 8, 2013)

Yes. Open Payments requires reporting of direct and indirect payments or other transfers of value provided by an applicable manufacturer to a covered recipient.  An indirect payment, defined by  42 C.F.R. § 403.902, is a payment or transfer of value made by an applicable manufacturer (or an applicable group purchasing organization) to a covered recipient (or a physician owner or investor) through a third party, where the applicable manufacturer (or applicable group purchasing organization) 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(s) (or a physician owner or investor). 

If the applicable manufacturer causes the specialty society, acting as a third party, to provide a payment or transfer of value in whole or in part to a covered recipient, then this may be considered an indirect payment or other transfer of value.  In this scenario, the transfer of value is the portion of the grant that would be used to create an award for a covered recipient. 

However, an applicable manufacturer is not required to report an indirect payment/other transfer of value if, according to 42 C.F.R. § 403.904(i)(1), the applicable manufacturer is unaware of the identity of the covered recipient.  An applicable manufacturer is unaware of the identity of a covered recipient if the applicable manufacturer does not know (as defined in §403.902) the identity of the covered recipient.  The definition of "know" states that a person "knows" if he/she has actual knowledge of the information, or acts in deliberate ignorance or reckless disregard of the information.  An example of an applicable manufacturer having the requisite knowledge that a covered recipient received an award from grant funds is if an applicable manufacturer allows a specialty society to use its name in an award for a covered recipient, the applicable manufacturer would easily be able to ascertain the identity of the award's recipient.  Therefore, the applicable manufacturer could be deemed to be acting with deliberate ignorance if it did not follow up with the specialty society regarding the identity of the recipient.

Is study equipment, implantable devices, instrumentation, or other supplies provided to a covered recipient by an applicable manufacturer in connection with a FDA approved clinical trial for use solely in a research project considered a transfer of value?

Yes, payments or other transfers of value made in connection with an activity that meets the definition of research and that are subject to a written agreement, a research protocol or both should be included in the total amount of the research payment. Payments or other transfers of value that are not included in the written agreement or research protocol should be reported separately in the appropriate nature of payment category.  

In which payment category should applicable manufacturers report payments to covered recipients for medical textbooks or journal reprints?

Applicable manufacturers must select the nature of payment category that they believe most accurately describes a payment or other transfer of value. 42 C.F.R. § 403.904(e)(2). Therefore, applicable manufacturers must select the nature of payment category that best describes the provision of a medical textbook or journal reprint to a covered recipient. Possible natures of payment applicable to medical textbooks include "education" and "gift," depending on the circumstances of the transfer of value. The "education" category generally includes payments or other transfers of value that involve the imparting or acquiring of particular knowledge or skills, which can include medical textbooks provided to covered recipients.

How should applicable manufacturers and applicable group purchasing organizations report transfer royalties, which are financial interests in a company provided in conjunction with an intellectual property assignment? (New Aug. 8, 2013)

Transfer royalties are reportable payments or other transfer of value for Open Payments.  Transfer royalties are required to be reported using the general payment data specification.  The appropriate "nature of payment" category for the payment or transfer of value would be "royalty or license."  The value of a transfer royalty should reflect the cost of the intellectual property that an applicable manufacturer or applicable group purchasing organization would pay to acquire the intellectual property from a covered recipient.

Are applicable manufacturers required to report uncollected payments for a covered device owed by a covered recipient to an applicable manufacturer as a payment or other transfer of value? (New Aug. 8, 2013)

Yes, debt forgiveness by an applicable manufacturer for the remaining balance of a covered drug, biological, device or medical supply purchased by a covered recipient is considered a payment or transfer of value and reportable for purposes of Open Payments.   

Are research payments provided to a Military Medical Center that is not a teaching hospital covered recipient required to be reported for Open Payments?  (New Aug. 8, 2013)

Yes, for research payments, the reporting entity must provide the name of the research institution, individual or entity receiving the payment or other transfer of value as outlined in §403.904(f).  If the Military Medical Center receives a research-related payment or other transfer of value, which is ultimately paid in whole or in part to a covered recipient (physician or teaching hospital), it must report information on the payment as indicated at § 403.904(f)(1)(i)(C).

Is information regarding a physician principal investigator required for reporting if he/she is a military physician?  (New Aug. 8, 2013)

Yes, if a military physician is a physician covered recipient principal investigator for a research study that is identified according to 42 C.F.R. § 403.904(f) then information about the physician covered recipient principal investigator is required to be reported as indicated at § 403.904(f)(1)(v).

Is a payment or other transfer of value provided by an applicable manufacturer's distributor to a covered recipient considered a reportable indirect payment if the payment or other transfer of value is from the distributor's own resources and the distributor does not hold title to any of the applicable manufacturer's products? (New Aug. 8, 2013)

Yes, if the applicable manufacturer requires, instructs, directs, or otherwise causes the distributor to provide the payment or transfer of value, in whole or in part, to a covered recipient or a physician owner or investor 

NON-PHYSICANS

If an employee (non-physician) of a teaching hospital receives a transfer of value such as a meal, would that transfer of value need to be reported as a transfer of value to the teaching hospital? Similarly, if employees of a physician's office receive a transfer of value, will that transfer of value need to be reported as a transfer of value to the physician?

Non-physician employees of a teaching hospital and non-physician employees of a physician-owned practice or other physician-owned entity are not covered recipients for the purposes of Open Payments. Accordingly, payments or other transfers of value made to these non-physician employees generally do not need to be reported.

However, note that such payments to non-physician employees would need to be reported pursuant to 42 C.F.R. §403.904(a) and (c)(10) if the payments were made to the non-physician employees at the request of or designated by the applicable manufacturer on behalf of a covered recipient. In addition, the payments to non-physician employees would need to be reported if they were in fact indirect payments (as defined at §403.902) to a covered recipient (physician or teaching hospital) being made through the non-physician employee. Indirect payments or other transfers of value occur when an applicable manufacturer or applicable group purchasing organization requires, instructs, directs or otherwise causes a third party to provide the payment or other transfer of value, in whole or in part, to a covered recipient. For example, an applicable manufacturer providing equipment to a non-physician employee of a teaching hospital that is intended to benefit the teaching hospital is considered an applicable manufacturer otherwise causing the employee to provide the equipment to the teaching hospital covered recipient.

REGISTRATION WITH CMS

NEW! Are all applicable manufacturers and applicable group purchasing organizations required to register for Open Payments? (posted October 2013)

No, only applicable manufacturers and applicable group purchasing organizations that have reportable payments or other transfers of value, ownership or investment interest, or both are required to register.

What information does an applicable manufacturer or applicable group purchasing organization need to provide during registration?

Applicable manufacturers and applicable group purchasing organizations need to register with CMS in order to submit data. Personnel representing applicable manufacturers and applicable group purchasing organizations should be prepared to provide information necessary to identify themselves and establish their roles (both within the OPEN PAYMENTS System and the organizations they represent). This data includes, for example, the name of the primary point of contact, the name of the secondary point of contact, and the name of the individual that will attest to the accuracy of the data submitted. Additional guidance regarding the registration process is forthcoming.

RESEARCH

NEW! Is an applicable manufacturer required to report the name of a third party, such as a clinical research organization (CRO) providing an indirect research payment to a covered recipient? (posted October 2013)

No, applicable manufacturers are not required to report the name of the third party, such as a CRO, that indirectly provides a research payment to principal investigators, teaching hospitals, nonteaching hospitals or clinics. Applicable manufacturers are required to report information regarding recipients of research payments as specified in 42 C.F.R § 403.904(f).

NEW! What value should an applicable manufacturer assign to clinical study drugs that are provided to principal investigators as part of the research agreement? (posted October 2013)

Applicable manufacturers are not required to assign a specific value to clinical study drugs that are provided to principal investigators, rather applicable manufacturers should report the total amount of the research payment, including all research-related costs for activities outlined in a written agreement, research protocol or both, as specified in 42 C.F.R. § 403.904(f)(1)(ii).

NEW! Why was research removed as a nature of payment category option from the general data specification? (posted October 2013)

The research nature of payment category was removed from the general data specification because all payments or other transfers of value made in connection with an activity that meets the definition of research, as defined at 42 C.F.R § 403.902, are required to be reported using the research data specification according to § 403.904(f). As discussed in the preamble to the final rule research-related payments, which do not meet the definition of research, should be reported using the other nature of payment categories available. (42 Fed Reg. 9482).

Is study equipment, implantable devices, instrumentation, or other supplies provided to a covered recipient by an applicable manufacturer in connection with a FDA approved clinical trial for use solely in a research project considered a transfer of value?

Yes, payments or other transfers of value made in connection with an activity that meets the definition of research and that are subject to a written agreement, a research protocol or both should be included in the total amount of the research payment. Payments or other transfers of value that are not included in the written agreement or research protocol should be reported separately in the appropriate nature of payment category.

Should all physician covered recipient principal investigators who perform research for the research institution under a research agreement or research protocol be listed on the research reporting templates when reporting research payments, even if such sub-researchers would not normally be considered "principal investigators" in the normal industry understanding of the word - i.e., the sub- researchers are not directing or in charge of the research overall?

No, applicable manufacturers are only required to report the names of principal investigators, as that term is normally used in industry, not sub-researchers. Applicable manufacturers reporting research payments may report up to five covered recipient principal investigators for each research payment reported.

Are payments for medical research writing and/or publication included in reporting research payments?

Under OPEN PAYMENTS, a payment reported as research falls within a research payment category if it is subject to either: 1) a written agreement; 2) a contract; or 3) a research protocol. Payments for medical research writing and/or publication would be included in the research payment, if the activity (here, medical research writing/publication) was included in the written agreement or research protocol and paid as a part of the research payment.

Is a contract research organization (CRO) that performs clinical trials according to protocols for pharmaceutical companies required to report a budgeted amount contracted for medical safety, which is performed by the CRO's employed physician? (New Aug. 8, 2013)

A CRO that is not an applicable manufacturer is not required to report information under Open Payments.  However, an applicable manufacturer providing a payment that meets the definition of research, as defined at 42 C.F.R. § 403.902,  to a CRO which is ultimately paid in whole or in part to a covered recipient (physician or teaching hospital), is required to report, as outlined in §403.904(f), the name of the research institution, individual or entity receiving the payment, total amount of the research payment, name of the research study, names of any related covered drugs, devices, biological, or medical supplies, and information about each physician covered recipient principal investigator.  The research agreement may include an unbroken chain of agreements as long as they link the applicable manufacturer with the recipient.  If the employee of a CRO who is conducting medical safety for clinical trials for a research study is also a physician covered recipient principal investigator then information regarding the physician is required to be reported by the applicable manufacturer under Open Payments. 

Are applicable manufacturers that receive research grants from National Institute of Health (NIH) required to report a sub-award from the NIH grant as a research payment, where the applicable manufacturer contracts with medical centers or universities to conduct research? (New Aug. 8, 2013)

Yes, research payments (meeting the definition of research at 42 C.F.R. § 403.902) from an NIH research grant are required to be reported as payment or other transfer of value for purposes of Open Payments according to the special rules for research payments at § 403.904(f).

Are research payments provided to a Military Medical Center that is not a teaching hospital covered recipient required to be reported for Open Payments?  (New Aug. 8, 2013)

Yes, for research payments, the reporting entity must provide the name of the research institution, individual or entity receiving the payment or other transfer of value as outlined in §403.904(f).  If the Military Medical Center receives a research-related payment or other transfer of value, which is ultimately paid in whole or in part to a covered recipient (physician or teaching hospital), it must report information on the payment as indicated at § 403.904(f)(1)(i)(C).

Is information regarding a physician principal investigator required for reporting if he/she is a military physician?  (New Aug. 8, 2013)

Yes, if a military physician is a physician covered recipient principal investigator for a research study that is identified according to 42 C.F.R. § 403.904(f) then information about the physician covered recipient principal investigator is required to be reported as indicated at § 403.904(f)(1)(v).  

STOCKS AND OWNERSHIP

Are applicable manufacturers or applicable group purchasing organizations responsible for reporting individual stock holdings, which were not stock awarded as a payment but are personal investment by covered recipient physicians?

Applicable manufacturers and applicable group purchasing organizations are required to report to CMS on an annual basis all ownership and investment interest in the applicable manufacturer or applicable group purchasing organization that were held by a physician or an immediate family member of a physician during the preceding calendar year. An ownership or investment interest is not reportable if an applicable manufacturer or applicable group purchasing organization did not know about such ownership or investment interest (42 C.F.R. § 403.902). In this context, the word "know" means that a person, with respect to information: (1) has actual knowledge of the information, (2) acts in deliberate ignorance of the truth or falsity of the information, or (3) acts in reckless disregard of the truth or falsity of the information.

When reporting ownership or investment interests; what should applicable manufacturers or applicable group purchasing organization report regarding value and terms of each ownership or investment interest?

Applicable manufacturers and applicable group purchasing organizations reporting ownership or investment interests have some flexibility to decide how to report the "value" of such interests. However, they must document the method used to estimate the value of the ownership or investment and may include such documentation if they submit an assumptions document with their annual report. When reporting the terms of an ownership or investment interest, applicable manufacturers and applicable group purchasing organizations should report the type of ownership or investment interest (as defined in 42 CFR § 403.902), including but not limited to stock, stock options, partnership shares, loans, bonds, or other financial instruments that are secured with an entity's property or revenue or a portion of that property or revenue.

What are the requirements for reporting stock options granted by an applicable manufacturer to a covered recipient prior to August 1, 2013, but not exercised until 2015?

Stock options granted prior to August 1, 2013 are not considered payments or other transfers of value in Open Payments for the data collection period beginning on August 1, 2013 to December 31, 2013. Stock options granted after August 1, 2013 are required to be reported as payments or other transfers of value if provided to a covered recipient. Once the stock option is exercised, causing the physician to become an owner or investor in an applicable manufacturer or applicable group purchasing organization, those investment or ownership interests are required to be reported annually according to the reporting requirements in the Physician Ownership data specification. 

THIRD PARTIES

Should an applicable manufacturer report a payment was made to a physician or to a clinic if the applicable manufacturer contracts with a clinic for consulting services, and the applicable manufacturer requests that a specific physician practicing at the clinic perform the services. Is this considered an indirect payment or a payment to a third party?

This is considered an indirect payment. Applicable manufacturers are required to report indirect payments to physicians. A payment is considered indirect if an applicable manufacturer requires, instructs, directs or otherwise causes the third party to provide the payment in whole or in part to a physician. An indirect payment was made to the physician since the applicable manufacturer requested a certain physician at the clinic perform the services. The payment made to the clinic was ultimately transmitted in part to the physician through the clinic.

Are payments provided to a consulting firm or third party, whom in turn provide the payment (in whole or part), to a physician reportable under the OPEN PAYMENTS?

Yes, OPEN PAYMENTS requires reporting of both direct and indirect payments and other transfers of value provided by an applicable manufacturer or applicable group purchasing organization to a covered recipient. An indirect payment is a payment or transfer of value made by an applicable manufacturer, or an applicable group purchasing organization, to a covered recipient, or a physician owner or investor, through a third party, where the applicable manufacturer, or applicable group purchasing organization, 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(s), or a physician owner or investor.

- See more at: http://www.typepad.com/site/blogs/6a00e5520572bb883400e5520572c88834/compose/preview/post#sthash.yrJPNtSV.dpuf

 

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