Life Science Compliance Update

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July 07, 2014

Physician Payments Sunshine Act: CMS Proposes Changes to Open Payments

At 5:30pm on July 3, the Centers for Medicare and Medicaid Services (CMS) released the CY 2015 Medicare Physician Fee Schedule proposed rule. The 609-page document included a number of proposed changes to the Physician Payments Sunshine Act – Open Payments final rule.

The revisions include:

(1) Deleting the CME exemption, section 403.904(g).

We have dedicated an entire article to this proposal.

As we have detailed on Policy and Medicine numerous times, the Final Rule contains an exemption for payments to healthcare providers who serve as speakers for accredited continuing education programs, under §403.904(g) (p.68).

CMS now proposes to delete the section. According to CMS part of its motivation in proposing to remove the CME exclusion "is to avoid the redundancy in another section §403.904(i)(1), which excludes indirect payments or other transfers of value where the applicable manufacturer is "unaware" of the identity of the covered recipient during the reporting year or by the end of the second quarter of the following reporting year.

Notably, CMS states that they will consider speaker payments to be excluded from reporting "[W]hen an applicable manufacturer or applicable GPO provides funding to a continuing education provider, but does not either:

[1] select or pay the covered recipient speaker directly, or [2] provide the continuing education provider with a distinct, identifiable set of covered recipients to be considered as speakers for the continuing education program.

In explaining its rationale for the change, CMS states: "This approach is consistent with our discussion in the preamble to the final rule, in which we explained that if an applicable manufacturer conveys 'full discretion' to the continuing education provider, those payments are outside the scope of the rule." In contrast, "when an applicable manufacturer conditions its financial sponsorship of a continuing education event on the participation of particular covered recipients, or pays a covered recipient directly for speaking at such an event, those payments are subject to disclosure."

(2) Deleting the definition of "covered device" at 403.902.

CMS is proposing to remove the definition of a "covered device" because they believe it is duplicative of the definition of "covered drug, device, biological or medical supply" which is codified in the same section.

(3) Requiring Reporting of Marketed Name

The Final Rule requires drug manufacturers to report the marketed name for each drug or biological related to a payment or other transfer of value. However, the Rule allows device and supply manufacturers the choice between reporting the marketed name, product category, or therapeutic area. CMS provided device manufactures flexibility because they determined that the "marketed name for all devices and medical supplies may not be useful for the general audience."

CMS now proposes that making the reporting requirements for marketed name across drugs, biologics, devices and medical supplies will make the data fields consistent within the system, and also enhance consumer's use of the data. Accordingly, they propose to revise §403.904(c)(8) to require applicable manufacturers to report the marketed name for all covered and non-covered drugs, devices, biologicals or medical supplies.

"We believe this would facilitate consistent reporting for the consumers and researchers using the data displayed publicly on the Open Payments. Manufacturers would still have the option to report product category or therapeutic area, in addition to reporting the market name, for devices and medical supplies."

(4) Revising §403.904(d) to require the reporting of the reporting of stock, stock option or any other options as distinct categories.

The original text  requires manufacturers report the "form" of payment. Currently there are four categories: (1) Cash or cash equivalent; (2) In-kind items or services; (3) Stock, stock option, or any other ownership interest; or (4) Dividend, profit or other return on investment.

CMS is proposing to split (3) into distinct categories. CMS determined that the increased specificity will "increase the ease of data aggregation within the system, and also enhance consumer's use of the data." They are seeking comments on the extent to which users of this data set find this disaggregation to be useful, and whether this change presents operational or other issues on the part of applicable manufacturers.

Data collection requirements for the new rules would begin January 1, 2015 according to this proposed rule for applicable manufacturers and applicable group purchasing organizations.

Comments

To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on September 2, 2014. In commenting, please refer to file code CMS-1612-P.

  • Electronically. You may submit electronic comments on this regulation to www.regulations.gov. Follow the instructions for "submitting a comment."
  • By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, 2 Attention: CMS-1612-P, P.O. Box 8013, Baltimore, MD 21244-8013.
  • By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1612-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850

Link to the Changes to Physician Payment Sunshine Revisions

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