Life Science Compliance Update

July 20, 2015

Open Payments: CMS Clarifies Continuing Medical Education FAQs, Confirms CME Funding Must Meet the Definition of "Indirect Payment" To Be Reportable

  CMS

On Friday, the Centers for Medicare and Medicaid Services (CMS) announced they had updated the Law and Policy page on the Open Payments website with information about the revised reporting requirements for continuing medical education. CMS also announced three FAQs for CME reporting. This information isn't necessarily "new" as CMS revised this page several months ago to correct what many felt was a misinterpretation of the Sunshine Act Final Rule regarding CME payments. This was, however, the agency's first announcement about the revision.

Under the Physician Payments Sunshine Act, pharmaceutical and device manufacturers must report to CMS direct or indirect transfers of value made to physicians and teaching hospitals. "Indirect payments" are situations where a manufacturer "requires, instructs, directs, or otherwise causes" a third party to provide payment or transfer of value, in whole or in part, to a covered recipient. 

Consistent with the regulations, in October 2014 CMS explained in the preamble to its final amended regulations to Open Payments that if a pharmaceutical or device manufacturer “provides funding to support a continuing education event but does not require, instruct, direct, or otherwise cause the continuing education event provider to provide the payment or other transfer of value in whole or in part to a covered recipient,” manufacturers are not responsible for reporting that transfer of value. ACCME-accredited CME, for instance, requires a complete firewall between commercial support and an education program. Manufacturers who provide CME funding must have absolutely no control over: (a) Identification of CME needs; (b) Determination of educational objectives; (c) Selection and presentation of content; (d) Selection of all persons and organizations that will be in a position to control the content of the CME; (e) Selection of educational methods; (f) Evaluation of the activity. (See ACCME Standards for Commercial Support 1.1)

CMS also states: “[n]ot all indirect payments are required to be reported, regardless if it is a payment to a continuing education organization.” For instance, if a manufacturer does “require, instruct, direct, or otherwise cause” the CME provider to provide the payment to a covered recipient, but does not know the identity of the covered recipient during the reporting year or by the end of the quarter of the following reporting year, such payment would not be reportable. CMS’s latest FAQs, outlined below, correctly re-iterate these points. 

In summary, starting in 2016 (with reporting due by March 31, 2017), CME related payments are only reportable if a manufacturer determines that the payment or transfer of value meets the definition of an “indirect payment” and the manufacturer is aware of the covered recipient’s identity within the reporting year or second quarter of the following year.

View screenshots from CMS's previous language here (zoom as necessary with the PDF). 

Frequently Asked Questions

If an applicable manufacturer gave a contribution to support a medical conference, but did not have any say in the content, speakers, or attendees, would this be considered an unrestricted donation? Or, is the fact that the money was specifically for an educational conference mean that it is, by definition, restricted?

Unrestricted donations to a medical conference as described in this FAQ would not be subject to reporting under Open Payments. Although there is no formal definition of an unrestricted donation, in this case we can take that term to mean a grant given by a reporting entity to a professional association for use without any restrictions, preconditions, or post-conditions in order to assist the professional or educational association with its administrative or educational needs. In accordance with the definition of an indirect payment at 42 C.F.R. §403.902, an applicable manufacturer that contributes funding to a medical/educational conference would be required to report the payment if the reporting entity determines that it meets the definition of an indirect payment at 42 C.F.R. §403.902. An indirect payment is defined at 42 C.F.R. §403.902 as 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.

Starting with 2016 Open Payments data collection and reporting to CMS in 2017, are payments provided by an applicable manufacturer to a continuing education organization for continuing education events reportable?

Yes, the payment is reportable if the applicable manufacturer determines that the payment meets the definition of an indirect payment, and the applicable manufacturer knows or can determine the identity of the covered recipient by the end of the second quarter of the following reporting year. An indirect payment is defined at 42 C.F.R. §403.902 as 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. In accordance with 42 C.F.R. §403.904(i)(1), indirect payments or other transfers of value do not have to be reported if 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.

If several applicable manufacturers contribute funding to a continuing medical education (CME) program and there are several speakers, how is this reported?

In accordance with the definition of an indirect payment at 42 C.F.R. §403.902, applicable manufacturers that contribute funding to a CME program with several speakers are required to report the payments provided to physician speakers if they determine that the payments meet the definition of an indirect payment. An indirect payment is defined at 42 C.F.R. §403.902 as 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.

Consistent with the CMS Final Rule (CMS-5060-F), there are instances where indirect payments provided by an applicable manufacturer to a CME program are not reportable. In accordance with 42 C.F.R. §403.904(i)(1), indirect payments or other transfers of value are excluded from reporting 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.

If the payment is a reportable payment, then the amount should be equally divided among the known covered recipient speakers.

 

July 14, 2015

Open Payments 2014 Data Highlights

The 2014 Open Payments database covers 11.41 million transactions between manufacturers and covered recipients (physicians and teaching hospitals), totaling $6.49 billion. With such an immense amount of data, it can be hard to make meaningful analysis of the information. Open Payments Analytics has put together a very interesting list of insights from their dive into the database with the Infographic seen bellow. While there are many takeaways from the data, here are three aspects that grabbed our attention:

(1) 49% of the physicians in the database received less than $100 total. Per the Sunshine Act, de minimis transfers of value are excluded from reporting requirements. The 2014 requirements excluded transfers of value less than $10.18, unless the aggregate amount for 2014 exceeded $101.75 during the calendar year. While some of the 49% of physicians listed may have had individual payments exceeding $10, it is safe to assume that companies are over-reporting on some of the ~300,000 physicians who received less than $100 throughout the entirety of last year. 

(2) The top two physicians in the general database earned their payments from Abbott's acquisition of Topera, a medical device company focused on developing innovative electrophysiology technologies. Last year, the company received Connect’s "Most Innovative New Product Award" for its RhythmView 3D Mapping System, “based on its innovative electrophysiology platform to improve the diagnosis and treatment of complex cardiac arrhythmias including atrial fibrillation, the most common heart rhythm disorder in the world, afflicting 8 million people in the US and Europe alone.”

(3) Payments in the Gift category of Open Payments represented 0.45% of the total payments. Meals, which represented 9 million of the 11.41 million payments (79%), represented $225 million of the $6.49 billion total value (3.5%).

Open Payments Analytics 1

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