Shedding Light on Marketing Practices & Physician Industry Financial Relationships Federal Stark Law Implications & The Sunshine Act The Health Law Partners, P.C. www.thehlp.com (248) 996 8510 Adrienne Dresevic, Esq.: adresevic@thehlp.com Clinton Mikel, Esq.: cmikel@thehlp.com Overview Part I The Federal Stark Law General Prohibitions Key Stark Terms Federal Stark Law Penalties Marketing & Stark Law Implications Potential Exceptions Compliance 1 2 Overview Part II The Sunshine Act (Affordable Care Act Sec. 6002) General Overview Who Does the Law Impact? What is Subject to Reporting? What is Required? What is Excluded? Where Will the Information be Posted? How to Report & Dispute Data Potential "unintended consequences" Practical Guidance for Physicians Federal Stark Law The General Prohibition Physicians may not refer: Medicare* patients For certain specified "designated health services" To an entity with which the "physician" or An "immediate family member" has A "financial relationship" Unless an "exception" applies Section 1903 (s) of SSA applies a non-payment provision to a State in connection with Medicaid. 42 U.S.C 1395nn; regulations at 42 CFR, Part 411, 411.350 et seq. 3 4 Stark Law Prohibitions Two basic prohibitions: 1) First, if a "physician" (or "immediate family member") has a "financial relationship" with an "entity," then the physician may not "refer" the patients "to" the entity for furnishing of "designated health services," unless an exception applies Financial Relationship Stark Law Prohibitions DHS Entity Medicare Patient Referral Physician 5 6
Stark Law Prohibitions Two basic prohibitions: 2) Second, an entity may not bill Medicare (or any other individual or entity) for services furnished pursuant to a prohibited referral Stark Law Prohibitions Medicare Entity Claim for Reimbursement Prohibited Referral Physician 7 8 Key Stark Terms Designated Health Services (DHS) includes: Clinical laboratory services Physical therapy services/occupational therapy services Outpatient speech language pathology services Radiology services, including MRI, CT, and ultrasound services Radiation therapy services and supplies Durable medical equipment and supplies Parental and enteral nutrients, equipment, and supplies Prosthetics, orthotics, and prosthetic devices and supplies Home health services Outpatient prescription drugs Inpatient and outpatient hospital services 9 Key Stark Terms Designated Health Services (DHS) Radiology and certain other imaging services Radiation therapy services and supplies Defined by CPT/HCPCS Codes Includes both professional & technical component (PC/TC) Does not include: X ray, fluoroscopy, or ultrasound that require the insertion of a needle/catheter/probe/tube Radiology procedures that are integral to the performance of a non radiological procedure 10 Key Stark Terms "Entity" is defined as a person or entity that has performed a service billed as DHS or present a claim to Medicare for DHS "Physician" and "immediate family member" is defined broadly See 42 CFR 411.351 Key Stark Terms "Financial Relationship" Includes direct/indirect ownership or compensation arrangements Compensation arrangement: "any arrangement involving remuneration." See 411.354(c) Remuneration: means any payment or other benefit made directly or indirectly, overtly, in cash or in kind except: The furnishing of items, devices, or supplies (not including surgical items, devices, or supplies) that are used solely to collect, transport, process, or store specimens for the entity of furnishing the items, devices, or supplies or are used solely to order or communicate the results of tests or procedures for the entity» CMS recognized this exception in Advisory Opinion CMS AO 2008 01 www.cms.gov/medicare/fraud-and- Abuse/PhysicianSelfReferral 11 12
Key Stark Terms "Referral" Does include the referral of both components (TC/PC) of a diagnostic imaging test Does not include personally performed services (e.g., orthopedic surgeon who orders and reads x ray film) Excludes certain requests by radiologists and radiation oncologists (the "Radiologist Referral Exception") Requests by a radiologist for diagnostic services when initiated from another physician and tests/services furnished by or under the supervision of the radiologist (group) Stark Law Penalties Statutory Penalties: For knowing or unknowing violations: Denial of payment Refund of amounts collected from beneficiary as a result of improper billing For knowing violations, potentially: Civil Money Penalties of $15,000 per item or service plus 2X the amount claimed Civil Money Penalties of $100,000 for "Circumvention Schemes" Exclusion Potential False Claims Act Liability 13 14 Federal Stark Law Is Stark applicable to my marketing activities/program? Am I a DHS entity? As a result of the marketing activity/arrangement, does a referring physician receive something of value from a DHS entity Think broadly! Stark Law & Marketing What marketing efforts do not trigger Stark? Marketing to: Patients Non Physician referral sources Stark defines "physician" as MD, DO, DPM, a doctor of dental surgery or dental medicine, a doctor of optometry, or a chiropractor Marketing for non DHS entity business 15 16 Stark Law & Marketing What marketing efforts do trigger Stark? DHS entities (e.g., IDTF, radiology practice, hospital, multi specialty group) marketing/partnering/ collaborating efforts focusing on referring physicians. Practice/hospital providing entertainment or other benefit (e.g., lunches, etc.) to a referring physician. Joint marketing agreement between non employed physician and hospital Radiology practice providing pre authorization assistance to referring physician Connectivity arrangement between radiology group and referring physician Transportation offered to referring doctor's patients Potential Exceptions Stark law exceptions potentially applicable to common marketing activities: Incidental Benefits Exception (42 CFR 411.357(m)) Non-Monetary Compensation Exception (42 CFR 411.357(k)) FMV Exception (42 CFR 411.357(l)) 17 18
Incidental Benefits Exception Allows a hospital to provide compensation in the form of items or services (not including cash or cash equivalents) to a member of its medical staff when the item or service is used on the hospital's campus (campus requirement not applicable to website/hospital advertising) Compensation must be offered to all members of the medical staff practicing in the same specialty 19 Incidental Benefits Exception Low value 2012- less than $31 2013- less than $32 2014- less than $32 This exception protects, for example, a listing or identification of a physician on a hospital's website or in other advertising See: http://www.cms.gov/medicare/fraud and Abuse/PhysicianSelfReferral/CPI U_Updates.html 20 Calendar Year Non monetary compensation limit in accordance with 411.357(k) Medical staff incidental benefit in accordance with 411.357(m)(5) CY 2004 $300 Less than $25 N/A CY 2005 $308 Less than $26 +2.5% CY 2006 $322 Less than $27 +4.7% CY 2007 $329 Less than $28 +2.1% CY 2008 $338 Less than $29 +2.8% CY 2009 $355 Less than $30 +4.9% CY 2010 $355 Less than $30 1.3% CY 2011 $359 Less than $30 +1.1% CY 2012 $373 Less than $31 +3.9% CY 2013 $380 Less than $32 +2.0% CY 2014 $385 Less than $32 +1.2% Percentage Change in the CPI U Allows a hospital or other DHS Entity To furnish something of value (no cash/cash equivalents) (e.g., advertising, meals, entertainment, non cash gifts such as tickets, pre authorization assistance) To a referring physician up to an annual limit 2013 $380/2014 $385 CMS displays annual adjustments after 9/30 each year 21 22 applies: The compensation is not determined in any manner that takes into account the volume or value of referrals or other business generated by the referring physician; The compensation may not be solicited by the physician or the physician's practice (e.g., staff); and The compensation arrangement does not violate the AKS, or any other Federal/State law regarding billing and claims submission Inadvertent compensation provided in excess of the annual limit can be corrected if: The value of excess compensation is not more than 50% of the limit; and The physician returns the excess to the entity by the end of the calendar year or within 180 days following the date received, whichever is earlier. The ability to pay back excess non-monetary compensation and remain in compliance with the exception may be used by an entity only once every 3 years with respect to the same referring physician 23 24
In addition to non-monetary compensation up to the annual limit, an entity that has a formal medical staff may provide one local medical staff appreciation event per year for the entire medical staff. But, any gifts or gratuities provided in connection with the medical staff appreciation event are subject to the limit. Entities without formal medical staffs (e.g., IDTFs, clinics) may not provide a local medical staff appreciation event unless another exception applies and is satisfied. "Formal medical staff" is not defined Group/ all referring physicians probably not "formal medical staff" What is non monetary compensation? Meals Tickets for sporting or entertainment events Transportation to events Golf Flowers congratulation physician (new office, birth of a child, birthday, funeral?) Use of client's vacation home 25 26 Applies only to non-monetary compensation provided to individual physicians (Phase I) (66 Fed. Reg. 920, 2001) Can a gift to a group practice be considered a gift to each physician in the group practice / should full value be accounted for?? No mention in the regulation or preamble of "immediate family member" Does not apply to cash and cash equivalents Gift certificates and gift cards are considered "cash equivalents" Exception applies only to "items and services" 27 Annual Monetary Limit Calculated based on cost of item (not value to the physician) Examples: A radiology practice pays $150 for and gives to a referring primary care physician a scarf, but the physician didn't ask for it and will not wear it because he doesn't like it.» It is likely that your client must count the $150 toward the annual limit for non monetary compensation to this physician What if a radiology practice receives free tickets to a golf outing and provides such tickets to a referring physician. No cost to count toward the annual limit? 28 FMV Exception FMV (42 CFR 411.357(i)) Signed writing Specific timeframe Compensation set in advance, FMV, not related to referrals Can't violate Anti Kickback Statute (AKS) The Federal Stark Law SRDP Self Referral Disclosure Protocol settlements involve violations of Stark related to the nonmonetary compensation exception To date, CMS has settled 3 cases involving nonmonetary compensation 29 30
A Proactive Approach to Stark Compliance Best practices for DHS entities that engage in marketing activities which target physicians: Track non monetary compensation Maintain a log with a centralized "keeper" responsible for recording all non monetary compensation provided to physicians Members of the organization must understand the requirement to report all non monetary compensation to the "keeper" Regular review to identify physicians approaching the annual limit Appropriate personal must be notified of physicians who should not receive any additional non monetary compensation for the rest of the calendar year Notify the physician when he/she has reached the limit and he/she should decline additional non monetary compensation if it is inadvertently offered Part II The Sunshine Act Shedding Light on Physician Industry Financial Relationships 31 32 Sunshine Act Affordable Care Act Sec. 6002 "Sunlight is said to be the best of disinfectants" Justice Louis D. Brandeis Sunshine Act Affordable Care Act Sec. 6002 Overview Enacted as part of the Patient Protection and Affordable Care Act of 2010 ("PPACA") Requires applicable manufacturers and group purchasing organizations (GPOs) to report to CMS any direct or indirect payment or other transfer of value provided to a covered recipient, or any payment provided to a third party on behalf of a covered recipient, during a calendar year Reported information is published by CMS and is available on a searchable public website 33 34 Sunshine Act Affordable Care Act Sec. 6002 Stated Policy Goals Promote transparency Increase public awareness of financial relationships between drug and device manufacturers and physicians Decrease potential conflicts of interests Sunshine Act Affordable Care Act Sec. 6002 Why is the Sunshine Act Important? Public availability of information (patients, media/news, competitors, DOJ, qui tam, divorce attorneys) Potential "unintended" consequences Fraud and Abuse Malpractice Regulatory oversight Institutional conflicts of interest Reputational Risk arising from conflicts of interest or appearance of a conflict Adverse effect on research & innovation 35 36
Who Does the Law Impact? Reporting Obligations Applicable manufacturers Applicable group purchasing organizations (GPOs) The law itself does not require physicians to report any information or to register with CMS, however, the information reported pertains to relationships with physicians & teaching hospitals Who Does the Law Impact? "Applicable Manufacturer" Operates in the United States (Has a physical location within the U.S. or otherwise conduct activities in the U.S., either directly or through a legally authorized agent); AND either Engages in producing, preparing, propagating, compounding, or converting at least one covered drug, device, biological, or medical supply; OR Operates under common ownership with an applicable manufacturer and provides assistance or support to the applicable manufacturer in the manufacturing, marketing, promotion, sale, or distribution of a covered drug, device, biological, or medical supply 37 38 Who Does the Law Impact? "Applicable Manufacturer" Common Ownership Refers to circumstances where the same individual, individuals, entity, or entities directly or indirectly own 5% or more total ownership of two entities Includes, but is not limited to, parent corporations, direct and indirect subsidiaries, and brother or sister corporations Assistance and support Means providing a service or services that are necessary or integral to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered product 39 Who Does the Law Impact? "Applicable GPO" Operates in the United States (Has a physical location within the U.S. or otherwise conduct activities in the U.S., either directly or through a legally authorized agent); AND Purchases, arranges for purchase, or negotiates the purchase of a covered drug, device, biological, or medical supply for a group of individuals or organizations that is not solely for the use of purchasing the entity itself 40 What is Subject to Reporting? "Covered Product" Covered product is any drug, device, biological, or medical supply that is eligible for federal payment (Medicare, CHIP, Tri Care, et cetera); and Requires a prescription to be dispensed (for drugs or biologicals) or required pre market approval by the FDA (for devices, including medical supplies) What is Subject to Reporting? "Covered Product" May include products from: Pharmaceutical manufacturers Medical device companies Exclusions Over the counter drugs and biologicals Class I and Class II devices that are exempt from premarket notification requirements NOTE: Some radiology devices are considered exempt» Refer to FDA List of Medical Device Exemptions Gray areas 41 42
Who Does the Law Impact? "Covered Recipients" Physicians Except for physicians who are bona fide employees of the applicable manufacturer reporting the payment Includes: MDs, DOs, dentists, podiatrists, optometrists, and licensed chiropractors» Does not include residents Teaching Hospitals Any institution that has received direct or indirect graduate medical education (GME) payments during most recent year List maintained by CMS What is Subject to Reporting? Two types of industry relationships must be reported: 1) Manufacturers' payments and transfers of value to a physician or teaching hospital Includes payments and transfer of value to a covered recipient Research related payments must be reported separately 2) Physician ownership and investment interests in manufacturers and GPOs Any ownership or investment interests held by a physician, or immediate family member in a manufacturer or GPO Includes stocks, stock options, dividends, profits or other return on investment 43 44 Physician Ownership & Investment Interests Reporting required for interests held by physicians and immediate family members of physicians For each ownership & investment interest, the following must be reported: Physician's name and business address Physician's NPI Primary and specialty practice State(s) where licensed and applicable license number(s) Dollar amount, value and terms of ownership or investment interest Whether interest is held by an immediate family member Any payments or transfers of value made to the physician owner or investor 45 Payments & Transfers of Value Applicable manufacturers must report to CMS all payments or other transfers of value provided to covered recipients regardless if payment/transfer was related to a covered drug, device, biological, or medical supply NOTE: There are some exceptions Must categorize form & nature of payment 46 Payments & Transfers of Value Form of Payment (manner in which they were paid) Cash or cash equivalent In kind items or services Stock, stock option or other ownership interest, dividend, profit or ROI Nature of Payment (reason for the payment) o Consulting fees o Honoraria o Gifts o Entertainment o Food o Travel o Education o Research o Grants o Charitable contributions o Royalty or license fees o Current or prospective ownership or investment interests o Compensation for faculty or speaker for accredited or certified continuing education program, OR non accredited or certified continuing education program o Special rental or facility fees (teaching hospitals only) 47 Payments & Transfers of Value For each payment or transfer of value, the following must be reported: Physician's name and business address Physician's NPI Primary and specialty practice State(s) where licensed and applicable license number Date of payment Form of payment Amount of payment Name of covered product 48
Exclusions Numerous exclusions to broad reporting requirement including, but not limited to: Payments made indirectly to a covered recipient through a third party when the manufacturer does not require, instruct or direct that payment be made to the covered recipient ( unaware of identity ). Payments or transfers of value less than $10 (unless aggregate amount is greater than $100) Educational materials that directly benefit patients or are intended for patient use Buffet meals, snacks, coffee, soft drinks generally available to all participants of a large scale conference/event Product samples not intended to be sold and are intended for patient use The loan of a medical device for a short term trial period (90 days) to permit evaluation Discounts (including rebates) In kind items used for the provision of charity care Physicians who are bona fide employees of the applicable manufacturer See Final Rule for complete list of applicable exclusions 49 Reporting Food & Beverage What is required? When food & beverage is reported in a group setting, applicable manufacturers must calculate the per person value by the total number of both covered recipients and non covered recipients who participated in the meal The per person value must be reported for covered recipients only (i.e., physicians) Example: Pizza for lunch, bagels & coffee for breakfast (included 6 staff members and 4 doctors) NOTE: Manufacturers do not need to report buffet meals, snacks, coffee, or other food/beverages made generally available at a large scale conference/event 50 Reporting Gifts Gifts May include anything provided to a covered recipient that does not fit into another category Example: Small trinkets (above the minimum threshold) would be reported as a "gift" since they are not included in any other category (e.g., flowers)» But, sporting event tickets would be better categorized as "entertainment" rather than a gift Reporting Continuing Medical Education Manufacturers do not need to report if all of the following conditions are met: 1) The event is accredited or certified (e.g., ADA, AMA); 2) Manufacturer does not pay the covered recipient speaker directly; and 3) Manufacturer does not select the speaker or provide the CME provider with a distinct, identifiable set of individuals as potential speakers for the continuing education program. 51 52 Reporting Research Reporting Research Any payments/transfers of value made in connection with research must be reported, and such payments must be made pursuant to a written agreement Key Events & Dates How is Research Reported? Must be reported as one single interaction Report must: Identify entity (if applicable) Identify the Principal Investigator(s); Report total aggregate amount of research payment; Identify name of study; and Identify name of related covered product Delayed Publication 53 54
Key Events & Dates August 1, 2013: Data collection begins for reporting January 1, 2014: Physicians may begin to register with CMS to receive notification for opportunity to review prior to public release March 31, 2014: First reports to CMS due (for period August 1, 2014 December 31, 2013) Report the 90 th day of each calendar year thereafter September 30, 2014: Public disclosure via CMS website April 1, 2015: CMS must provide its first reports to Congress 45 Day Review & Dispute Period CMS will provide notification to manufacturers, GPOs, and covered recipients when data is ready to review Individual physician registration, not group practice or employer! Covered recipients and physician owners may review data & notify the manufacturer or GPO of errors within 45 days Physician/teaching hospital must directly contact applicable manufacturer/gpo and resolve any dispute Manufacturer or GPO then has 15 days to correct the information before publication of disputed information If dispute is unresolved, information is still publically reported, but it is marked as disputed CMS will update data from current and previous year at least once annually 55 56 Audits & Penalties CMS will conduct audits of manufacturers and GPOs to ensure compliance Penalties for non compliance include: Penalty up to $10,000 for each payment not reported ($150,000 per annum); and Penalty up to $100,000 for knowing failure to submit payment information for each payment (up to $1,000,000 per annum) "Unintended" Consequences Public Access to Information Available to government, patients, competitors, media/news, potential qui tam whistleblowers, divorce attorneys Anticipate questions from patients Possible scrutiny from media/news outlets Impact on PR (Reputational Risks) Inquiry & Investigation from Regulatory Agencies Malpractice liability Other Possible Federal/State law Implications 57 58 "Unintended" Consequences Public Relations Effect Public disclosure starts as of June 2014 Information may be misleading Perception of "impropriety" in industry/physician partnerships Reputational risks Outliers likely to attract scrutiny Identify potential vulnerabilities of conflicts and appearance of a conflict Potential scrutiny from media & watchdog groups "Unintended" Consequences Adverse effect on research & innovation May result in fewer: Clinical studies Conferences Research publications Scientific advisory board meetings with manufacturers Institutional COI Policies 59 60
"Unintended" Consequences Inquiry & Investigation from Regulatory Agencies OIG/HHS State AGs IRS CMS Other Possible Federal/State law Implications Anti kickback (Federal/State) Stark (Federal/State) False Claims Act Tax Exempt Organization Regulations Compliance Advice for Physicians Assess relationships with manufacturers and GPOs Ask entity in writing if payments/transfers are subject to/reported under the Sunshine Act If you have questions regarding your practice's relationships under the Sunshine Act, contact healthcare counsel THERE IS NO REQUIREMENT THAT MANUFACTURERS TELL YOU THAT THEY WILL BE REPORTING! Keep an open dialogue Communicate and keep a open a dialogue with any "applicable manufacturers" from whom you anticipate receiving payments If you voice your concerns ahead of time, this will save both physicians and applicable manufacturers from surprises at reporting time Become familiar with the type of information that is collected and reported The nuances of the law are very important 61 62 Update your information Update your professional info and ensure your specialty is designated correctly Physicians who have a NPI should verify the information in the NPI enumerator database is current and update it as needed. Be proactive Compliance Advice for Physicians This information among other unique identifiers will be used by industry to confirm they have identified you accurately http://www.cms.gov/regulations and Guidance/Legislation/National Physician Payment Transparency Program/Physicians.html Sign up for the pre publication Sunshine Act data review process (http://www.cms.gov/regulations and Guidance/Legislation/National Physician payment Transparency Program/index.html) Subscribe to the Open Payments listserv for updates http://www.cms.gov/regulations and Guidance/Legislation/National Physician Payment Transparency Program/Contact Us.html Review data submitted to CMS Work with applicable manufacturers and GPOs to ensure information submitted is correct and appropriate Be prepared to challenge if reported data is incorrect Remember if you do not register, you may miss the opportunity to review and dispute manufacturer reports! 63 Compliance Advice for Physicians Maintain records of all payments and other transfers of value CMS recommends at least 5 years from date transaction is published on CMS website NOTE: CMS acknowledged that this policy "may require the records to be retained for up to 9 years" because of payments or other transfers of value eligible for delayed publication Reconsider your current compliance practices Bolster compliance policies and procedures with industry and referral sources Adopt conflict of interest policies, sales rep. visitation policies Adopt tools/methods to collect Sunshine Act data Remember other Federal and State law implications (e.g. The Stark Law, Federal Anti Kickback Law, tax exempt laws, etc.) 64