Slides on Managing and Monitoring Compliance with the PPACA’s Sunshine Provisions: Legal, Compliance, and Operational Considerations Presentation by David Sclar, Gary Keilty, and Andrew VanHaute from October 2011 Slides on compliance with sunshine provisions.

1. Managing and Monitoring Compliance with the
PPACA’s Sunshine Provisions: Legal,
Compliance, and Operational Considerations
October 17, 2011
Washington, D.C.
Speakers:
Gary Keilty, Huron Healthcare
David Sclar, Ropes & Gray LLP
Andrew VanHaute, AdvaMed

2. Federal Sunshine Provisions
 Patient Protection and Affordable Care Act
(PPACA)
– Signed into law March 23, 2010
– Section 6002: Transparency Reports
and Reporting of Physician
Ownership of Investment Interest
– Section 6004: Prescription Drug Sample
Transparency
2

3. Overview of State and Federal
Sunshine Laws
Preemption by
PPACA
State Sunshine Laws
Disclosure Requirements
Requirements Not Preempted:
• Behavioral prohibitions
• Code of Conduct
• Training and internal auditing
• Representative licensing
• Lobbying registration, fees
3

4. PPACA Applicability/Requirements
TRANSACTIONS ($)
$
Payments or (Minus
Transfers of Value Exclusions)
4

5. PPACA Applicability/Requirements
DISCLOSURE
Payments or (Minus
Transfers of Value Exclusions)
Disclose Posted
Online
5

6. Disclosures Required by
PPACA Sunshine Provisions
 Any “applicable manufacturer” must
report any “payment or transfer of
value” to any “covered recipient”
 “Applicable manufacturer”:
– Manufacturer of any drug, device, biological
or medical supply reimbursed under
Medicare, Medicaid, or CHIP
 “Covered recipients”:
– Physicians
– Teaching Hospitals 6

7. Broad Scope - Required Reporting
of “Transfer of Value”
“Transfer of value” (cash and cash equivalents, in-kind items or
services, stock and other forms defined by the HHS Secretary):
– Consulting fees – Education
– Compensation for – Research
non-consulting – Royalty or license
services
– Current or prospective
– Honoraria ownership or investment
– Gift interest
– Entertainment – Direct compensation for serving
– Food as faculty or speaker for
– Travel medical education program
– Grant
– Others defined by the Secretary 7

8. Selected Exclusions from
“Transfers of Value”
 A transfer of value of less than $10 (unless the aggregate to
the covered recipient exceeds $100 in that calendar year)
 Product samples not intended to be sold and intended for
patient use. (But see § 6004 for prescription drug samples)
 Educational materials that directly benefit patients or are
intended for patient use
 Short-term loans of a device for evaluation purposes, not to
exceed 90 days
 Items or services provided under a contractual warranty.
 Transfer of value when the covered recipient is a patient
and not acting in his/her professional capacity
 Discounts and rebates
8

9. Additional Requirement: Disclosure of
Physician Ownership Interests
 Manufacturers and GPOs must disclose to the HHS
Secretary:
– $ invested by each physician owner or investor
– Value/terms ownership or investment interests
– Payments/transfers of value to such physicians
– Any other information specified by the Secretary
 Disclose by March 31, 2013 and the 90th day of each
calendar year
 Secretary will make this information publicly available
9

10. State “Sunshine Laws”
& Industry Codes
Current States with Relevant Laws
 California* • Massachusetts
 Connecticut* • Minnesota
 District of Columbia • Nevada*
 Maine Repealed July
2011, effective • Vermont
September 28,
2011 • West Virginia
* Law does not require disclosures (not
preempted by PPACA sunshine provisions)
Voluntary Industry Codes of Behavior
PhRMA Code
AdvaMed Code of Ethics
10

11. Timeline of PPACA Sunshine
Law Implementation
 2011
1
1
/1
/1
D e
TB at
1
4
/2
0/
D
3
1
CMS issues
CMS held a interim final Secretary shall establish
Special Open regulations for procedures for
Door Forum on 2012 (Maybe)
manufacturers to submit
§ 6002 of the
PPACA information and for the
data to be made public
(CMS missed deadline)
Note: State laws are already effective and ongoing
11

12. Timeline Update
 10/1/11 – Deadline came and went
– No procedures published for manufacturers to submit
information and for the data to be made public
 10/3/11 - Senators Grassley and
Kohl letter to CMS Administrator
Berwick expressing “severe
disappointment that deadline
was missed”*
 Letter demands of CMS:
– By 10/7/11 – Schedule a meeting with the Senators’ staff
to provide an in-depth briefing
– By 10/14/11 - Answer questions regarding 1) agency’s
timetable for implementing Sunshine provisions and 2) why
deadline was missed
*http://grassley.senate.gov/news/Article.cfm?customel_dataPageID_1502=37211
12

13. Timeline of PPACA Sunshine
Law Implementation
 2012
2
D e
/1
TB at
2
/1
1
D
3
/1
2/
1
1
Beginning of CMS issues final End of first
first reporting regulations reporting
period and (Maybe) period
preemption of
state laws
13

14. Timeline of PPACA Sunshine
Law Implementation
 2013
3
3
/1
/1
1
0
/3
/3
3
9
First manufacturer HHS will make
report due information
(covering 2012 public through
transfers of value) a website
14

15. Timeline of PPACA Sunshine
Law Implementation
 2014 and Subsequent Years
ch d nd
ea 0 th a
ye ay
ar
of e 9 /14
th 31
3/
4
/1
30
6/
Manufacturer HHS will make
report due information
(covering previous public through
calendar year’s a website
transfers of value)
15

16. A Sun Tan or A Sun Burn?
Realizing the Potential Benefits of Transparency
 Informed public
 Deterrence of improper payments
 Lower health care costs
 Data for prosecuting of violations of federal
health care laws
 Business opportunity for industry to track
expenses and monitor conflicts of interest
16

17. A Sun Tan or A Sun Burn (cont.)?
Challenges Facing Manufacturers - Legal
 Limitations in PPACA § 6002 sunshine
provisions
 Preemption and variance among PPACA and
state laws
 Changing laws and regulatory guidance
 Proposed laws in additional states
 Government investigation of outliers anticipated
17

18. A Sun Tan or A Sun Burn (cont.)?
Operational and Reputational Challenges
 Data analysis and data quality
 Relationships with providers
 Negotiations with vendors (e.g., CROs)
 Protection of trade secrets
 Public opinion
 Organizational change management
18

19. Operating and Strategic Considerations
 The enactment of many public disclosure regulations
threatens to change how the public views the relationship
between HCPs and Life Sciences (“LS”) manufacturers
 Ultimately this shift in public perception could force LS
manufacturers and their competitors to change, possibly
significantly, their go-to-market strategy
19

20. Operating and Strategic Considerations
Key Questions to Investigate
 What are the “what-if” scenarios after government
disclosure regulations are enacted and what are their
relative likelihood of occurring?
 Which product lines and HCP segments are most at risk
from the public disclosure regulations?
 What current sales and marketing operations could be
impacted by these scenarios?
 What external factors influence these scenarios and what
can be done now to pro-actively monitor the situation on
the ground and prepare for the future?
20

21. Aggregate Spend Reporting and Tracking
 Aggregate spend tracking requirements have
necessitated the development of processes and systems
to track aggregate spending at an enterprise level
 Most life sciences companies have experienced
significant implementation challenges, since very few
organizations had existing systems and processes that
were interoperable at the enterprise level
 Most systems were historically designed and
implemented to meet very specific functional needs or
departmental requirements (e.g., sales force automation,
grants management, T&E, etc.). As a result, capturing all
data necessary for reporting represents a challenge for
most life science organizations
21

22. Aggregate Spend Tracking & Reporting
Common Implementation Activities
Systems
Customer Touch
and Mapping Analysis
Master Points
Processes
Identify touch-
points with Identify notable
Gain
HCPs and HCOs gaps between
understanding
Custom
Update/Acquir
of systems and across all key  Map the touch-
the current
er Master
e Customer
processes functional areas
points to the
process
Master so all assessment
current
HCPs can be Develop and inventory
Determine all complete Business
uniquely
channels inventory of Systems and
identified and Develop a
where activities and processes
aggregated vision for the
payments may expenditure company’s
occur types
tracking
points
IMPLEMENTATION PROCESS
22

23. Aggregate Spend Reporting and
Tracking – Touch Points
 To fully comply with payment disclosure requirements,
manufacturers must identify all of the circumstances
under which healthcare entities are given payments, gifts
or other economic benefits
 Many manufacturers have found, however, that HCP
spending is widely spread across the organization and is
tracked in a variety of systems
23

24. Aggregate Spend Reporting and
Tracking – Touch Points (cont.)
Identifying HCP Spending Across Company
Identifying HCP Spending Across Company
Field Sales
Field Sales Medical &
Medical & Third-
Third-
(Non-
(Non- Clinical
Clinical Marketing
Marketing Party
Party
Distributor)
Distributor) Affairs
Affairs Vendors
Vendors
Meals Advisory
Advisory Travel &
Meals Meals/Gifts
Meals/Gifts Travel &
Boards
Boards Hospitality
Sample
Hospitality
Focus
Areas
Gifts
Gifts Consulting
Consulting Peer to Peer
Peer to Peer Service Fee
Service Fee
Services
Services Meetings
Meetings
Grants Payments
Payments
Grants
Publications
Publications Advisory
Advisory
Practice
Practice & Speaking Boards Consulting
& Speaking Boards Consulting
Aids
Aids Services
Services
Medical
Medical Consulting
Consulting
Education
Education Services
Services
24

25. Proactive Compliance Management
ON‐GOING REPORTING PREDICTIVE
PLANNING
“How do we “How do we
“How do we report spend?” spend more
continually effectively?”
determine
spend?”
STEPS
 Customer Master  Sales & Marketing
 Business Process Analysis
Integration Decisioning
 Customer Touch Point  Commercial Data Center
Identification  Aggregate Spend Reporting
Tool Implementation of Excellence (CoE)
OUTCOMES
 As‐Is / To‐Be Strategy  Transparency and Visibility  Most effective use of
for Ethics & Compliance commercial budget
 Gap Analysis to determine
issues across various  Seamless integration of tools  Promotional Mix
division / functions in an needed for reporting Optimization with rich
organization processes “Reporting” data
 Roadmap created to  Scalability of solution to
blueprint next steps handle pending and future
state and federal legislation
25

26. Business Unit Responsibility
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Source: Huron Consulting Group Survey 26

27. Current Methods Used To Satisfy
Reporting
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Source: Cegedim Relationship Management 2011 Survey 27

28. Planned Reporting Methods For New Laws
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Source: Cegedim Relationship Management 2011 Survey 28

29. Confidence That Reporting Is Fully Compliant
50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Very Confident Somewhat Neutral Not Very/Not at All
Confident Confident
Source: Cegedim Relationship Management 2011 Survey 29

30. Level of Concern In Preparing for Sunshine Provisions
7.40
7.20
7.00
6.80
6.60
6.40
6.20
6.00
Proper ID of Collecting All Data Integrity Certification Handling
Spend Recipients Relevant Spend Before Posting Inquiries Post
Data Posting
Source: Cegedim Relationship Management 2011 Survey. Scale 1 to 10 (10 highest)
30

31. Operational Challenges
 Determining who “owns” aggregate spend reporting and
tracking within the organization
 Development of standard operating procedures
 Employee Education
 Training
 Compliance auditing and monitoring activities
31

32. Potential Provider Implications
 Despite enforcement actions against manufacturers, many
providers believe they are immune to enforcement
initiatives in this area or have not focused attention to these
risks
 Enforcement agencies and counsel representing patients in
private law suits have begun to broaden their focus on
providers with regards to conflicts of interest with
physicians
 All providers need to develop and enhance their physician
conflicts of interest policies; however, a growing number of
providers, in particular academic medical centers, have
enhanced this process
32

33. Provider Implications (cont.)
 As a result of increased regulation and based on recent
vendor settlements with the government, providers also
need to develop a comprehensive and effective compliance
program for their organization in connection with potential
physician conflicts of interests
33

34. Concluding Thoughts
Questions & Answers
34

35. Contact Information
Gary Keilty
Huron Healthcare
gkeilty@huronconsultinggroup.com
813.309.1139
David Sclar
Ropes & Gray LLP
David.Sclar@ropesgray.com
212.596.9660
Andrew VanHaute
AdvaMed
AVanHaute@advaMed.org
202.434.7225
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