Tag Archive for: Mary Holloway Richard

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Regulation focuses on financial ties between physicians and industry

Healthcare attorney, Mary Holloway Richard published an article about the Sunshine Act in the May/June 2015 issue of the Oklahoma County Medical Society publication, The Bulletin.

CMS seeks to mitigate potential impact on prescribing and treatment practices

Sunshine-Act-MHRThe Physicians Payments Sunshine Act (i) (“Sunshine Act”), despite its name, currently places no direct reporting requirements on physicians. Rather, the Sunshine Act requires that certain manufacturers of prescription drugs, biologic agents, medical devices and medical supplies (“Manufacturers”) and group purchasing organizations (“GPOs”) report to Centers for Medicare and Medicaid Services (“CMS”) payments in specified amounts (ii) and other transfers of value to physicians (iii) and to teaching hospitals (iv). In addition, ownership and investment interests in applicable Manufacturers and GPOs held by physicians (and immediate family members) must be reported annually by applicable Manufacturers and GPOs. Covered payments include cash (or cash equivalent, in-kind items or services), stock (including stock options or ownership interest dividend profit or other return on investment), and other forms of payment to be determined in the future by CMS. While it is not the physician’s duty to report, the reporting requirement directly impacts physicians who receive such payments as their names appear on a list on the CMS website accessible by patients and other consumers (v).

The purpose of the Sunshine Act is to identify potential biases in physician prescribing and treatment practices, to reveal conflicts of interest for clinical researchers and educators, and to identify transactions in which payments involving potential referrals by physicians exceed fair market value. The Sunshine Act creates the Open Payments Program for the actual reporting of the financial payments and transfers of value to physicians. Currently the burden is on the Manufacturers to report payments for consulting fees, contracted services, honoraria, gifts, entertainment, food, travel, education, research, charitable contributions, royalty or license, current or prospective ownership or investment interest, grants, direct compensation for serving as faculty or speaking at a medical education program, and any other nature of payment or transfer of value as defined by the Secretary of the Department of Health and Human Services (“HHS.”) The form of the payment and the nature of the payment must be reported. See Table 1 below. Data has been collected since August, 2013, and is due to CMS by March 31 of each year. The first report was available to the public on September 30, 2014, and the 2014 report is predicted to be available on June 30, 2015 (vi).

The regulations provide for a formal dispute resolution process whereby physicians can seek to correct inaccurate information. In September, 2014, representatives of pharmaceutical and biotechnology companies and organized medicine expressed concerns about the database and its presentation of data to the public in a potentially misleading manner. CMS shut down the Open Payments system for a period of time to address these issues. On October 30, 2014, CMS announced a procedure for Manufacturers and GPOs to report information not previously accepted by the system because of data errors, and CMS extended the reporting time accordingly. CMS has provided guides for Manufacturers to use to correct records and for covered recipients to correct information submitted in compliance with the regulations (vii).

Registration with CMS to receive notifications and information submitted by Manufacturers and GPOs is voluntary. This information is now available on the CMS website, to public and regulators alike, but the website itself continues to present issues of accuracy and ease of on-line accessibility. Physicians and teaching hospital representatives have the opportunity to review and, if appropriate, dispute information reported about them in the Open Payments System (viii).

open payments graph

Source: ttps://www.cms.gov/OpenPayments/About/How-Open-Payments-Works.html

It has been necessary to resolve a number of procedural and substantive issues with the reporting requirements including initial confusion about the information that had to be reported and by whom. Example of substantive issues to be resolved may be helpful is understanding the regulatory climate. Some confusion has surrounded the CMS treatment of payments related to continuing medical education. “Direct payments” have always been included in the Sunshine Act’s reporting requirements. “Indirect payments” refers to payments by a manufacturer to a continuing education organization where the Manufacturer directs that the third party provide the payment or transfer to a covered recipient. In the October, 2014, final regulations, CMS responded to widespread criticism of its treatment of the CME by requiring reporting in 2017 payments (direct and indirect) made to continuing education organizations in 2016 as long as the speaker can be identified (ix). Further, payments to physicians for speaking at CME programs need not be reported if the following conditions are met:

  • The CME program meets accreditation/certification standards of one of the following: (1) the Accreditation Council for Continuing Medical Education; (2) the American Academy of Family Physicians ; (3) the American Dental Association’s Continuing Education Recognition Program; (4) the American Medical Association; (5) the American Osteopathic Association; and
  • The Manufacturer or GPO does not pay the speaker directly; and
  • The Manufacturer or GPO does not select the speaker or provide the third party, such as the CME vendor, with a distinct, identifiable set of individuals to be considered as speakers for the CME program (x).

Other frequent questions concern Manufacturers providing meals and other event support and sponsorships to physicians. In this context the Open Payments program is very specific–e.g., where a Manufacturer’s sales representative brings a meal to a staff meeting or a community education event for a number of persons, the cost of the meal is divided by the number of persons who actually eat the meal and this benefit is reported only if it exceeds $10.00 per person. This does not include meals eaten by support staff. Financial support of buffet meals at large-scale medical conferences is not reportable. The “User Guide” for Open Payments published by CMS is over 350 pages long and provides additional guidance to those reporting and those reviewing reports. It is accessible on-line (xi).

The Open Payments System is expected to significantly impact historic financial support of provider, patient and community education by industry. Importantly, these regulations and reporting requirements echo federal policy designed to avoid improper payments and incentives and market influence. These are the same concerns that spawned the expansion of federal antitrust, Stark and Anti-kickback law within health care.

Ms. Richard is a health care lawyer at Phillips Murrah, P.C. in Oklahoma City and was formerly in house counsel with INTEGRIS Health, Inc.

The Natures of Payment that are of Interest to CMS

Nature of payment Definition Examples
Consulting fee Payments made to physicians for advice and expertise on a particular medical product or treatment, typically provided under a written agreement and in response to a particular business need. These payments often vary depending on the experience of the physician being consulted. Example 1: Company A has developed a drug to treat patients with a particular disease and wants advice from physicians on how to design a large study to test the drug on patients. Dr. J has a large number of patients with this disease and has experience doing research on how well medicines work for this condition. Company A asks Dr. J if he would spend about 10 hours per month to work with other physicians to create a new research study. Dr. J agrees and is paid for his time.Example 2: Company C has designed a new tool for surgeons to use when they are doing heart surgery. The company pays some physicians to give the new tool a “test drive” on a computer-simulated patient at the company headquarters. The physicians are paid an hourly fee for their time testing the tool and giving advice on how to make it work better. They are also paid for flights, hotel rooms and meals.
Compensation for services other than consulting, including serving as faculty or as a speaker at an event other than a continuing education program. Payments made to physicians for speaking, training, and education engagements that are not for continuing education. A physician who frequently prescribes a particular drug is invited by the company that makes that drug to talk about the medicine to other physicians at a local restaurant.  The physician is paid for preparation time as well as the time spent giving the talk.
Honoraria Similar to consulting fees, but generally reserved for a one-time, short duration activity. Also distinguishable in that they are generally provided for services which custom prohibits a price from being set. A medical device manufacturer representative goes to a medical meeting and asks some physicians there for an hour of their time to talk about features they would like to see to improve a particular device. This representative pays each physician a one-time honorarium.

Footnotes:

(i) The Physician Payment Sunshine Act is Section 6002 of the Patient Protection and Affordable Care Act, 42 U.S.C.§18001. The regulations can be found at: http://www.cms.gov/OpenPayments/Downloads/Affordable-Care-Act-Section-6002-Final-Rule.pdf.

(ii) There are specific reporting thresholds for applicable manufacturers and GPOs. The Open Payments reporting thresholds are adjusted based on the consumer price index. This means that for 2015 (January 1 – December 31), if a payment or other transfer of value is less than $10.21 ($10.00 for 2013, $10.18 for 2014), unless the aggregate amount transferred to, requested by, or designated on behalf of a physician or teaching hospital exceeds $102.07 in a calendar year ($100.00 for 2013, $101.75 for 2014), it is excluded from the reporting requirements under Open Payments. http://www.cms.gov/OpenPayments/Program-Participants/Applicable-Manufacturers-and-GPOs/Data-Collection.html.

(iii) This law applies to physicians and other providers, but, for the purposes of this article, we will only reference physicians. The other providers as defined in Section 1861(r) of the Social Security Act to whom this law applies include medical and osteopathic physicians, dentists, podiatrists, optometrists and chiropractors. Providers exempted include medical and osteopathic residents, physician assistants, nurse practitioners and allied health practitioners. However, in some circumstances, payments to these types of providers may be imputed to physicians, thereby triggering the Manufacturers’ obligations to report payments.

(iv) Manufacturers and GPOs may also be referred to in this paper as “covered recipients.”

(v) https://openpaymentsdata.cms.gov/.

(vi) http://www.cms.gov/OpenPayments/About/Resources.html

(vii) The American Medical Association offers a toolkit for physicians to use in reviewing and dispute reports at: http://www.ama-assn.org/ama/pub/advocacy/topics/sunshine-act-and-physician-financial-transparency-reports/sunshine-act-toolkit.page?

(viii) See Flow Chart 1 in content.

(ix) 42 C.F.R. §403.902.

(x) 42 C.F.R. §403.904(g).

(xi) www.cms.gov/Regulations-and-Guidance/Legislation/National-Physician-Payment-Transparenct-Program/Download/Open-Payments-User-Guide-%5BJuly-2014%5D.pdf.

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(UPDATE) What does all of the talk in the media about the “SGR” mean for physicians?

By Mary Holloway Richard.

(Updated 4/14/15)

What does all of the talk in the media about the “SGR” mean for physicians?

One of the important issues identified in the health care industry “crisis” and reform is the cost of providing services.  Focus has been on shifting payment from charges for visits and procedures to reimbursement according to certain metrics such as outcome and quality.  In addition, a ceiling on physician reimbursement has been much debated.  The Affordable Care Act (“ACA”) included the Medicare sustainable growth rate (“SGR”) formula for doing just that, although the SGR was actually created as part of the 1997 deficit reduction law designed to contain federal spending  by tying physician payments to an economic metric or growth target.

On Tuesday, March 24, 2015, Democrats and Republicans revealed the result of their negotiation and cooperation to offer an alternative to Medicare’s SGR formula.  The proposal calls for repeal of the SGR formula.  House Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA) have arrived at this compromise to strengthen the financial picture for Medicare and to end the continuing threat of payment cuts to physicians.  According to the Association of American Medical Colleges, although medical school applications are up slightly since 2011, the United States faces a physician shortage of between 46,000 and 90,000 by 2015.  www.aamc.org/newsroom/aamcstat/,a=427828.  The economic incentives to the professional are an integral component in stabilizing the health care system in this country.  The House overwhelmingly approved the proposal on Thursday, March 26, 2015.

What does the SGR mean to physicians?  There is still great divergence between the Boehner (repeal Washington’s most famous gimmick) and Pelosi (Medicare payments for doctor services to seniors facilitating continuation of physician-patient relationship) perspectives.

What does the bipartisan proposal mean to physicians?  This will halt the cut that was to be implemented on April 1, 2015.  When the ACA was signed five years ago, that seemed like a long time away but was nonetheless worrisome.  It puts in place a 21.2% reduction in Medicare payments making it virtually impossible for many providers to support the operations of their practices or clinics.

This proposal is very similar to the one proposed in 2014 , and it includes a system of rewarding physicians based upon quality standards rather than output or number of services provided and fosters a focus on coordination of care, prevention and quality and key cost containment strategies.  All of these elements are part of a new accountability that is the cornerstone for allowing payment increases for doctors for the next five years during this period of transition.  In addition, if approved by the Senate, the bipartisan proposal would extend the Children’s Health Insurance Program (“CHIP”) with full funding through September 30, 2017.  It also provides for $7.2 billion funding for community health centers.  The cost of the House package is $200 billion

On Friday, March 27, 2015, the Senate adjourned without approving the Doc fix.  It apparently will take up the issue upon its return in mid-April.  In the meantime, CMS is poised to delay processing provider claims as of April 1, 2015, when the 21.2% cut was to go into effect.  However, CMS is warning that the cut will go into effect if the Senate fails to pass an SGR fix by April 15.  One complication may exist in the form of legislation introduced by a bipartisan Senate team, Senators Cardin (D-MD) and Collins (R-ME), to permanently repeal the caps on how much the program spends on rehabilitation therapy.  This unresolved issue may arise as an amendment to the legislation to be considered after the break and provides a reminder of how single issues or senators can ultimately frustrate the passage of legislation that has support from both parties.  Others in the Senate are critical that spending cuts will offset only a portion of the costs.  Conservatives have characterized this element of the plan as irresponsible.  The AARP is focused on increased costs to Medicare beneficiaries and will continue to lobby for changes to lower these costs.

Democrats may want amendments to extend the CHIP program four years, to remove the Hyde Amendment (abortion-related language), and to repeal the Medicare therapy cap.  Any amendments would, of course, send the legislation back through the House, and this appears to be an unattractive alternative to all concerned because of the remarkable support for this resolution from both parties.  A perhaps more significant complication is presented by the report issued last week by the Office of the Actuary of the Centers for Medicare and Medicaid Services (CMS) indicating that physician payments in which the 0.5% increases in Medicare payments over the next four years would come to a halt in 2020.  In that year a two-tiered system is phased in which is designed to encourage physicians to shift greater numbers of patients into risk-based models.  For physicians continuing to work within the traditional payment system, but who are scoring well on the quality metrics, remuneration will be awarded from a separate appropriation.  After 2024, the alternative payment track would increase annually by 0.75% which will be three times greater than the rates of other physicians. CMS is predicting that 2024 is the time when there will be a shortfall and payments will lag behind inflation.

On the one hand, Congress is fed up with required annual intervention for the past seventeen years to avoid scheduled cuts to physicians.  On the other hand, Congress is forced to rely on estimates to predict costs which places the federal government at risk of future payments not keeping up with the either the chosen formulae or with inflation.

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(UPDATE) A look at the controversial Affordable Care Act on its fifth anniversary

By Mary Holloway Richard.

(Updated 4/7/15)
President Obama has taken the occasion of the fifth anniversary of the signing of the Affordable Care Act (“ACA”) to characterize continued activities on the Hill to repeal it as renegade special interest activities. The ACA continues to be a subject of debate both in terms of its accomplishments—how many are newly covered and how much will be saved—and in terms of its public support.

While the Associated Press reported on March 23, 2015, that public support was down 5% since its passage, as one who daily writes and advises health care clients on matters related to the ACA, I can say with certainty that the depth and breadth of increased regulation spawned by the ACA are changing the nature of the system.

Those changes include responsive movement toward integrated health systems, mergers and affiliations; transition from quantity- to quality-based reimbursement; the relaxation of HIPAA standards in some respects and its tightening in others in the context of EHR transformation; and increased direct and indirect costs to employers as a result of new responsibilities.

Nearly fifty changes have been made to the ACA as of March 2, 2015, and this suggests a continuing need for providers, employers and business owners to remain informed and responsive to the moving regulatory compliance target.

On Monday, March 30 the Supreme Court rejected a new challenge to the Affordable Care Act (“ACA”)  that targeted the Independent Payment Advisory Board (“IPAB”), a 15-member government panel which has been characterized as a “death panel” because of its intended role in cutting Medicare costs.   The IPAB was to convene when the target growth rate for Medicare (3.03%) is exceeded.  However, the growth rate is 1.15% according to CMS, and so the administration has not nominated any panel members.  In declining to take up the case, the Supreme Court left undisturbed the 9th US Circuit Court of Appeals in San Francisco dismissal of the lawsuit. The proponents of the ACA are calling this a win.  Coons v. Lew, No. 14-525.   Certiorari was denied by the United States Supreme Court on March 30, 2015.

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SCOTUS order to stay executions doesn’t change anything

shutterstock_lethal-injectionThe Supreme Court of the United States stay order blocking three pending executions in Oklahoma, handed down Jan. 28, doesn’t actually change anything, said Phillip Murrah Director and one of the firm’s founders, Robert N. Sheets.

While there is much interest and coverage of the motion, no decision has been made that will change how death sentences are carried out – other than a mandate to remain in place for the time being.

While the occurrence is quite interesting, it is simply an order to halt executions until the highest court of the land has a chance to hear arguments and make a decision.

From The Supreme Court of the United States on Jan 28, 2015: Application (14A796) granted by the Court. Respondents’ application for stays of execution of sentences of death presented to Justice Sotomayor and by her referred to the Court is granted and it is hereby ordered that petitioners’ executions using midazolam are stayed pending final disposition of this case.

Wednesday’s order doesn’t address the death penalty. The State of Oklahoma is still able to execute condemned prisoners by any other means previously deemed constitutional, Sheets noted. The Stay also doesn’t make a determination about the controversial decision to use the drug midazolam as lethal injection agent during the execution process. It doesn’t determine anything about constituent ingredients. It doesn’t address process or propriety. It doesn’t make any kind of judgment, one way or the other.

What happened here in Oklahoma is simple – Oklahoma attorney general Scott Pruitt asked earlier this week for the stay, according to a report by The Associated Press:

“Rather than stop the executions himself, Oklahoma Attorney General Scott Pruitt took the unusual step of asking the justices for a stay. Oklahoma wants the right to resume executions if it finds a different suitable drug.  Pruitt said in a statement: “It is important that we act in order to best serve the interests of the victims of these horrific crimes and the state’s obligation to ensure justice in each and every case. The families of the victims in these three cases have waited a combined 48 years for the sentences of these heinous crimes to be carried out.”

The United State Supreme Court, defense attorneys for the condemned inmates and the Oklahoma Attorney General agreed that the state should wait on these executions until final disposition of the case. The executions are put on hold until the Court can hear Richard E. Glossip v. Kevin J. Gross.  Richard Glossip was the next inmate scheduled to be put to death

SCOTUS scrutiny: The drug and how it is administered

The Supreme Court will hear Glossip v. Gross in April and issue a decision in the summer. The focus of the case is the drug, midazolam, and whether it causes pain and suffering in the inmate. The drug is part of a drug combination used in the state’s lethal injection process. Last year, Oklahoma received worldwide attention after an execution using the same drug when terribly wrong.

During the execution process, midazolam (Midazolam Hydrochloride) is administered to the inmate, first, as a sedative. That injection, according to The New York Times, “was to be followed by injections of vecuronium bromide, a paralyzing agent that stops breathing, and then potassium chloride, which stops the heart.”

Health Law Oklahoma attorney, Mary Holloway Richard, a pioneer in healthcare law who has practiced in the area of clinical research and regulatory law for many years, said that the drug, itself, isn’t necessarily the problem. Rather, how and under what conditions it’s administered could be more at issue.

“To eliminate some of the mystique, this is the drug commonly known, and used, as Versed,” she clarified. “This drug is used in many venues and even for many different types of patients, including pediatric patients.”

A significant issue is raised by the exact recipe of the drug combination and the amount of Versed used, she added. “I keep seeing that it must be titrated properly.”

In other words, the dosage amount and duration of administration is very important to successful effect. Oklahoma has a three-drug protocol.

Also implicated is the manner in which the drug is administered. After the Clayton Lockett execution problems, Oklahoma released a report identifying insufficient training of those administering the drug and communication between prison and support staff, as well as a lack of contingency planning on the part of the Department of Public Safety.  The report also points to difficulties in starting the IV in Mr. Lockett.

More info: http://www.deathpenaltyinfo.org/state-lethal-injection

 

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Healthcare cost-cutting trend ties money to results

By Mary Holloway Richard

healthcare-shutterstock-02The trend toward decreasing costs in healthcare has seized upon value-based care – tying physician compensation to performance and outcome measures. These measures are also being used in contract negotiations with third party payors and healthcare plans.

Counsel for institutional and non-institutional providers are at the table providing advice about a number of important contractual terms and their ramifications including appropriate and measurable metrics for calculating bonuses and penalties and, if shared savings are at issue, how they should be split. For those who have been involved in negotiations of traditional fee-for-service contracts, this will seem like a fundamental change. It may also seem like a change that narrows the potential for disputes.

However, numerous issues will continue to be important to providers. For example:

  • Are the metrics used as incentives or penalties?
  • Are the selected benchmarks easily measurable and attainable?
  • Do they raise regulatory issues such as potentially impacting volume in an unacceptable way or spawn any other results that could be construed to be anticompetitive?

While these questions have yet to be answered by Oklahoma courts, we can look to decisions from other states and consider ourselves forewarned as to the nuances and potential pitfalls in negotiating and drafting these terms.

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