Al­ready feel­ing the heat

Docs re­think­ing pay­ments as Sun­shine Act looms

Modern Healthcare - - THE WEEK IN HEALTHCARE - Jaimy Lee

Dr. No­gah Hara­mati, a ra­di­ol­o­gist based in New York, re­cently can­celled a meet­ing with a ven­dor— one of the many equip­ment man­u­fac­tur­ers and soft­ware de­vel­op­ers who rou­tinely of­fer free din­ners and lec­tures to ply their wares.

Hara­mati, who works for Al­bert Ein­stein Col­lege of Medicine and Mon­te­fiore Med­i­cal Cen­ter in the Bronx, said he was con­cerned that even at­tend­ing a lec­ture with a din­ner would lead to his name be­ing listed in a pub­lic data­base out­lin­ing that tie to the com­pany. Such dis­clo­sures could put him in con­flict with poli­cies set out by his em­ployer.

“It’s very easy to run afoul of that data­base,” he said.

Sim­i­lar thoughts are go­ing through the minds of thou­sands of physi­cians across the coun­try with the im­mi­nent roll­out of new fed­eral reg­u­la­tions that re­quire med­i­cal de­vice and drug man­u­fac­tur­ers to dis­close their fi­nan­cial deal­ings with all health­care providers. “Physi­cians as well as teach­ing hos­pi­tals are go­ing to be wary of ac­cept­ing some of the trans­fers or pay­ments that they may have taken in the past now that th­ese things will see the light of the day,” said Robert Hus­sar, a lawyer with Manatt, Phelps & Phillips.

The leg­is­la­tion re­quir­ing pub­lic dis­clo­sure of the fi­nan­cial re­la­tion­ships be­tween health­care ven­dors and physi­cians has been widely dis­cussed in pol­icy cir­cles for years. Crit­ics claimed pay­ments for speak­ing, con­sult­ing, re­search or even the small trin­kets and meals de­liv­ered dur­ing rou­tine sales calls un­duly in­flu­enced physi­cian choices and in­flated health­care costs. To com­bat those ef­fects, Congress re­quired pub­lic re­port­ing of those pay­ments in a pub­licly ac­ces­si­ble data­base. The leg­is­la­tion, la­beled the Physi­cian Pay­ment Sun­shine Act, was in­cluded in the 2010 health­care re­form law.

Start­ing in Au­gust, man­u­fac­tur­ers and providers will be­gin col­lect­ing data about so-called “trans­fers of value” that they make to physi­cians and teach­ing hos­pi­tals. The data will be re­ported to the CMS, which is ex­pected to make it pub­lic for the first time in Septem­ber 2014.

The roll­out of the Sun­shine Act sets up sev­eral likely re­sponses by the com­pa­nies and the physi­cians and is ex­pected to al­ter the long- stand­ing and some­times lu­cra­tive fi­nan­cial re­la­tion­ships be­tween the two par­ties.

Some physi­cians will prob­a­bly see end­ing re­la­tion­ships with man­u­fac­tur­ers as the wis­est course, since there’s not much in­come at stake and they fear hav­ing the data mis­in­ter­preted if found in the pub­lic data­base.

Oth­ers with ex­ten­sive ties to in­dus­try may scale back their lu­cra­tive deal­ings in or­der to ap­pear less be­holden to in­di­vid­ual firms.

On the in­dus­try side, some com­pa­nies may be­gin look­ing for new ways to in­flu­ence physi­cian be­hav­ior. That could lead to stepped-up ad­ver­tis­ing in print or on­line and in­creased con­tri­bu­tions to pro­fes­sional so­ci­eties, which write clin­i­cal prac­tice guide­lines. Oth­ers may sim­ply cut back spend­ing on physi­cians as they pre­pare for in­creased scru­tiny over the na­ture of the trans­fers of value.

“Whether trans­parency will lead to fewer re­la­tion­ships is re­ally the mil­lion-dol­lar ques­tion,” said Dr. Daniel Car­lat, di­rec­tor of the Pew Char­i­ta­ble Trusts’ Pre­scrip­tion Pro­ject. “The kinds of re­la­tion­ship that may drop off may well be the most in­ap­pro­pri­ate re­la­tion­ships.”

One of the big­gest con­cerns that physi­cians have is that pa­tients may be­gin ques­tion­ing a doc­tor’s rea­sons for pre­scrib­ing cer­tain drugs if pub­licly avail­able data links them to the drug­maker. At the Amer­i­can Med­i­cal As­so­ci­a­tion’s an­nual meet­ing last month, physi­cians ex­pressed fears that in­ac­cu­rate re­ports pro­vided by man­u­fac­tur­ers could neg­a­tively re­flect their re­la­tion­ships with pa­tients.

“The me­dia can re­ally sen­sa­tion­al­ize this,” Dr. Lynda Young, a pe­di­a­tri­cian from Worces­ter, Mass., and for­mer pres­i­dent of the Mas­sachusetts Med­i­cal So­ci­ety, said at the meet­ing.

Al­though the bur­den of col­lect­ing and re­port­ing data falls to man­u­fac­tur­ers, the AMA is urg­ing doc­tors to re­view the dis­clo­sures and de­mand cor­rec­tion of in­ac­cu­ra­cies dur­ing a 45-day re­view pe­riod es­tab­lished by the law. How­ever, it’s up to man­u­fac­tur­ers and not reg­u­la­tors to han­dle the cor­rec­tions. The CMS can mark the data as un­der dis­pute, but has said it will not me­di­ate dis­agree­ments be­tween physi­cians and com­pa­nies.

“The AMA fought to en­sure physi­cians have the abil­ity to ap­peal any in­ac­cu­rate

in­for­ma­tion that is re­ported about them through the Sun­shine Act dis­clo­sure process, but it is best to cor­rect any er­rors be­fore they are pub­licly re­ported,” AMA Pres­i­dent Dr. Ardis Hoven said in a state­ment.

Some hos­pi­tals have started ed­u­cat­ing physi­cians about the po­ten­tial im­pact of Sun­shine Act re­port­ing. Many teach­ing hos­pi­tals have adopted stricter con­flict-ofin­ter­est poli­cies in re­cent years.

The Univer­sity of Arkansas for Med­i­cal Sciences in Lit­tle Rock, for in­stance, no­ti­fied its med­i­cal staff and fac­ulty about the pub­lic dis­clo­sures.

The aca­demic med­i­cal cen­ter strength­ened its con­flict-of-in­ter­est pol­icy about 2½ years ago to fur­ther ad­dress re­la­tion­ships be­tween in­dus­try and physi­cians. “It is fair to say that we rec­og­nized that there were go­ing to be more pub­lic dis­clo­sures and we wanted to be sure we had our act to­gether,” said Dr. Charles Smith, ex­ec­u­tive as­so­ciate dean for clin­i­cal af­fairs for the univer­sity’s Col­lege of Medicine.

It’s ex­pected that drug and de­vice man­u­fac­tur­ers will seek new ways to keep frus­trated physi­cians from walk­ing away from val­ued con­sult­ing or re­search-based re­la­tion­ships. If “doc­tors are un­happy, then those doc­tors may choose to end those re­la­tion­ships,” Pew’s Car­lat said. “That’s not some­thing the com­pa­nies want to see.”

The Sun­shine Act re­quire­ments will be very fa­mil­iar to com­pa­nies that in re­cent years have been forced to sign cor­po­rate in­tegrity agree­ments to set­tle govern­ment law­suits al­leg­ing the com­pa­nies had used physi­cian pay­ments to im­prop­erly mar­ket drugs for off-label uses or as kick­backs to get them to use spe­cific de­vices. Dozens of drug and de­vice com­pa­nies dis­closed their fi­nan­cial re­la­tion­ships with physi­cians un­der the set­tle­ments.

Six states have also adopted pay­ment-dis­clo­sure laws. The Sun­shine Act will be the first fed­eral law to re­quire such re­port­ing for all drug and de­vice com­pa­nies.

For providers, in­sur­ers and govern­ment pay­ers, the good news is that some re­search has in­di­cated that dis­clo­sure may lead to lower health­care costs.

Pa­tients “might be less in­clined to ac­cept treat­ment rec­om­men­da­tions from th­ese physi­cians or even to re­ceive care from them,” noted the au­thors of a May ar­ti­cle in the New Eng­land Jour­nal of Medicine. “Given the ev­i­dence that greater physi­cian fi­nan­cial in­volve­ment with man­u­fac­tur­ers is as­so­ci­ated with higher uti­liza­tion of ex­pen­sive, brand-name prod­ucts, such dy­nam­ics could re­duce costs.”

The rule man­dates that man­u­fac­tur­ers re­port any pay­ment or trans­fer of value that costs more than $10 or any ag­gre­gate amount that ex­ceeds $100 a year. In ad­di­tion, it re­quires man­u­fac­tur­ers and group pur­chas­ing or­ga­ni­za­tions to re­port own­er­ship or in­vest­ment in­ter­ests held by physi­cians and their fam­i­lies.

Sev­eral sources say they ex­pect to see changes in re­la­tion­ships be­tween physi­cians and man­u­fac­tur­ers. Yet it is un­clear whether the im­ple­men­ta­tion of what the CMS is call­ing the Open Pay­ments pro­gram will lead to fewer fi­nan­cial re­la­tion­ships ex­cept in in­stances where the re­la­tion­ships clearly were im­proper.

“If some of the money is used in­ap­pro­pri­ately, then those pay­ments would pre­sume to be un­der more scru­tiny and be less com­mon in the long run,” said Dr. Kevin Bozic, vice chair­man of the ortho­pe­dic surgery depart­ment at the Univer­sity of Cal­i­for­nia at San Fran­cisco.

Bozic said it seemed the de­ferred pros­e­cu­tion agree­ments reached be­tween the U.S. at­tor­ney’s of­fice in New Jersey and five ortho­pe­dic man­u­fac­tur­ers in 2007 led to fewer fi­nan­cial re­la­tion­ships with sur­geons for sev­eral years and only re­cently re­turned to their pre-2007 lev­els.

Physi­cians tend to think, “This doesn’t ap­ply to me. I would never be in­flu­enced by th­ese things,’ ” Bozic said. “The re­search shows oth­er­wise.”

The dis­clo­sures will shed light for the first time on many pre­vi­ously undis­closed re­la­tion­ships that ex­ist in the med­i­cal-de­vice in­dus­try.

The drug in­dus­try, by com­par­i­son, has had much more ex­pe­ri­ence with court-man­dated dis­clo­sure. Many of the largest drug com­pa­nies, such as Eli Lilly and Co., No­var­tis, and Pfizer, have been re­quired to re­port vary­ing in­for­ma­tion about their agree­ments with physi­cians as part of cor­po­rate in­tegrity agree­ments. Am­gen will be­gin post­ing in­for­ma­tion about its pay­ments to physi­cians later this week. Within the med­i­cal-de­vice sec­tor, there are fi­nan­cial re­la­tion­ships be­tween physi­cians and man­u­fac­tur­ers for prod­ucts rang­ing from in­fu­sion pumps and catheters to MRI ma­chines and op­er­at­ing ta­bles. “It’s for ev­ery type of de­vice,” said lawyer Kris­tian Wer­ling, a part­ner with McDer­mott Will & Emery. “They all need physi­cian in­put. It’s def­i­nitely wide-rang­ing.”

De­spite the level of de­tail in the fi­nal rule, there are pos­si­ble loop­holes that may al­low man­u­fac­tur­ers to by­pass physi­cian-spe­cific re­port­ing.

In a May 14 let­ter to the CMS, Pew urged the reg­u­la­tor to ad­dress a num­ber of con­cerns, in­clud­ing defin­ing large-scale con­fer­ences as more than 500 at­ten­dees to en­cour­age in­di­vid­ual re­port­ing of meals and gifts at smaller events. It also wants clar­i­fi­ca­tion that in­di­rect pay­ments made to pro­fes­sional physi­cian or­ga­ni­za­tions will not be ex­empt from re­port­ing un­less they are des­ig­nated for non­physi­cians.

Such physi­cian or­ga­ni­za­tions of­ten set prac­tice guide­lines that can in­flu­ence adop­tion of drugs and de­vices.

“If the grant is de­signed as un­re­stricted, it looks like the com­pa­nies will not have to at­tribute pay­ments to spe­cific physi­cians,” Car­lat said. “We’re talk­ing about mil­lions of dollars be­ing spent on dif­fer­ent ac­tiv­i­ties.”

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