Sunshine in Vermont… Again. Vermont Senate Bill (S-048)

As reported in the NY Times Blog yesterday, the State of Vermont, which already had fairly strict provider financial arrangement reporting requirements for pharmaceutical companies doing business in the state, is slated to significantly limit gifts to providers by both pharmaceutical and medical device companies.  The new law, which, according to the NYT blog, will be signed by the governor, will prohibit all but certain enumerated gifts, revise reporting requirements by pharmaceutical companies and expand the reporting requirements to medical device manufactures.

The legislative bodies findings and intent, obviously influenced by the reporting thus far provided under the previous version of the law, outline its concerns, stating its belief that marketing practices can influence the rise in health care spending and that “state of Vermont has a substantial interest in cost containment and the protection of public health.” The legislature cites a number of findings leading to its adoption of the legislation:  (i) an IOM study linking gifts to prescribing behavior, (ii) recent federal crackdowns on medical device manufacturers’ alleged antikickback  violations (see my related post on the federal Sunshine Act), (iii) significant spending in the relatively small state of Vermont on pharma marketing (“[i]n fiscal year 2008, pharmaceutical manufacturers reported spending $2,935,248.00 in Vermont on fees, travel expenses, and other direct payments to Vermont physicians, hospitals, universities, and others”), (iv) the pharma industry’s focus on 100 physician opinion leaders for almost two-thirds of pharma’s spend (“approximately $2.1 million in payments went to physicians…[with the] top 100 individual recipients received nearly $1,770,000.00 in fiscal year 2008”) and prevalence of pharma’s spend throughout Vermont’s 4,573 licensed health care professionals, with 2,280 being recipients.   Based upon the legislation, the Vermont lawmakers certainly are frowning on the nearly $1M spent on food, noting that many food recipients received $1,000 or more spent on them.  One individual recipient, in fact, apparently receive over $15,000 in food.

The legislature concludes that the “act is necessary to increase transparency for consumers by requiring disclosure of allowable expenditures and gifts to health care providers and facilities providing health care [in order] to reduce real or perceived conflicts of interest which undermine patient confidence in health care providers and increase health care costs by influencing prescribing patterns.  Limitations on gifts and increased transparency are expected to save money for consumers, businesses, and the state by reducing the promotion of expensive prescription drugs, biological products, and medical devices, and to protect public health by reducing sales-oriented information to prescribers.”

The new law prohibits “any manufacturer of a prescribed product or any wholesale distributor of medical devices, or any agent thereof, to offer or give any gift to a health care provider.”  It provides that the  attorney general “may bring an action in Washington superior court for injunctive relief, costs, and attorney’s fees and may impose on a manufacturer that violates this section a civil penalty of no more than $10,000.00 per violation. Each unlawful gift shall constitute a separate violation.”

Permitted items that are not deemed prohibited gifts include:  (i) samples, (ii) limited short term evaluation use loaners of medical devices not exceeding 90 days, (iii) reasonable quantities of medical device demonstration or evaluation units to a health care provider to assess the appropriate use and function of the product, (iv) provision, distribution, dissemination, or receipt of peer-reviewed academic, scientific, or clinical articles or journals and other items that serve a genuine educational function, (v) scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference or seminar of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association, (vi) rebates and discounts for prescribed products provided in the normal course of business.  Certain items are not prohibited and are considered “allowable expenditures.”  These include (i) certain limited sponsorship of a significant educational, medical, scientific, or policy-making conference or seminar, (ii) certain limited honoraria and payment of the expenses of a health care professional who serves on the faculty at a bona fide significant educational, medical, scientific, or policy-making conference or seminar, (iii) bona fide clinical trial arrangements, (vi) certain limited bona fide research projects, (v) expenses relating to technical training of individual health care professionals on the use of a medical device pursuant to a written agreement.

Manufactuers need to report “any allowable expenditure or gift … to any health care provider” or “to an academic institution or to a professional, educational, or patient organization representing or serving health care providers or consumers” in the following categories:

• “The loan of a medical device for a short-term trial period, not to exceed 90 days, to permit evaluation of a medical device by a health care provider or patient.”

• “The provision of reasonable quantities of medical device demonstration or evaluation units to a health care provider to assess the appropriate use and function of the product and determine whether and when to use or recommend the product in the future.”

• “The provision, distribution, dissemination, or receipt of peer-reviewed academic, scientific, or clinical articles or journals and other items that serve a genuine educational function provided to a health care provider for the benefit of patients.”

• “Scholarship or other support for medical students, residents, and fellows to attend a significant educational, scientific, or policy-making conference or seminar of a national, regional, or specialty medical or other professional association if the recipient of the scholarship or other support is selected by the association.”

• “Labels approved by the federal Food and Drug Administration for prescribed products.”

Manufacturers must report, on form specified by the attorney general, the value, nature, and purpose of each allowable expenditure, and permitted gift along with (i) the name of the recipient, (ii) the recipient’s address, (iii) the recipient’s institutional affiliation, (iv) prescribed product or products being marketed, if any; and (v) the recipient’s state board number.

Failure to manufacturer of prescribed products that fails to disclose as required by the law subjects the manufacturer to a civil penalty of no more than $10,000.00 per violation. Each unlawful failure to disclose, however, constitutes a separate violation.

The legislation also directs the attorney general’s office to conduct a review, in consultation with the commission on health care reform, of the advisability of modifying the law to require the disclosure of information about the provision of pharmaceutical samples to health care providers.   At present, samples are expressly excluded from the reporting regime.

If signed into law, the law will take effect July 1, 2009, but reporting activities under new regime will be implemented in 2010 reporting period.

Clearly the legislature had cost on its mind in enacting the law, as it also has tasked a state workgroup to explore generic alternative formularie recommendationss.   The workgroup is to report to the legislature by January 15, 2010 on the list generated.

Filed under: AKS, Conflicts of Interest, Health Law, AKS, CMP, Conflicts of Interest, LinkedIn, Pharma

Physician Payments Sunshine Act of 2009

Interesting bill introduced in the 111th Congress (SB 301) by Mr. Grassley.  After recent settlements involving Medtronics and then a host of other medical device manufacturers in late 2007 (Johnson & Johnson subsidiary DePuy Orthopaedics, Zimmer, Biomet and Smith & Nephew) who provided lavish trips and sometimes sham consulting and IP royalty payments to physicians allegedly to induce their ordering of the firms’ devices, the Congress is considering forcing pharma and medical device manufacturers to disclose all financial arrangements with physicians and medical groups greater than $100/year.  The financial arrangements would be posted in a manner that would be accessible to the public.  Failure to disclose would subject the companies to up to $150,000 (if innocent) or $1m Civil Monetary Pentalties if knowingly.  It is of note that disclosure was used by the OIG in the deferred prosecution agreements with these companies.   See, for example, Zimmer’s home page at www.zimmer.com.

Search Results – THOMAS (Library of Congress).

Filed under: AKS, CMP, Conflicts of Interest, Health Law, AKS, CMP, Conflicts of Interest, Economics, Health Law

CVS Resolution Agreement with HHS Office for Civil Rights for HIPAA Violations

CVS Pharmacy, Inc. recently entered into a “Resolution Agreement” with the DHS Office of Civil Rights for a variety of business practices that were reported in the media concerning disclosure of protected health information (“PHI”).   There was a similar agreement with Providence Health System last year for a $100,000 amount and corrective action plan.

Of note is the size of the settlement – $2.25M.  I also took a look at the Resolution Agreement and the Corrective Action Plan (“CAP”) to note similarities/differences from Corporate Integrity Agreements from OIG.  I saw many similar parallel items from my experience with the CIA front.   Now that the bubble has burst on actual enforcement actions with significant settlement payment amounts, and with the recent HIPAA changes in the Stimulus law, you can bet that there will be both more plaintiff litigation on this front (i.e., HIPAA privacy regulations as the “standard of care” and state tort law as the actual suit mechanism) as well as enforcement action by the Office for Civil Rights.   It is also notable that the “trigger” here was media reports.  Perhaps no accident that the proposed HIPAA changes require media outlet reporting once a threshold of PHI is released.  You can check out the press release and the resolution agreement/CAP at http://www.hhs.gov/ocr/privacy/hipaa/enforcement/examples/cvsresolutionagreement.html

Filed under: CMP, Health Law, HIPAA, CMP, Health Law, HIPAA, Law

OIG Finds No Grounds for Penalties on SNF’s Transportation Proposal for Residents’ Family

Health Law Reporter.  As reported in 3/19/2009 BNA Health Law reporter and published by the OIG on 3/13/2009, the OIG granted a favorable advisory regarding transportation program for friends and families of SNF residents, where the SNF is located in a geography difficult for such individuals to reach.  According to the OIG, “[m]any arrangements involving free transportation have important and beneficial effects on patient care, especially where such arrangements are narrowly tailored to address issues of financial need, limited transportation resources, treatment compliance, or safety.”  But the OIG cautions that transportation programs may also be “schemes” to lead to “inappropriate steering of patients, overutilization, and provision of medically unnecessary” services.  The OIG lists some examples:

• Providers offering out-of-state patients free transportation to receive services at their facilities;
• Van drivers soliciting, and offering free transportation services to, Medicaid patients for health care providers who compensate the drivers on a per patient or per service basis;
• Providers offering residents of nursing facilities and other congregate care facilities free transportation services to and from their offices for services of questionable necessity;
• Providers offering patients free limousine services;
• Hospitals or other providers offering patients free ambulance services without making individual determinations of financial need; and
• Hospitals or other providers inducing referrals from physicians by offering the physicians’ patients free transportation to the physicians’ offices or to a facility where the physician furnishes services.

The OIG indicated that it will look at factors such as (i) whether transportation is offered in a manner related to referrals; (ii) the type of transportation and if it is luxury or specialized; (iii) whether the transportation is within or outside of the primary service area of the provider; (iv) the availability of other forms of transportation; (v) how the program is marketed or advertised; (vi) who bears the cost of the transportation — whether the provider itself or beneficiaries or the federal healthcare programs through cost reporting; (vii) whether the destination is to the primary provider or if the transportation is to other providers of care; (viii) whether there is a healthcare provision nexus between the provider and those receiving the transportation — particularly in this case where it is not the patient, but family and friends receiving it.

It goes without saying, but the gating issue also is if the transportation can fit into the other unofficial safe harbor that the OIG has set out — that is, services at less than $10/instance, $50/annually.  Here the program would likely exceed at least the $50/annual guideline.

What the OIG liked about the program:

(A) It was not for or related directly to the patient receiving care and it was not about the patient going to another healthcare provider;

(B) The program is open to all friends and family members of patients, regardless of payor source, means or other potentially problematic factors.

(C) Transportation is reasonable – a van running between public pick-up locations – not a limo or specialized transit.

(D) Marketing is local, limited to local papers and patient/family/friends themselves.

(E) There truly is limited public transportation and the cost to access the facility is hampered by a large “toll-bridge” toll.

(F) It’s good for patients to have the companionship of friends and family and, therefor, supports the SNF’s mission.

(G) The costs will not be on the provider’s cost report.

This is a reasonable and good opinion on a practice that I have a feeling is widespread in the industry and that can be structured in a manner that is good for the patients and the care that they receive and structured in a way that does not increase risks to the Medicare program.

Filed under: AKS, CMP, Health Law, Transportation, AKS, CMP, Health Law, Law, Transportation