Legal Insights and Perspectives for the Healthcare Industry

The Open Payments program established by the Physician Payments Sunshine Act (Sunshine Act) requires manufacturers of covered drugs, medical devices, biologicals, and medical supplies (applicable manufacturers) to report annually to the Centers for Medicare and Medicaid Services (CMS) certain payments and other transfers of value made in the previous calendar year to “covered recipients,” which currently are defined as US-licensed physicians and teaching hospitals. Applicable manufacturers and Group Purchasing Organizations also must report any ownership or investment interests held by physicians or members of their immediate family. CMS makes this information available to the public on the agency’s Open Payments webpage and refreshes it annually.

We hope you were able to join us for last month's Fast Break on the Physician Fee Schedule proposed rule. If not, you missed a great session featuring Eric Knickrehm discussing the important changes the proposed rule would have on Medicare Part B. 

Eric provided an overview of the most important aspects of the proposed rule, which was published on August 4, 2019. A number of these changes highlight CMS's increasing emphasis on preventive and low acuity care. For instance, CMS has continued to incentivize Transitional Care Management services and Chronic Care Management services to ensure that patients who were either recently hospitalized or are very likely to be hospitalized have effective care management to avoid further hospitalization.

Clearing the way for consideration by the US House of Representatives, the Ways and Means Committee has unanimously approved bipartisan legislation aimed at increasing drug price transparency by manufacturers and pharmacy benefit managers through enhanced reporting and accountability requirements.

In a rare show of bipartisanship, the House Ways and Means Committee recently approved HR 2113, the Prescription Drug Sunshine, Transparency, Accountability and Reporting Act of 2019 (STAR Act) by a 40-0 vote. The STAR Act is the consolidated product of four House bills aimed at bringing transparency to drug price hikes and high launch prices, required reporting of product samples under the Physician Payments Sunshine Act (Sunshine Act), accountability by pharmaceutical benefits managers (PBMs), and accurate drug price reporting to the Medicare program. Key highlights of the legislative proposal follow below.

In a March 19 letter to CMS and HHS-OIG, Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR) continued their oversight efforts regarding physician-owned distributorship (POD) relationships by raising questions about US Sunshine compliance by PODs. PODs involve the ownership of medical device distributorships by surgeons who use or recommend those products in their surgical procedures. The senators are critical of CMS and OIG efforts to expose and deter POD arrangements, citing long-held concerns that POD arrangements are, as the OIG has suggested in a prior Fraud Bulletin, "inherently suspect” and abusive arrangements that promote medically unnecessary services. The March letter raises an often debated question regarding POD compliance with Physician Sunshine Rules and whether CMS or the OIG have taken sufficient steps to assure transparency compliance with these particular arrangements.