CMS Open Door Forum on Payments to Physicians by Pharma and Device Manufacturers

Another provision of the Patient Protection and Affordable Care Act that has the potential to cause upset among physicians and those of us that work with them is Section 6002 titled Transparency Reports and Reporting of Physician Ownership or Investment Interests. This provision requires pharma, device and medical supply manufacturers to make annual reports to the Secretary of Health and Human Services of payments or other value transfers in excess of $10 made to physicians and teaching hospitals for products covered by Medicare, Medicaid or the Children’s Health Insurance Program.  These reports will be compiled and made available to the public in a searchable website in March, 2013.

In the meantime, the Centers for Medicare and Medicaid Services (CMS) will be overseeing this effort and will begin the process of developing the data base of payments by hosting a conference call for physicians and industry participants they are calling a Special Open Door Forum on transparency on payments to physicians.  The call will take place on Thursday, March 24, 2011 from 2:00 p.m. to 4:00 p.m. EST.   The call in number is 800-837-1935 using conference ID 51513526.  Other details can be found here.

The provision was first introduced as stand alone legislation in 2007 and was later folded into PPACA.  Proponents claim it will bring much needed “sunshine” to issues like payments for gifts, speaking fees/honoraria, research grants, consulting fees, royalty and licensing payments, and any other category of arrangements CMS might later deem appropriate to be made public.  Failure to report the payments will result in the imposition of civil money penalties on the manufacturers.

The issue of  payments to physicians from drug companies and medical device manufacturers has gained quite a bit of attention in recent years.  Industry groups and medical specialty societies have adopted voluntary restrictions in an effort to give patients, payers, and state and federal policymakers and regulators greater comfort that they understand the concerns and want to play a constructive role in stopping the abuses among these arrangements.   Those efforts have obviously not done enough to calm the waters.

I have some concerns about this approach that may or may not be addressed during the CMS Special Open Door Forum.  First, like the Stark Law and other laws designed to prevent over-utilization and self-dealing by physicians, it presupposes that every decision made by a doctor is motivated by a desire to enrich themselves and not by following their duty to provide patients with the best possible care.  My experience as a health care attorney, congressional staffer, and friend and family member to physicians has shown me that simply is not the case.

Second, this effort to promote transparency and “sunshine” may have the unintended effect of chilling the kind of productive relationships between clinicians, academicians and industry that has been at the foundation of some of this country’s most important medical advances of the 100 years.

Finally, the scope of the federal preemption of state laws in Section 6002 is so limited that the manufacturers who are obligated to make the disclosures will still have to adhere to the patchwork of state laws that have been enacted in recent years, as well as restrictions imposed by professional groups, academic medical centers and health systems around the country.  In my opinion, there is a pretty good chance that as manufacturers try to comply with these varied disclosure regimens, the data generated by state and federal collection systems will actually result in a more muddled rather than transparent view of economic arrangements between physicians and industry.

We will all find out more on March 24.  Stay tuned.


About Bill Cadigan

WILLIAM J. CADIGAN is principal in the Law Office of William J. Cadigan, P.C. located in Chicago, Illinois. Before starting his own firm, Bill Cadigan was a member of the Health Industry Group of the law firm of Akin, Gump, Strauss, Hauer & Feld L.L.P.
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