Here Comes the Sun
When Congress began working on healthcare legislation in 2009, it integrated language from a stand-alone bill, the Physician Payments Sunshine Act, into the Health Insurance Portability and Accountability Act (HIPAA), which it passed on March 23, 2010. Those provisions have been dubbed the Sunshine Act. The key dates and points are:
January 1, 2012: Healthcare companies must begin tracking the cash value of gifts, payments, and services made to physicians and teaching hospitals.
March 31, 2013: The Sunshine Act goes into effect. Reports on spend to physicians and teaching hospitals in the prior year must be made to the Department of Health and Human Services by this date, and each year thereafter.
Items covered: Cash or in-kind transfers covering compensation; entertainment, food, or gifts; travel and transportation; consulting fees; honoraria; researching funding or grants; education or conference funding; and charitable contributions.
Exemptions: Educational materials that benefit patients; rebates; discounts; payments of less than $10 until the aggregate annual total per company, per covered physician, reaches $100; prescription drug or device samples (covered under a separate section of HIPAA); and payments made to a physician who is a patient or employee of the reporting company.
Data required: Physician name, address, and national provider identifier, and the value, date, form, and nature of the payment. If related to marketing, education, or research for a specific drug, device, or biological or medical supply, the name of the product must be included.
- All U.S. manufacturers of drug, device, biologics, and medical supplies covered under Medicare, Medicaid, or SCHIP must comply.
- Information will be publicly available beginning September 30, 2013.
- Penalties for non-compliance: $10,000 for each failure to report, up to $150,000 annually. Knowing failure to report carries fines of $100,000, not to exceed $1 million annually.
Scrutiny is nothing new for pharmaceutical and medical companies, which underwent a sea change in 2002 when they voluntarily began following the PhRMA Code‚ a set of ethics adopted by the Pharmaceutical Research and Manufacturers of America to address the perception of influence on healthcare providers‚Äîand events held at resorts in exotic locales, extravagant entertainment, and gifts for physicians virtually disappeared.
The industry is about to undergo another major shift.
Sunshine Act Compliance
The Physician Payment Sunshine Act (PPSA), which passed last year, requires unprecedented reporting of payments and transfer-of-value to physicians and other healthcare providers, including many expenses controlled by meeting managers, such as speakers fees, continuing education, and meals. It doesn't go into effect until March 31, 2013, but planners are feeling the effects now‚ or at least they should be.
"Companies need to start complying with the Act by capturing data beginning January 1, 2012, so they can report it in 2013. Most of the attention has been focused on how to comply, and meeting planners are very involved in that," says Bill Cooney, president and CEO of MedPoint Communications, based in Evanston, IL. If your company is going to change the way it [conducts and tracks meetings and events], then you have only six months to pilot test those changes and implement those policies. Assuming you're going to recruit physician participants in the fourth quarter of this year for events taking place in the first quarter of 2012, you have only three to four months to make changes.
Proactive companies began preparing for PPSA more than a year ago, creating or updating their database systems to capture expenses, as well as implementing or expanding strategic meetings management (SMM) programs.
"The more mature pharmaceutical and life sciences companies have known this was on the horizon for a long time," says Philadelphia-based Betty McNulty, senior vice president of global account management and implementation for StarCite, which works with seven of the 10 largest pharmaceutical firms and several other medical and life sciences companies.
For client Sanofi Pasteur, a vaccine provider, StarCite first talked about its approach to business and what was needed for compliance. "We were able to automate a lot of their processes, including payments, through our Meetings 360 solution, as well as drive adoption and provide an audit-compliance model that keeps them on track on how to manage meetings," says McNulty. There's now a heightened visibility around their meetings spend on an individual healthcare provider level, as well as on therapeutic and product levels.
One of the challenges for planners and technology providers is not knowing what the Department of Health and Human Services
(HHS) report requirements will look like. HHS won't release the implementation rules until October.
It could, for example, differentiate between F&B provided in meetings and meals at an airport. But should those expenses be included in F&B, or do they fall under reimbursed travel expenses? Planners currently don't know, so many are dissecting everything now rather than having to change to conform later. (See "Cvent Plans Strategic Meetings Management Tool for Pharma"
for more information.)
Some planners, especially those at companies that already track spending on a detailed level, may not think they will feel much of an impact. But the Act is having widespread effects.
"The amount of reporting that needs to be done is doubling the administrative workload," says one pharmaceutical planner who requested anonymity. "We have five planners in the department, and we're going from 400 meetings last year to close to 500 this year."
To cope, some pharmaceutical planners are partnering with third parties on healthcare provider meetings, and instead of two planners being on site at a meeting, it's now one and a third-party planner.
Spend on physicians isn't the only data required either. Companies will need to include addresses, physician ID numbers, dates, forms, and nature of payments or services. "Planners should include detailed categories on event registration forms for physician registration identification (PRI) numbers and their field of specialty," says Helen Kalorides, meetings management consultant for Roche Diagnostics Corp. in Indianapolis. "Mention it in communications so doctors remember to include it. They don't always know it off the top of their heads."
Kalorides also recommends planners read the PhRMA Code and PPSA and learn how both affect them, their companies, and their customers. "This will make you a key player at your company," she says.
PPSA transparency is arguably as important as compliance. For meeting managers, this means that every meeting expense to every U.S. physician will be open to public scrutiny once the HHS website goes live on September 30, 2013.
"It's unprecedented," says MedPoint's Cooney. "Any time an event takes place at a restaurant, the value of that meal will be made public for everyone to see. There are a lot of anti-pharma people among academics, the press, and politicians. Everyone should expect people to seize on this information to cast the industry in a negative light."
Sound familiar? Financial industry planners know all too well what that's like, thanks to the AIG Effect. But while medical and pharma meetings already are stripped down, in terms of cost, this new level of transparency puts all expenses in the spotlight.
"For meeting planners, the toughest part will be defending meals," says Cooney. ‚"It's easier to defend physician consulting services or speaker fees, which have fair-market value for services. For physicians merely attending a program and getting a meal with it, or bringing meals into their offices for meetings, that's going to create issues."
As planners know, a private catered event always costs more than it seems on the surface to the general public. ‚"It's normal to pay close to $100 for a private dinner at Morton, but to the average citizen, that' a heck of a lot for a steak that on the menu costs $45," says Cooney.
Unlike the PhRMA Code, PPSA doesn't provide dollar values for spend, further fueling the ironic fact that negative perceptions still trump actual cost savings. Even if a five-star property or high-end restaurant offers a better deal than a venue the next rung down the ladder, planners will pay more to draw less public scrutiny.
The public listing of doctor payments also could make physicians less willing to accept invitations to industry events. That said, attendee drop-off was a concern when the PhRMA Code was adopted, eliminating higher-end perks to physicians, but that hasn‚Äôt been much of an issue, especially when it comes to education.
"If you develop educational initiatives based on the true needs of the target audience, and individuals feel they will benefit from attending your event, you'll get the right audience," says Maureen Doyle-Scharff, senior director, team lead, medical education group for Pfizer Inc.
Transparency can be good too. "Not many years ago, pharmaceutical and medical associations were not transparent about the grants they were receiving or the purposes for which they were being used,"says Mike Saxton, chief learning officer at the American Academy of Physician Assistants (AAPA). It's important that associations determine what their needs are first, then find out who's interested in funding.
Virtual Cost-Saving Measures
When planning for the impact of compliance and transparency, the first thing companies should do is conduct an honest self study, says Cooney. "What does the data currently look like; what is the spending per physician? Break it out by brand. The data is not yet reportable, so companies have a little time to determine whether they need to make changes. Do they need to lower spend? Can virtual media accomplish the same thing as a face-to-face meeting?"
In many cases, a viable alternative will be a hybrid of face-to-face and virtual meetings. "Most web conferences are clunky and not exciting. Planners can improve these digital events by applying their creative and organizational skills to help them run more smoothly and better use the media available," says Cooney.
One example is virtual speaker programs. MedPoint is working with several pharmaceutical companies that are scaling up use of these programs, which historically had been one-off events or niche marketing. They're also incorporating digital elements, such as live peer-interactive sessions, voting, and texting. "Doctors log on from their computers during breakfast or lunch time for small group sessions," says Cooney. Keep the event brief, 15 to 20 minutes if possible, and address individual modular topics.
"Companies need to use a mix of live and virtual," Cooney continues. "Look at the needs of the audience, the message, the geographic locations involved, and the cost. Take a hard look at how the events will look in the public space. Then make the best choice."