The Sunshine Act Casts a Long Shadow

SMM: Protection From the Sunshine Act
One already prevalent trend that the Sunshine Act is reinforcing is the value of using a strategic meetings management (SMM) program in the life sciences industry.  

“The use of meetings technology is a big help, says Carlson Wagonlit’s Brenda Miller. “You can take information from the technology and transfer it directly into a format that most other databases can accept.”
At its core, a “strategic meetings management program enables organizations to look at what the overall expense is for their meetings and events program and extrapolate that down to level of the individual,” says Betty McNulty, general manager, enterprise, of ACTIVE Network/StarCite. “Because we have so many life sciences companies as clients, we have been driven to build a rigorous reporting package that sits on top of our technology — a very specific HCP solution.”

One of the first questions for these clients is whether this is an event at which HCPs will be present, McNulty adds. If it is, it triggers a set of rules that will cascade through the process — for example excluding properties with “resort” in the name. 

“We have the ability to break down, by individual, within a specific therapeutic area within a pharmaceutical company, within a specific product area,” she says. “That’s what our clients needed.”

Cvent has had an HCP tracking tool available since mid-2011, says Jeannie Griffin, the firm’s director of product development. A lot of the company’s energy went into properly tracking and allocating that spend. “Lots of times people will register and not show up,” says Griffin. “You have to have that tracking capability on-site for the actual event, and ensure that your reconciliation process is accurate. We also have the ability to update that information [in real time] by tracking RFID-equipped badges.” 

The main concern, she says, is that you have “accurate totals at the end, to the penny. We’re not using estimated values. If Dr. Smith did not show up for the breakfast, he is not allocated for that breakfast.” 

“If I were a pharmaceutical company executive, I’d have a clause in every meeting contract stating that if there is a mistake in tracking expenditures, I’ll fire the planner,” says Michaeline Daboul, CEO of MMIS, a global technology company that develops secure business collaboration solutions.

That’s a pretty draconian penalty, but one that illustrates just how serious things are about to get for pharmaceutical and medical meetings on Aug. 1, when the long-delayed regulations of the Sunshine Act go into effect. Daboul’s company has been hard at work, helping pharmaceutical companies develop tracking systems to comply with these regulations. 

But in some ways, the actual impact of the Sunshine Act on pharmaceutical and medical-device companies will be minimal. Many life sciences firms, particularly the large ones, already follow a set of self-imposed guidelines from the industry association Pharmaceutical Research and Manufacterers of America (PhRMA)about the type of hotels in which they hold their meetings, how much can be spent on meals, and policies for gifts and entertainment. But the Sunshine Act will impose fines of up to $1 million a year for failing to properly track and report all of that spending. 

For the executives who oversee these meetings and the planners who organize and run them, the burden will be huge. They will effectively have to track every dollar spent at every meeting — even those with only one doctor in attendance. 

While attorneys are still researching the rules, that could mean tracking “travel, lodging, and food and beverage,” to “speakers’ honoraria, meeting and event space rental, consulting fees, education, and charity donations,” says Helen Kalorides, a meetings management consultant employed by Indianapolis-based Roche Diagnostics, a manufacturer of medical devices and diagnostic tools. 

And that, in turn, means the planners at these companies will need the vendors they work with — hotel convention services staffs, transportation suppliers, off-site restaurateurs, and third-party planners — to step up and do their part.  

“Just like it takes a village to raise a child, it will take a village to hold a meeting under the Sunshine Act,” says Lisa Keilty, vice president of compliance for consulting firm pmc², former team leader at pharmaceutical giant Pfizer, and past president of the International Medical Meetings Professionals Association (IMMPA). 

Here’s a look at how, by complying with the Sunshine Act regulations, some vendors and planners are taking the tracking of meetings spend to the next level.

Policing the Attendees
One of the biggest headaches event planners will face is that although the Sunshine Act requires the reporting of certain data, many pharmaceutical and medical device companies are interpreting the rules differently.

“When I first started looking at the Sunshine Act, my No. 1 ‘A-ha’ moment was when I realized, yes, the burden is on manufacturers to report, but at least they can design how they’re going to do it,” says Keilty. “Hoteliers and third-party planning agencies have to do it the way that all of their clients want it.”

According to Keilty, the first three questions any planner or vendor working on a pharmaceutical or medical device meeting should ask are: 

1. What is the definition of a healthcare professional (HCP)? 
Under the law, these are doctors of medicine and osteopathy, dentists, podiatrists, optometrists, and chiropractors. But some firms choose to include any HCP able to prescribe medicines, such as physicians’ assistants and nurse practitioners. 

2. Is there going to be an HCP in attendance?
Even if only one HCP is in attendance, the Sunshine Act tracking provisions will apply to the entire meeting.

3. Where are the doctors from?
The Sunshine Act allows states to have stricter laws than the federal government. Currently, Massachusetts, Minnesota, Vermont, Washington, D.C., and West Virginia have stricter laws that require different reporting standards. 
 
Therefore if you have a meeting with physicians from every state plus Washington, D.C., “there will be [at least] five for whom you have to report differently,” says Pat Schaumann, president of Meeting IQ/Present China, and founder of the IMMPA. “You might be able to spend $35 for breakfast for some of the physicians but only $10 for the other ones. And if there is a physician from outside the U.S. attending, they may be from a country with different rules. So something as simple as food and beverage actually becomes one of the more complex issues in meeting planning.” 

One method for dealing with this is using the lowest common denominator to set the meal budget, and holding some meetings where certain doctors are told they can’t enter the dining room or, particularly if there is educational content during the meal, that they simply can’t eat. Usually this happens during the initial registration process, but can also happen at the door — which requires hiring staffers with tact when checking attendees in.

Another, more complex, method is allowing individual HCPs to opt out of some or all meals and other “transfers of value” (the Sunshine Act’s term for anything an HCP receives from a pharmaceutical or medical device company, from a logoed pen to a hotel stay). “Most registration forms I’ve seen in the last 12 months give the physician the opportunity to opt out of the meals and pay on his own,” says Schaumann. 

Of course, that puts the burden of determining who can and can’t eat a meal onto the on-site planners. Unless the meeting is small enough for the planner to go through a lunchroom and do a head count, they can document life sciences firms’ corporate meeting planning departments don’t really have the resources to do all of that in-depth tracking in-house, says Kalorides, who is an IMMPA board member and co-director of education. At larger meetings this can mean checking attendees’ identity at registration and adding scannable RFID chips to badges so HCPs can be scanned in and out of every meeting and every meal — and not just main meals like breakfast or lunch, but even the snacks and drinks at meeting breaks. 

One tool that planners have is the National Provider Identifier (NPI), a unique 10-digit ID number issued to all healthcare providers — such as physicians, nurses, dentists, and physicians assistants — by the U.S. Centers for Medicare & Medicaid Services (CMS). It will be used in Sunshine Act reporting, although many pharmaceutical and medical-device firms also issue their own ID numbers to HCPs with whom they work.

Catering to the New Rules
Hotels that want to keep pharmaceutical and medical-device companies’ business will have to adapt to the new realities of the Sunshine Act. First and foremost that means learning what those realities are, and what their clients are going to require from them as a result.

As the August reporting deadline approaches, Bonnie Weiss, director of global pharmaceutical sales–Americas for Hyatt Hotels Corporation is working to educate the individual hotels on what the Sunshine Act is and why there are going to be specific things that clients are going to ask for and need because of these regulations. 

“We are not going to be able to service these clients the way they need to be serviced unless catering, convention services, and accounting understand what they’re talking about,” Weiss says.

Understanding these needs isn’t much help if hotels don’t have the tools to track and break down billing for the individual healthcare providers attending a meeting that the Sunshine Act targets. Some hotel brands such as Starwood and Hyatt, which unveiled its new hotel brands Group Bill tool last fall, are a step ahead, says Kalorides.

The Hyatt Group Bill tool allows planners to see all per-attendee charges in real time during an event — from room charges to banqueting to audiovisual services — via an interactive PDF document with linked budget items that run from high-level overviews down to individual room bills and line-item coffee-break charges. 

“We can easily take a group’s food-and-beverage spend on a daily basis, break it out into what was spent at breakfast, lunch, and dinner, then cross reference that with their attendee list and make it so planners can easily see their per-person expense for each meal on each day,” says Steve Enselein, Hyatt’s vice president of catering and convention services. “We can say [a specific doctor] was in each of these three events, here’s his cost per event, and here’s his total cost.” 

A strong billing system also makes determining an accurate estimate of per-person costs easier, an important ability when many doctors may want to opt out of individual meals — that is to say, accepting a $26 lunch, but not wanting to see a $26 breakfast reported.

“A lot of properties, especially smaller ones that have older processes, are going to have to update,” Kalorides says, adding that a number of the major chains are working on their billing systems already. “I was recently at a property where they were still running things off pen and paper; their new technology was Microsoft Excel. That’s not going to work.”

Planners will make real-time reporting a de facto Sunshine Act requirement, Keilty predicts, noting that a bill churned out days or even weeks after an event will leave planners with a lot more work, and a much more difficult trail of evidence in case of an audit. 

But beyond tracking costs, hotel catering departments will have to work even harder to keep costs down, notes Cindy D’Aoust, COO and interim CEO of Meeting Professionals International (MPI). “When the initial [PhRMA Code] restrictions came out, some F&B costs were shifted into the room rate,” she says. This will no longer work.

Planners will be looking for breakdowns beyond just who attended a meal, Kalorides says, noting that a $15-per-person breakfast looks a lot larger with a 22-percent service charge and 8-percent tax included.

“For a couple of years, [life sciences] companies’ planners have been making a conscious effort to scale back what they’re doing from a food and beverage standpoint,” Enselein says. “They’ve been consolidating purchasing and negotiating national contracts with us. They’ve forced us, as an industry, not to look at them as a three-day meeting in Boston, but one of 30 meetings over the course of a three-month period.”

Another tactic is telling catering departments what the per-meal budget is and “putting the onus back on the hotels to provide menu suggestions that fit into those price points, as opposed to [our] saying, ‘Here’s our banquet menu; find what fits,’” Enselein adds. “Beverage packages are being scaled back to wine and beer only, and the wine offerings might not be as expensive as they were.”

But there is only so much you can push. “It makes you look harder at these pieces of business,” Enselein says. “When a pharma group came in, you used to book it without a second thought. Now, it becomes more like any typical piece of business, except these companies use more space than other groups.”

On the Go
When it comes to transportation, figuring out the Sunshine Act’s impact on air travel to and from an event is a lot simpler than ground transportation at the meeting. 

Air travel and everything associated with it has to be reported, says Keilty. That starts with the car service to the airport, which a physician may arrange and turn in receipts. 

“Any money out of his or her pocket has to be documented on an invitee expense form,” she says. That also includes baggage check fees, meals at the airport, and even a drink on the plane, although there are generally thresholds established. 

“Transportation is something that’s being reported,” she says. “If you’re transferring your attendees from the airport, let’s say, on shuttle buses, that’s typically something that’ll be worked into the per-person cost.”

At that point, Kalorides says, a representative of a transportation supplier or destination management firm meets the attendees on arrival and checks them off against a master list. Kalorides adds that the same thing happens on departure. 

Where it gets tricky is actually tracking those arrivals, says Brenda Miller, global program director for a Fortune 500 pharmaceutical firm that is a strategic meeting management client of Carlson Wagonlit Travel’s meetings and events division. While the DMC’s fee is not considered a transfer of value that must be tracked and reported, “you’ve got to have the breakdown of exactly what that passenger consumed,” she says. “Did they consume a limo, or did they have a ride share, or did they take a shuttle? All of those elements become important to manage.” 

Dining Off the Site
While the PhRMA Code’s spending caps did restrict the use of restaurants as a venue for pharmaceutical and medical-device manufacturers’ meetings and off-site events, they are still used, although though not as widely. 

“There are 98,000 meetings in the U.S. each year that are for the continuing education of doctors,” says Schaumann. “That’s big business for restaurants. They are even putting in special medical meetings menus and A/V equipment. That’s how much restaurants understand this industry.” 

She points to higher-end dining chains like Maggiano’s Little Italy and Morton’s The Steakhouse as big venues for pharmaceutical and medical-device manufacturers. 

Still, some companies have been shying away from pricey restaurants and steakhouses over perception issues, says Kalorides, even though they can be cheaper than a meal in a hotel banquet room. 

 “For many of us, this represents 40 to 50 percent of our business on Tuesdays, Wednesdays, and Thursdays,” says Deborah Hinson, owner of New Orleans-based restaurant branding and marketing firm The Hinson Group, which represents 65 Flemings Prime Steakhouse & Wine Bars and 22 outposts of Roy’s Hawaiian fusion restaurants.

And while it is not as lucrative as it was before the PhRMA Code, “this is such an important piece of our business that we have to figure out how to make it compelling,” Hinson says. But she is also looking more aggressively at other, less-regulated industries like finance and technology.

Hinson, who is on the board of the IMMPA, says that clients are adjusting to the Sunshine Act’s regulations in a number of ways, including: 

Moving away from F&B minimums: If fewer doctors show up than planned at an event with a flat fee, the price per person can exceed the price cap when divided among fewer people. Separating out things like A/V charges, which are not reported under the Sunshine Act, helps.

Adjusting menus: Reducing menus from four courses to three, replacing costly appetizers like shrimp with cheese, removing the meat from a salad, and abandoning more expensive side dishes like asparagus, but not changing the centerpiece steak or seafood offering.

Planning for non-dining attendees: “We probably have one or two attendees who do not eat and one or two who pay separately,” Hinson says. “Most pharma companies say ‘make room for five or six total.’”

Attendee Fallout
While life sciences firms have adapted to the PhRMA Code, what really has them nervous is that the Sunshine Act turns the perception issue on the potential attendees rather than the pharmaceutical companies themselves. 

“In the past we set up tee times for physicians, we had room gifts, and gala entertainment. But those days are long gone,” says Judith Johnson, president and CEO of Plano, TX-based Rx Worldwide Meetings, a planning firm that specializes in pharmaceutical meetings. “The word that’s been used so heavily the last couple of years is ‘perception.’ [Manufacturers] didn’t want any perception that they’re buying the physicians’ favor to prescribe these drugs.”

Now it’s also a matter of physicians not wanting their patients, who will be able to search a public database of any “transfer of value” from a pharmaceutical and medical-device manufacturer to their doctor, to perceive them as having been bought.
“It’s going to be more difficult to get people to attend programs,” says Kalorides. “If I’m a physician that typically will attend three meetings by different companies per year for education or to see products and services, and they’re covering my cost at all of those events, by the end of the year my cost as an attendee will be very high, and that won’t look very good on paper. I anticipate that we’re going to see decreased attendance.”

Not everyone agrees. Doctors and other HCPs need to learn the rules and incorporate them into their process for deciding whether or not to attend a meeting, says Marian Long, meeting services director of the American Association of Diabetes Educators. “It’s your license and your career,” she says. “You have to take ownership.” 

In fact, that does seem to be happening, says Donald Schmid, department manager, experiential marketing and corporate branding, of Hospira, a Lake Forrest, IL-based firm that is the largest manufacturer of injectable drugs and infusion technologies. His firm exhibits at approximately 70 medical trade shows a year, he says, and as the Sunshine Act’s long-delayed rules come closer to reality, the number of doctors who are taking a serious look at the Sunshine Act regulations when making the decision to attend a conference has grown.

“A year ago, 20 percent [of HCPs] understood, now I’d say it’s 50 percent,” Schmid says. “Once this is implemented, it’ll probably rise to 70 or 80 percent pretty quickly.”

As doctors learn more about the rules — particularly the public reporting of what they accept from pharmaceutical and medical device companies — they want more oversight on what is reported, Daboul says. The survey, now in its third year, also found that 43 percent of the doctors who responded said that an inaccurate report about them that was publicly disclosed would affect their relationship with that company, and 21 percent said they would “sever a relationship” with a company over inaccurate reporting. 

On top of that, 94 percent said they want the opportunity to review Sunshine Act data about them before it is published, Daboul says. That is why a major focus of MMIS’s MediSpend Sunshine Act tracking tool was to create an easy-to-use, integrated dispute resolution tool for HCPs who are being tracked. 

All of this means that if errors are traced back to the meeting planner running an event, that planner “will be on the hook,” Daboul says.  And in fact, pharmaceutical companies are “beginning to build service-level agreements around accuracy and timeliness of data entry,” says Miller. “It’s the meeting planning company’s responsibility to make sure that information is as accurate as possible.”

For that reason, many of the larger pharmaceutical and medical-device companies begin the tracking process when inviting an HCP to a meeting, Miller says. Her client, which spends $200 million a year on meetings, includes an estimate of what that transfer of value will be on the meeting invitations it sends out, Miller says. 

“At that point, the HCP has the ability to opt in or opt out of everything,” she says. “They feel this is the best way for their customers: We’re going to let you know upfront that this is what we’re going to 
report.”