CMS Open Payments Rule Updates

11.12.14 | By Andy Bender

CMS Open Payments RuleOn October 31st, CMS released key amendments to its February 2013 Open Payments Final Rule around the reporting of:

1. Speaker payments at continuing medical education (“CME”) events
2. The marketed name of covered devices and medical supplies
3. The Form of Payment category noting stock, stock option, or any other ownership interest

These amendments will take effect with 2016 data, which manufacturers will report to CMS in 2017. (Note: The amendments also contained an additional change, which was a deletion of the definition of a “covered device”; this constituted a simple technical amendment.)

Speaker Payments at CME Events

CMS has deleted the original exemption from reporting on speaker payments at CME events (in which such payments were exempt if the CME event was accredited by select accrediting bodies, the manufacturer did not pay the speaker directly, and the manufacturer did not select the covered recipient speaker or provide the CME organizer with a distinct, identifiable set of individuals to be considered as speakers). This amendment clears the way for the interpretation that the remaining Open Payments exclusions would allow for those programs which are not specifically accredited by the ACCME, AOA, AAFP, AMA, and the ADA CERP to be exempt from reporting.

CME support that abides by certain standards of independence would likely not qualify as indirect payments (or direct payments, unless the CME organizer is a Teaching Hospital). Provided that the:

“[M]anufacturer does not require, instruct, direct, or otherwise cause the continuing education event provider to provide the payment or other transfer or value in whole or in part to a covered recipient, . . . [t]he payment is not reportable regardless if the applicable manufacturer . . . learns the identity of the covered recipient during the reporting year or by the end of the second quarter of the following reporting year because the payment or other transfer of value did not meet the definition of an indirect payment.”

CMS noted this reasoning was akin to the provision of an unrestricted donation to a professional organization to use at its discretion, where the organization then chose to use the funds to provide grants to physicians. Under these circumstances, manufacturers need not report the ultimate payments to the physicians. Many view this as meaning that grants meeting the normal independence standards would be exempt from reporting. However, CMS has not provided a specific, real world example of how this applies to CME grant making. Should manufacturers seek to follow the initial view that payments meeting the independence requirements are exempt from reporting, they should ensure that internal legal counsel review this interpretation.

On a related note, CMS has clarified that even though CME grants may generally subsidize physician attendee’s tuition fees, such payments are “not expected to be reported.”

Marketed Names and Therapeutic Area or Product Category Descriptors

With the exception of reportable Research Payment transactions, manufacturers will be required to “report the marketed name and therapeutic area or product category for all covered drugs, devices, biologicals or medical supplies.” For Research Payments, manufacturers continue to have the option of reporting the marketed name, therapeutic area or product category for related covered devices and medical supplies.

This amendment will create additional reporting burdens for many covered drug, device biologics and medical supply companies, who must now map their General Payments transactions to specific marketed products and therapeutic area or product category.

Stock, Stock Options and Other Ownership Interests

Through these October 31st requirements, CMS will require that manufacturers report “stock, stock option, or any other ownership interest form of payment or other transfer of value” in distinct categories.

Changes will likely involve a change in companies’ aggregate spend reporting systems to allow for this additional categorization, but will likely mean a minor change for the industry overall, as payments in any of these forms comprised a relatively small handful of reportable payments.

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With changes coming into effect with 2016 data, manufacturers should ensure that they review what changes must be made based on these amendments by early 2015.