CMS to Float Physician Reporting Rules on Pay from Drug, Device Firms

The Patient Protection and Affordable Care Act is a huge document. As we all digest the many implications of accountable care organizations, value-based purchasing, and increased access to medical care for the previously uninsured, it’s easy to forget there are other important parts of the law.

One often-overlooked provision is Section 6002, which requires the public reporting of payments or other value transfers made to physicians and teaching hospitals by manufacturers and group purchasing organizations of drugs, devices, biologicals, and medical supplies that are covered by Medicare, Medicaid, or the Children’s Health Insurance Program.

Despite its more than 900-page length, the Act can be viewed as sort of a guideline for how lawmakers envision that healthcare should be delivered and measured. The real work of interpreting the law and translating it into policy and regulation is often done out of the media spotlight as the Centers for Medicare & Medicaid Services determines how each piece of the law will govern healthcare in practice.

The key to successful implementation is interpreting the intent of legislators in making the law. Of course, CMS offers plenty of opportunity for citizens, public interest groups, and industry mouthpieces to offer input into their interpretations of certain aspects of the law before creating final reporting and compliance guidelines. I’ll let you guess who’s best represented at these meetings.

Section 6002 is a provision in the Act that is intended to give consumers valuable information about their physicians' or hospitals' involvement in payments or other transfers of value from drugmakers and medical device manufacturers.

This provision comes from the perception that the non-public nature of such value transfers might  create doubts among patients about whose interests are being placed ahead of whose in decisions about the treatment of their illness.

Whether or not such deals most often passed the “smell test,” there is a widespread perception that such payments represent a key reason why healthcare costs so much, and beg the question of whether a $10,000 replacement hip that comes from a manufacturer with which a physician has a development deal is any better than a $5,000 one from a company that doesn’t pay him. And further, whether any of that might have influenced the physician’s recommendation of treatment. That’s not an easy conclusion to reach, but it’s impossible without the disclosure of financial relationships between the two.

In any case, CMS is now formulating the reporting requirements of section 6002, and will be judged on whether or not it has done a good job of making the information easily understandable and presented in context and without delay, while at the same time making reporting requirements simple enough so that they do not stifle innovation. It’s a daunting task, and breaks down like this:

Goal 1: Understandable
Each payment or transfer of value should be listed separately, but consumers should be able to manipulate the data such that a clear picture of the financial relationship between the physician and the company or companies with which he has a financial relationship can be obtained. Because of this need, CMS needs to ensure proper safeguards such that duplication of data does not give false impressions to consumers. These kinds of duplications have an odd way of multiplying in searches of sophisticated databases of information, and this one would have to be of the most complex sort.

Goal 2: Presented in context and without delay
In addition to making the list searchable in various ways, CMS needs to ensure that the data is presented in context, says a missive to CMS from the Premier healthcare alliance, a financial and clinical data analysis group owned by hospitals. That means, according to Premier, that “CMS should reference the specific drug or device associated with any reported payment or transfer of value and should also include the name of the drug or device in a form that is recognizable to the public.” That sounds right to me.

Premier also argues against providing a period for review and correction of the data from manufacturers and group purchasing organizations because of the inevitable delays that this would entail in presenting the data to the public. As the group rightly points out, delay in access to reported information lessens its value and undermines the goal of the statute.

Goal 3: Don’t discourage innovation
When discussing this issue, it’s easy for physicians of even the highest ethics to understand that the data might provide a misleading picture of their work with drug or device manufacturers. This work is surely necessary on some level in order to innovate, and compensation for the work is only fair.

Physicians and manufacturers are rightly worried that any financial relationship, simply by being publicly listed, encourages the presumption that these relationships are by definition unethical. However, the fact that somebody is watching is often enough to prevent most ethical lapses in instances like this. Transparency never hurt anybody but the ones who are trying to hide behind everyone else’s good name.

Let’s leave aside, for a moment, the potential consumer/patient use of this data. Hospitals and health systems that are trying to get a handle on supply costs would surely make good use of the data. Would it not be helpful, for instance, for a hospital CEO who’s pushing supply chain optimization to know whether her top heart surgeon has a development deal with Medtronic or if her top orthopedic surgeon has a consulting relationship with Stryker?

Such information, taken alone, doesn’t suggest anything improper or unethical is going on, but the very fact that it will be reported might strike a little fear into anyone who might be tempted to provide preferential treatment to manufacturers who sign their checks.