The Medicare Payment Advisory Commission (MedPAC) met to continue its review on public reporting of physicians’ financial relationships on September 4, 2008. No formal recommendations were made at that time; instead, the purpose of the meeting was to seek guidance to shape draft recommendations on a proposed framework for collecting data on physicians’ financial relationships with drug and device companies, hospitals and ambulatory surgical centers (ASCs). This topic was also discussed during the March and April MedPAC meetings, which led to a chapter in the Commission’s June 2008 biannual report to the Congress.
The report described the financial relationships among drug and device companies, physicians, and other entities, such as academic institutions, and medical education organizations. MedPAC views relationships between physicians and manufacturers as having both benefits and risks, and acknowledged that physicians play an important role in developing new drugs and devices by running clinical trials and providing expert advice. Nonethless, there is concern that physician industry ties may also undermine physicians' independence and objectivity.
Efforts have been made by private sector and government to regulate industry-physician relationships. Currently, five states and the District of Columbia require drug manufacturers to report payments they make to physicians and other health care providers, but only Massachusetts law — which was recently enacted —covers device companies.
Legislation has previously been introduced in Congress that would require companies to disclose the amount or value of a gift or payment, the name of the receiving physician, the date and purpose of the activity, and what, if anything, was received in exchange. The Physician Payments Sunshine Act (S. 2029; H.R. 5605) was introduced last fall by Senators Charles Grassley (R-IA) and Herbert Kohl (D-WI) and by Representatives Peter DeFazio (D-OR) and Fortney "Pete" Stark (D-CA), among others, in response to growing concerns about the lack of disclosure of these financial relationships.
The Sunshine Act's purpose is to amend title XI of the Social Security Act to provide for transparency in the relationship between physicians and manufacturers of drugs, devices, or medical supplies for which payment is made under Medicare, Medicaid, or SCHIP, and for other purposes. It will also require the Secretary of Health and Human Services to create a website and post payment information in a clear and understandable manner. The legislation is not likely to pass before Congress adjourns, but will probably be re-introduced next year.
MedPAC staff proposed a more comprehensive framework for a national reporting system than the proposed legislation, based on three key design questions:
- How comprehensive should the system be,
- What size and types of relationships should be reported, and
- Should a federal law preempt state laws
Also discussed was how best to make the data readily accessible to the public and which agency should administer the system. Some advantages of having a national database on physician-industry relationships are thought to be that it would discourage inappropriate arrangements, shed light on potential conflicts of interest, and would enable payers to examine whether physicians’ are influenced by their relationships with the industry. The downside to public reporting is that it might discourage beneficial arrangements between physicians and industry, would create compliance costs for manufacturers and administrative costs for government, and would not eliminate conflicts of interest.
While offering many differing views in response to the proposed policy options, the Commissioners overall supported full disclosure and transparency in the relationships between physicians and manufacturers of drugs, devices, or medical supplies for which payment is made under the Medicare program. The Commissioners did not agree on whether the reporting requirements should cover payments made to recipients other than physicians, or on a threshold amount for which companies would be required to report payments or transfers of value. They also expressed concerns about whether companies should be allowed to withhold information they deem proprietary, the impact on workloads for manufacturers or federal agencies and if federal reporting law should preempt state laws.
Physician-owned Specialty Hospitals and ASCs
The discussion then turned to the rapid growth of physician-owned specialty hospitals and ASCs as well as the increase in joint ventures and other financial arrangements between hospitals and physicians. It is currently difficult to obtain information about these types of financial relationships. Although hospitals currently enrolled in Medicare are required to report individuals who own 5 percent or more of the hospital, this information is not publicly available. Hospitals are also required to inform patients about physician ownership, but this information is also not available to the public. MedPAC staff presented options for public reporting of hospitals’ financial relationships with physicians’ that would require all hospitals to disclose to CMS, which would be posted to the website, and would require hospitals to publicly report additional financial ties.
Currently, Medicare rules for ASC disclosure of physician ownership requires reporting of individuals who own more than 5 percent of an ASC, but this information also is not available to the public. Physician-owned ASCs that comply with anti-kickback safe harbors must disclose ownership to patients. MedPAC staff also recommended that the Centers for Medicare & Medicaid Services (CMS) require all ASCs to report all physician owners, which would be posted to the website as part of a public reporting system.
Recommendations on the proposed framework for pubic reporting of physicians’ financial relationships with drug and device companies, hospitals and ASCs will be presented at a future MedPAC meeting. The Society is in the process of evaluating and responding to this MedPAC proposal and similar proposals from others on industry relationships.
