March 21,2019
Grassley, Wyden Press HHS, CMS on Physician Payment Sunshine Act Compliance
Finance Leaders Seek Answers Regarding Potential Failures to Disclose Physicians’ Financial Stake in Medical Supply-Chain Companies
WASHINGTON
– U.S. Senate Finance Committee Chairman Chuck Grassley of Iowa and Ranking
Member Ron Wyden of Oregon wrote to the Department of Health and Human Services
Office of Inspector General (HHS OIG) and the Centers for Medicare &
Medicaid Services (CMS) regarding physician-owned distributorships’ (PODs)
potential failure to disclose physician ownership interests and related
payments as required by the Physician Payment Sunshine Act. A POD is an
arrangement where a physician purchases ownership shares in an entity that
supplies medical products to the physician’s own medical practice, such as
implantable medical devices used in surgeries like joint replacements or spine
surgery.
“This
relationship is inherently suspect because it could encourage physicians to
perform unnecessary surgeries or to choose a device in which they have a
financial interest for the purposes of generating more profit for the POD and
thereby themselves,” the senators wrote. “Congress passed the Sunshine Act
to promote transparency and accountability in taxpayer-funded government
healthcare programs…We look forward to working with the Administration to
ensure that the Sunshine Act is up-to-date and that the penalties for
non-disclosure are implemented against bad actors who fail to report.”
In
their letter, Grassley and Wyden ask what steps are being taken to determine
the extent of POD compliance, what regulatory changes and guidance are being
considered to ensure compliance, and what current enforcement measures are
taken when there is an instance of failure to comply.
In
2011, several senators expressed
concern about the proliferation of PODs and about their potential to run
afoul of the Anti-Kickback Statute. The Sunshine Act requires
manufacturers of pharmaceuticals, biologics, medical devices, and medical
supplies that participate in Federal healthcare programs to report to CMS any
transfer of value to physicians or teaching hospitals. A covered entity that
knowingly fails to submit payment information is subject to civil monetary
penalties. The committee also held
a hearing in 2015 on the risk of PODs to patients’ health and to health
care costs.
The
letter can be found here
or below.
March
19, 2019
The
Honorable Daniel R. Levinson
Office
of Inspector General
Department
of Health and Human Services
330
Independence Ave, SW
Washington,
DC 20201
The
Honorable Seema Verma
Centers
for Medicare & Medicaid Services
Department
of Health and Human Services
200
Independence Ave, SW
Washington,
DC 20201
Dear
Inspector General Levinson and Administrator Verma:
It has come to our attention that some physician owned distributorships (PODs)
may be failing to disclose physician ownership or investment interest as
required by the Physician Payment Sunshine Act (Sunshine Act).[1] As you know,
a POD is an arrangement where a physician purchases ownership shares in an
entity that sells implantable medical devices used in the physician’s
surgeries. This relationship is inherently suspect because it could encourage
physicians to perform unnecessary surgeries or to choose a device in which they
have a financial interest for the purposes of generating more profit for the
POD and thereby themselves.[2]
In 2011, Senator Grassley, along with
Senators Hatch, Baucus, Kohl, and Corker, became concerned about the
proliferation of PODs, particularly those selling devices for spinal surgeries,
and about their potential to run afoul of the Anti-Kickback Statute. The
Senators requested that the Department of Health and Human Services, Office of
Inspector General (HHS OIG) review the “structures and activities” of PODs,
including their relationships with hospitals and potential effects on patient
care.[3] HHS OIG found that spinal surgeries for hospitals that purchase
medical devices from PODs increased at a rate three times faster than for
hospitals overall in FY 2011.[4] HHS OIG also reported that PODs may be
driving up healthcare costs due to overutilization and that surgeries that used
POD devices were more expensive than non POD surgeries.[5] In November 2015,
then-Chairman Hatch and Ranking Member Wyden held a Finance Committee hearing
on the medical and financial risks to patients and healthcare payers associated
with PODs.[6]
Congress passed the Sunshine Act to
promote transparency and accountability in taxpayer-funded government
healthcare programs. The Act requires manufacturers of pharmaceuticals,
biologics, medical devices and medical supplies that participate in Federal healthcare
programs to report to the Centers for Medicare and Medicaid Services (CMS) any
transfer of value to physicians or teaching hospitals. Group purchasing
organizations, of which PODs are a subset, also must report ownership or
investment interests to CMS. A covered entity that knowingly fails to submit
payment information is subject to civil monetary penalties. In August 2018, CMS
sent out special advisories to physicians and PODs reminding them that
ownership and investment interest payments associated with the POD must report
under the Sunshine Act.
We want to work with you to ensure that
all PODs report physician ownership or investment interest to CMS as required
by law so that stakeholders can have confidence in the integrity of Federal
healthcare programs and patients can trust the quality of care they
receive. Accordingly, please respond to the following questions no later
than April 15, 2019:
1.
In
2015, HHS OIG issued a memorandum titled, “Overlap Between Physician-Owned
Hospitals and Physician Owned Distributorships.”[7] In this memorandum, HHS OIG
described plans to monitor CMS’s Sunshine Act database and determine how best
to assess its impact on transparency within Medicare.
a.
Has
HHS OIG conducted a detailed review and audit of the CMS sunshine database to
determine whether PODs are reporting physician ownership or investment
interest? If so, please provide these to the Committee.
b.
Please
describe the steps that HHS OIG has taken, or plans to take, to ensure the
quality of data reported under the Sunshine Act relating to PODs.
c.
Will
CMS commit to conducting a detailed review of Sunshine Act filings to determine
the extent to which the 2018 special notices had an effect on POD related
disclosures?
d.
How
can the Sunshine Act be improved to ensure that PODs are reporting physician
ownership or investment interest?
2.
Please
describe in detail any anticipated regulatory changes or issuance of additional
guidance designed to ensure that PODs are reporting physician ownership or
investment interest as required under the Sunshine Act.
3.
Has
HHS OIG updated its Compliance Program Guidance (CPG) for hospitals and other
healthcare entities to account for PODs? If so, please provide a copy of that
guidance. If not, please explain.
4.
When
HHS OIG is alerted that a POD failed to report a physician’s ownership or
investment interest to CMS’s sunshine database, what steps does HHS OIG take to
validate these claims?
5.
What
actions have HHS OIG and CMS taken to enforce the March 2013 HHS OIG special
fraud alert?
We look forward to working with the
Administration to ensure that the Sunshine Act is up-to-date and that the
penalties for non-disclosure are implemented against bad actors who fail to
report. We ask that you respond to the Committee no later than April 15, 2019.
We also ask that you answer the questions on a question-by-question basis,
indicating which questions you are answering. If you have any questions, please
contact Caitlin Soto of Senator Grassley’s staff or Dave Berick of Senator
Wyden’s staff.
Charles
E. Grassley
Chairman
Senate
Finance Committee
Ron
Wyden
Ranking
Member
Senate
Finance Committee
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