Physician Servicing and Consulting Agreements and Transparency

Medical device companies, pharmaceutical companies or other health care related companies or vendors often seek consulting or personal services from doctors. Physicians should be cautious in such arrangements to avoid legal issues under federal law. Where fair market value compensation is paid for such services, there may be no issue under, for example, the federal Anti-Kickback Statute (AKS). However, arrangements that involve excessive compensation can lead to legal problems and reporting issues.

Physician personal service arrangements may fall within the AKS safe harbor found in 42 C.F.R. § 1001.952(d). Such services provided by the physician must be legitimate and necessary and must meet the following requirements:

1. A written agreement states the specific services and compensation for the services;
2. The term of the agreement must be at least one year; and 3. The compensation must be for fair market value and not fluctuate based on volume or value of the business generated
Transparency in many such arrangements is required by law. The Physician Payment Sunshine Act (PPSA) was enacted pursuant to the Patient Protection and Affordable Care Act of 2009 (ACA). The PPSA requires manufacturers of medical supplies, devices and drugs paid for by certain government programs (e.g. Medicare) to report to the federal government payments made to health care providers, including physicians, that exceed $10 or aggregate payments over $100 annually. Payments covered include consulting fees, royalties, stock options, gifts, entertainment, and other items of value or forms of consideration, subject to a fine of $10,000 per failure to report.

As of August 1, 2013, manufacturers are required to track such information and submit the reports to CMS annually. Most of the information in the reports will be available in searchable websites. The following are the 14 possible categories manufacturers will use to describe such payments:

•Consulting fees
•Compensation for services other than consulting
•Honoraria
•Gift
•Entertainment
•Food
•Travel
•Education
•Research •Charitable contribution
•Royalty or license
•Current or prospective ownership or investment interest
•Direct compensation for serving as faculty or as a speaker for a medical education program
•Grant

Beginning June 1, 2014, Physicians can register with CMS to receive their individual reports. Beginning in July 2014, physicians will be able to access CMS’ Open Payments system through a CMS Enterprise portal. Once those steps are completed, physicians will receive a notice that their individual report is available for review. Physicians will then have 45 days to challenge a disputed report by contacting the manufacturer that submitted the information. When a dispute is not resolved with the manufacturer, physicians will also be able for up to two years to seek correction of the report. CMS website provides helpful information and instructions.

Our business and health care law firm represents health care providers and professionals. Contact us at (404) 685-1662 (Atlanta), (706) 722-7886 (Augusta), or info@littlehealthlaw.com to schedule a consultation.
Source: CMS

*Disclaimer: Thoughts shared here do not constitute legal advice.