Now that the Sunshine Act is likely to go into effect on June 1, some planners and suppliers are feverishly working to get ready for the enormous tracking requirements of this legislation.
Among the growing pains likely to be inflicted on the industry because of the new laws are changes at third-party planning firms. Many are assessing how meeting the requirements will impact their costs and procedures—and what those changes will mean for customers.
The Physician Payments Sunshine Act (PPSA, or the “Sunshine Act”), which initially required companies to start tracking payments to physicians and teaching hospitals at the beginning of this year, created such confusion that the government had to issue revisions and postpone enactment.
However, the Centers for Medicare and Medicaid Services (CMS)—which was charged with writing guidelines surrounding the legislation—has indicated it will have everything completed by June and expects companies to start recording expenses on June 1.
PPSA requires drug, device, biological and medical supply manufacturing companies to report payments and gifts of $10 or more to the government, and keep track of payments that add up to $100 or more, in a calendar year, for items worth less than $10. These expenses, called transfer-of-value (TOV) payments in the legislation, include meeting costs such as travel, food and beverage, gifts, entertainment, conference fees and any compensation, such as speakers’ honoraria.
Labor Pains
Struck by the extra work that complying with the legislation is going to require, third-party planning firms are talking about having increased costs which, in turn, these companies will pass on to customers.
“The labor it takes to manage reporting will be the most significant change for us,” says Rebecca Steiner, vice president of Creative Group, Inc., a large, Appleton, Wis.-based third-party planning firm.
“The reporting needs associated with the Sunshine Act are more robust and the deadlines are tighter,” she notes. “We’re in the process of evaluating the labor requirements.”
“We may need to add staff or adjust job descriptions to include the reporting work,” she admits, “and potentially revise our management fees associated with HCP reporting and tracking.”
Another large third-party planning firm, M&I(Meetings & Incentives), based in Caledonia, Wis., is seeing an increased cost of business but plans to attack the increase in a slightly different way, says Ann Catherine Craig, SMMC, vice president of strategic meetings management.
“It definitely means more labor hours, which does translate to higher rates in the end,” she admits. “Our meeting planning service rates won’t necessarily change but we may add tracking and reporting fees for this new component.”
While this will no doubt inflate budgets, planner customers contacted by M&I accepted the increase as the cost of doing business when outsourcing, according to Craig.
“The clients for whom we already track individual HCP spend approve of it,” she says. “They realize that it would be more expensive for them to use internal resources and labor hours than to outsource it to companies like Meetings & Incentives.”
Lisa Keilty, president of The Keilty Group, a healthcare provider (HCP) and compliance consultancy based in New London, Conn., wasn’t surprised to hear about the increases. In fact, she says, they’ve already been instituted at some third-party firms.
“There are a few companies now that are charging a reporting fee or are including these types of fees in their master services agreements (MSAs),” she says.
Meetings Focus South contacted five of the larger such firms, including BI Worldwide and Bishop-McCann LLC. The former said it is not charging such fees and the latter declined to discuss any pricing matters. The remaining firms—ALTOUR Meetings & Incentives, American Express Business Travel and BCD Meetings & Incentives LLC—did not respond to the inquiry by press time.
Beyond cost fluctuations, pharma meeting planners need to get ready for fastidious record keeping, notes Keilty.
“They need to start segmenting all of the meetings that have healthcare care professionals in attendance and start a steering committee or the like to get members of finance, compliance, legal and other departments together to scope out all of the transactions that fall into the TOV segment,” Keilty advises. “Then they divide and conquer.”
Help Getting Started
Some technology can help planners with this process. Cvent offers tools that can tie spend to specific HCPs—a pivotal part of the Sunshine Act requirements.
“When you look at the act and the different categories companies are supposed to report on, all of that is configurable in Cvent so customers can create buckets for meals, honoraria, travel etc.,” says Jeannie Griffin, senior product manager of strategic meetings management at the tech firm. “We take that data and associate it to any HCP who’s participating in an event.”
And since it’s early days in complying with the legislation, planners need to start small and worry about related issues later on, Griffin says.
“Sometimes people are worried about the global implications and more and so they wind up being afraid to move,” she notes. “It’s good to have the dialogue but I think we know enough now so that we can move forward and worry about other parts later.”
Hoteliers are trying to demystify the process of tracking meetings spend for each event attendee.
Hyatt Hotels & Resorts is developing a new group billing process that should ease Sunshine compliance, according to Casper van Eldik Thieme, director of sales and marketing at the Hyatt Regency Atlanta.
“We think we’ll be able to submit bills that aren’t just by room but by person,” he says. “We want to meet the needs planners have to be responsible with their budgets.”
The Sunshine Act doesn’t specifically cite spending limits that drug companies should adhere to but it’s making planners more attuned to potential customer perceptions of lavishness—something these firms want to stay far away from, says Rosaelena Ledesma-Bernaducci, CMP, congress manager for McVeigh Associates LLC., a company that specializes in strategic meetings management.
“A wise woman once said to me, ‘If there’s an incident at the hotel [hosting our meeting], what’s the CEO’s face going to look like in a photo on the cover of the next day’s Wall Street Journal that shows him emerging from the hotel?
“That’s how I measure which properties to go to,” says Ledesma-Bernaducci. “If the lobby has too much marble, they’re not staying there.”
