Monthly Archives: February 2013

Promotional Products Work! Week — Share Your Success

PPW! Week Logo CMYKDrum roll, please! It has finally arrived! Promotional Products Work! Week is now in full throttle. During the next few days, the collective industry will shine the spotlight on the gears that power the industry: promotional products experts, companies and the most efficient and effective advertising medium in the business.

Starting today, make sure to capture and share photos of your PPW! Week experience: the people you meet, the things you see and the events you throw. We want to see it all!

Help us share your experience with the rest of industry. All you have to do to get involved is upload your photos and video through a short submission form. Also, don’t forget to share your photos with us on the PPW! Facebook page and tweet about PPW! Week using hashtag #PPW!Week.

We’re looking forward to seeing your Promotional Products Work! Week.

Best wishes for an amazing week!

Paul

P.S. Below are a few helpful links to help make your PPW! Week a success.

PPAI Action Alert: Physician Payment Sunshine Act

The Centers for Medicare & Medicaid Services have published the final rule that details reporting transfers of value as identified by the Center for Medicare and Medicaid Services. The following summary reviews those reporting obligations–specifically as they relate to the promotional products industry. Please note–this law does not prohibit the giving of promotional products to physicians and teaching hospitals.

For any questions or concerns please email us at ppailaw@ppai.org.

On February 2, 2013, the Centers for Medicare & Medicaid Services (www.CMS.gov) within the United States Department of Health and Human Services published the much-delayed final rule for the transparency reports that pharmaceutical and medical device manufacturers must file with the Federal government for payments and transfers of value they provide to physicians (doctors of medicine and osteopathy, dentists, podiatrists, optometrists and chiropractors, who are legally authorized to practice by the State in which they practice) and teaching hospitals. The requirement was included in the healthcare reform law and the provision is frequently referred to as the “Physician Payments Sunshine Act.”

At the outset, it is important to remember that the law does not prohibit the giving of promotional products to physicians and teaching hospitals. The manufacturers of drugs, devices, biologicals or medical supplies—CMS refers to them as the “applicable manufacturers”—must report the transfers of value. There were two exclusions from the reporting requirements of interest to us—an aggregate $100 of items with values under $10 each and a separate exclusion for educational materials that directly benefit patients or are intended for patient use.

The regulations and CMS’s explanatory material cover nearly 300 pages. You can find them at ppailaw.org.

For the most part, CMS followed the law. In one situation, it appears to provide some relief. Here are some of the “highlights” of the final rule.

Applicable manufacturers and applicable group purchasing organizations must begin to collect the required data on August 1, 2013, and report the data to CMS by March 31, 2014.

The law included a list of categories of payments and transfers of value. The rule requires each payment or transfer of value to be placed in a specific category. Promotional products will be reported in the category called “gifts.”

You may recall, one of our concerns was that the law provided no minimum for the term “transfer of value.” Unfortunately, CMS acknowledged that it does not have the latitude to adjust that rigid standard. Said the CMS: “We appreciate the comments on the threshold for small payments and understand that they may be low for some stakeholders.  Nevertheless, the thresholds were mandated by the statute, and we do not have discretion to change them.  However, we recognize that we do not want the database to be overwhelmed by small payments.  We have considered options for reducing the number of small payments, but we believe that we do not have authority to change the reporting requirements for small payments or other transfers of value.”

On establishing the value, CMS said:

“Applicable manufacturers should be allowed flexibility to determine value, so we do not plan to create numerous rules for calculating value.  We have outlined a few guidelines to help manufacturers.  First, payments or other transfers of value that do not have a “discernible” economic value for the covered recipient specifically, but nevertheless have a discernible economic value generally must be reported.  For example, an applicable manufacturer may provide a physician with a textbook that the physician already owns.  Since it is a duplicate, it may not have a value to the physician; however, the textbook does have an economic value, so it must be reported. 

“Second, even if a covered recipient does not formally request the payment or other transfer of value, it still must be reported.  Similarly, when calculating value we believe that all aspects of a payment or transfer of value, such as tax or shipping, should be included in the reported value.  Finally, all applicable manufacturers must make a reasonable, good faith effort to determine the value of a payment or other transfer of value.  The methodology used and assumptions made by the applicable manufacturer may be included in the applicable manufacturer’s voluntary assumptions document [that can be included with its report.]”

The law provides that the $10 and $100 aggregate numbers will be adjusted for inflation in future years, but CMS chose to start with the statutory amounts of $10 and $100 aggregate for this first reporting cycle.

With regard to reporting multiple items, the CMS said: “applicable manufacturers have flexibility in reporting small payments.  They may either report them individually or bundled with other small payments or other transfers of value in the same nature of payment category, as long as applicable manufacturers are reporting consistently and clearly indicating the method they are using.”

CMS did provide an “exception to the exception” that allows promotional products to be provided in large event settings without having those items count toward the $10 and $100 numbers. Said the CMS:

“Regarding reporting of payment or other transfers of value at conferences or similar events, we appreciate the comments and have provided additional guidelines expanding on the proposed rule.  In general, we will finalize that these guidelines will apply to conference and similar events, as well as events open to the public.  We believe that at events open to the public, it will be extremely difficult for applicable manufacturer to identify physician covered recipients.  Therefore, we will finalize that small incidental items that are under $10 (such as pens and note pads) that are provided at large-scale conferences and similar large-scale events will be exempted from the reporting requirements, including the need to track them for aggregation purposes.  While these small payments are excluded by statute, the $100 aggregate payment requirement generally requires the tracking of small payments in order to determine whether covered recipients received more than $100 annually.  For these covered recipients, we believe it would be difficult for applicable manufacturers to track who receives these small items at conferences or similar events, due to the nature and disparate attendance at large-scale conferences or similar events.”

With regard to the patient education materials exclusion, the CMS said:

“We understand that patient education is important and recognize that it may take a form other than written material, especially in the device context.  For example, a device manufacturer may give a physician an anatomical model to help explain to patients how a procedure would work.

“We agree that such an item, which is given to physicians for the purpose of educating patients, falls within the exclusion.  Similarly, if a manufacturer provides educational materials to a physician on a flash drive to be distributed to patients, the flash drive would also be included in the exclusion.  However, if the drive was provided as a gift alongside the materials, then it would have to be reported, since it was secondary to the materials.  Similarly, we believe that overhead expenses, such as printing and time, should be included in the exclusion as long as they are directly related to the development of the materials, which directly benefit patients or are intended for patient use.”

With respect to providing promotional products in a group practice setting, the CMS said:

“We have finalized that payments provided to a group or practice (or multiple covered recipients generally) should be attributed to the individual physician covered recipients who requested the payment, on whose behalf the payment was made, or who are intended to benefit from the payment or other transfer of value.  This means that the payment or other transfer of value does not necessarily need to be reported in the name of all members of a practice.  For example, if an applicable manufacturer donates a set of dermatology textbooks to a group practice, we believe that applicable manufacturers should attribute the transfer of value to only the dermatologists at the practice by dividing the cost equally across all dermatologists.

“We intend for applicable manufacturers to divide payments or other transfers of value in a manner that most fairly represents the situation.  For example, many payments or other transfers of value may need to be divided evenly, whereas others may need to be divided in a different manner to represent who requested the payment, on whose behalf the payment was made, or who was intended to benefit from the payment or other transfer of value.  We agree with the commenters that this approach attributes payments more fairly, since some physicians in a group practice may not make use of a payment or other transfer of value and may have concerns about such payments or other transfers of value being attributed to them.”

One definition has been clarified. The law never defined a teaching hospital. The rule defines it, and CMS said it will publish a list to simplify the process. A teaching hospital is defined by linking it to Medicare graduate medical education (GME) payments it receives.

For convenience, PPAI has extracted the applicable sections of the rule from the Federal Register Notice. It can be found at ppailaw.org.   It should be noted that the explanatory material cited above is found only in the Federal Register Notice.

Since it has been more than two years since the law was enacted, publication of the rule is likely to refresh memories and stir another review of internal policies in the pharmaceutical and medical device industries. The laws in those states that have passed their own laws regarding “gifts” to physicians and others still apply, and some of the manufacturers in those industries may still adhere to their own voluntary codes of conduct.

The PPAI Washington Report (and a Constitutional Quiz)

The United States Supreme Court will probably get the opportunity to take the quiz over an interesting “technical” issue – the meaning of the word “recess.”

Through our legislative contacts and lobbyists, PPAI has access to up-to-the-minute information, insight and analysis that you won’t see published anywhere else. The information in this month’s special Washington Report will help you understand how what happens in D.C. can affect your business and employees. It is timely information that will help you become more aware and better prepared to advocate for your business, profession and industry.

I hope you find this information beneficial to your business.

______________________________________________________

CONSTITUTIONAL QUIZ

The United States Supreme Court will probably get the opportunity to take the quiz over an interesting “technical” issue.  Recently, an appeals court said that recess appointments made by the President to the National Labor Relations Board were not made during a recess.  The Administration had taken a generous interpretation of the term “recess” to make some appointments.

In recent years, members of the opposing party have gone to extreme measures to keep the Senate in session so that a President cannot make these temporary recess appointments, which are only good until the end of the next session of the Senate.

If you will recall, the Constitution says, “The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.”

COMMITTEE MUSICAL CHAIRS

Congress is slowly getting itself organized.  There are a fair number of committee and subcommittee chair and ranking member positions that are changing because of the election or internal term limits.  Most of the new folks want to hire their own staff even though the party control did not change.  It will take some time before we start seeing meaningful activity in some committees.

The debt ceiling can has been kicked down the road for a couple of months.  As a result, the automatic cuts known as sequestration are the next items on the agenda at the end of the month.  There is increasing talk about just letting the cuts take effect.  While the possibility has increased, a more probably compromise would be to give agencies the firm numbers but let them fill in the details.  The most probably is some sort of “replacement” strategy with a different mix.  The main source of the angst about sequestration is that it is applied to all programs, projects, and activities within a budget account.  There is no discretion.

As to the actual numbers, it depends on several variables, as they exist at the time the cuts take effect.  The last estimate, made when the fiscal cliff one was in front of us, indicated the sequestration would result in a 9.4 percent reduction in non-exempt defense discretionary funding and an 8.2 percent reduction in non-exempt nondefense discretionary funding.  The sequestration would also impose cuts of 2.0 percent to Medicare, 7.6 percent to other non-exempt nondefense mandatory programs, and 10.0 percent to non-exempt defense mandatory programs.

IMMIGRATION REFORM

A bipartisan group of Senators has released a set of principles for immigration reform.  The President has said he can go along with their concept.  The principles still have to be put into bill form and the committees must work their magic.  The House has said they will work on their own plan.  The bottom line is we are a long way from the enactment of reforms.

The core principle, which most employers will be interested in, is the employment verification requirements.  The plan is to “beef up” enforcement and penalties for hiring illegal immigrants after a more robust and reliable electronic verification system is put in place.  It has gotten nearly impossible for employers to detect false documentation.

All we know at this point about this new system is what the Senators included in their statement of principles.  Here is what they said:

** We recognize that undocumented immigrants come to the United States almost exclusively for jobs.  As such, dramatically reducing future illegal immigration can only be achieved by developing a tough, fair, effective, and mandatory employment verification system.  An employment verification system must hold employers accountable for knowingly hiring undocumented workers and make it more difficult for unauthorized immigrants to falsify documents to obtain employment.  Employers who knowingly hire unauthorized workers must face stiff fines and criminal penalties for egregious offenses.

** We believe the federal government must provide U.S. employers with a fast and reliable method to confirm whether new hires are legally authorized to work in the United States.  This is essential to ensure the effective enforcement of immigration laws.

** Our proposal will create an effective employment verification system which prevents identity theft and ends the hiring of future unauthorized workers.  We believe requiring prospective workers to demonstrate both legal status and identity, through non-forgeable electronic means prior to obtaining employment, is essential to an employee verification system; and,

** The employee verification system in our proposal will be crafted with procedural safeguards to protect American workers, prevent identity theft, and provide due process protections.

A Message From PPAI – Health Care Reform—How to calculate hours worked by commissioned salespeople

Dear Colleagues,

It was good seeing so many of you at The PPAI Expo 2013 in Las Vegas.  I hope you found the industry’s premier event to be both enjoyable and productive.

As you all know, health care responsibilities for “large” employers are rapidly approaching in 2014. What you may not know is that the IRS is currently evaluating how to calculate hours worked by commissioned salespeople to determine if that employee is “full time” for the purposes of the health care reform law.  We received a number of questions about this topic during The Expo last week and asked that PPAI’s counsel outline the various options the IRS has identified to help you make that calculation. The information can be located here, PPAI COMMISSION ACTIVITY AND HEALTH CARE REFORM.

PPAI also has a “planning tool” that can also help you work through some of these issues.  It can be found at: http://www.ppai.org/inside-ppai/ppai-law/Pages/CheckUPResource.aspx

I hope you find this information helpful and, as always, let me know if there’s anything we can do to help you grow your business.

Regards,

Paul