Matt Wetzel is a partner in the Washington, DC office of Goodwin Procter LLP and serves as the WLF Legal Pulse’s Featured Expert Contributor, Life Sciences and Medtech Regulation.
The Advanced Medical Technology Association (“AdvaMed”) has released an updated Code of Ethics on Interactions with Health Care Professionals, effective June 1, 2022. The most recent revisions to the Code (the medical technology’s longstanding self-regulatory principles for industry interactions with potential referral sources) highlight the medical technology industry’s important roles in (a) delivering value-based, coordinated health care to patients and (b) training physicians and other professionals on how to safely and effectively use complex medical technology.
With respect to value-based care: the medical device and diagnostics industry produces high-tech, digital, and interconnected products that are at the heart of value- and outcomes-based solutions for patients. It is not difficult to imagine the contributions that medical technology offers, from increasing efficiency in the delivery of health care (for example, the use of artificial intelligence to improve diagnostics); to providing more effective, personalized care (for example, the use of 3D printing in orthopedics); to monitoring signs and symptoms of disease in real time (for example, wearable technology that allows for patient input and immediate physician monitoring); and even to providing more cost-saving treatment.
In recent years, we have witnessed the transition from a fee-for-service model of paying for health care (i.e. each item and service is separately reimbursed or reimbursed as a bundle of similar items or services) to a value-based payment model (i.e. payment for care is based on the quality of care delivered to the patient and may involve multiple stakeholders who agree to coordinate care and share in any related payment). Prior to November 2020, federal regulations implementing the two primary federal health care fraud and abuse laws (the Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b) and the Physician Self-Referral Law or Stark Law (42 U.S.C. § 1395nn)) were written to address health care fraud risks associated with fee-for-service payments. Despite the collective drive towards increasing value-based and care coordinated models, those who wished to participate in an innovative arrangement without fear of legal liability needed to secure exemptions and waivers from the federal government to avoid liability under the health care fraud laws.
In November 2020, however, the U.S. Department of Health & Human Services Office of Inspector General (“OIG”) and the Centers for Medicare & Medicaid Services jointly released updates to the agencies’ longstanding regulations under both the Anti-Kickback Statute (42 C.F.R. § 1001.952) and the Stark Law (42 C.F.R. Part 411) to permit providers, payors, and other stakeholders to enter novel care and payment relationships paid on the basis of or quality of health outcomes achieved or other economic and health benefits and value delivered to patients. As a result, health care organizations and professionals can now band together with less fear of liability and exchange payments and remuneration that might have previously been deemed violations of either the Anti-Kickback Statute or the Stark Law, provided they meet the confines of one of several well-defined regulations. Notably, the federal government made clear in its final regulations that full regulatory protection from liability would only be available to a narrow band of digital health technology participants in value-based arrangements and would not be broadly available to the pharmaceutical, medical device, durable medical equipment, pharmacy, and laboratory testing businesses generally.
With its new revisions, the AdvaMed Code clarifies that the medical technology industry does have a place in value-based care, care coordination, and outcomes- and quality-based payment models. In fact, the revised AdvaMed Code now defines “value-based care” as health care arrangements that are “paid based on individual patient health outcomes, population health outcomes, increasing access to healthcare for underserved populations, managing costs, and/or improving efficiency” and which might involve payment pricing for health care “based upon clinical, economic, and/or patient-experience outcomes, and may include payor-driven reimbursement arrangements for providers, arrangements between providers, and arrangements between providers and manufacturers or other participants in the health care system.”
The revised Code’s updated definition of “Medical Technology” emphasizes that technology has a role in coordinating patient care via data-driven medical devices and software solutions. According to the Code, medical technology companies use health care data and technology to advance outcomes and enhance care delivery. It recognizes that “[d]ata-driven devices can also work independently or as part of a larger ecosystem to enable data collection, aggregation, and analysis.” Finally, the revised Code highlights that the medical technology industry is “[u]niquely positioned with data hub and analytics capabilities, clinical solutions to improve health outcomes, and business solutions to improve efficiency” and “provide[s] solutions: a combination of technology and services designed to deliver a targeted outcome.”
The revised Code also addresses the limited window of safe harbor for digital health technology participants. It acknowledges the OIG’s Anti-Kickback Statute safe harbors and guidance while also clarifying that, even though full protection from liability is not afforded by the terms of a safe harbor regulation, this does not mean that the behavior violates the Anti-Kickback Statute. The revised AdvaMed Code notes in new FAQ 3 – “What if a proposed interaction with a Health Care Professional does not fit into an existing safe harbor to the Anti-Kickback Statute?” – that this simply means that the behavior needs to be analyzed on a case-by-case basis.
The Code’s updates incorporate other new references throughout the document to value-based care arrangements, including for example in its section on how medical device companies can appropriately contract with health care providers to provide consulting services, and its sections on appropriate training and education programs for health care providers and other business meetings with health care providers.
With respect to training providers on the safe and effective use of products, the revised AdvaMed Code emphasizes that the medtech industry has a central place in training physicians on how to use its complicated technology, which can often require complex technical instruction on products in a clinical theater or cadaver lab. The Code’s revisions include new language regarding the ability to conduct training virtually and includes new guidance for addressing the industry’s interactions with health care providers in connection with such training. This serves, in part, to address a Special Fraud Alert issued by OIG (also in November 2020) related to company-funded speaker programs that involve drug or medical device manufacturers. These programs involve companies hiring physicians and other health care providers to educate other providers on the safe and effective use of the product. In its 2020 Special Fraud Alert, the OIG expressed skepticism about the educational value of such programs when they include certain “suspect characteristics” that would lead the government to conclude the programs might be a violation of the Anti-Kickback Statute. These characteristics include, for example speaker programs with little or no substantive information is presented, excessive compensation paid to speakers, speakers being selected by sales or marketing personnel, allowing HCPs to attend programs on the same or “substantially the same topics” more than once, holding programs in venues that are “not conducive to the exchange of educational information,” and serving alcohol at the program, among others.
Conclusion. The AdvaMed Code helps guide medical technology companies to develop and structure internal controls and self-regulatory principles in a way that addresses important legal risks. It makes clear that, as the industry continues to develop ground-breaking technological advancements, there is a role for medical technology companies to play in coordinating care and delivering value to patients. And with the shift in the federal regulatory environment from a fee-for-service to a value-based model, the Code’s provisions can also help companies keep up with the concomitant evolution in legal risks. Finally, the Code provides a principled approach and direction for companies that are seeking to provide essential training and education for customers and other health care providers, even in light of the government’s increased scrutiny and skepticism.