You are a new member of the Board of University Medical Center and have been appointed chairperson of the Board’s Compliance Committee.

You were recruited due to concerns about two controversial challenges that apply to your organization.

How do you turn these “challenges into “opportunities?”

Find two other Compliance situations that need to be addressed.

Opportunity 1

“Not-for-profit health systems—no strangers to paying top dollar for talented executives—are using sophisticated methods to avoid the penalties on high employee compensation.

Effective tax year 2018, the Tax Cuts and Jobs Act imposes a 21% excise tax on not-for-profit compensation that exceeds $1 million, a threshold that encompasses just about all major not-for-profit health systems.

Total CEO pay, including bonuses, retirement and other benefits, across the top 25 largest not-for-profit health systems averaged about $5.1 million in 2016, the most recent year for which data are available. That’s up from $4.5 million in 2015.

The tax is significant. This year, a $5.1 million salary, for example, would hit a health system with a roughly $860,000 tax. Bernard Tyson, CEO of Oakland, Calif.-based Kaiser Permanente, made about $10 million in total compensation in 2016. A 21% tax on all of his pay over $1 million would be $1.9 million—perhaps not a huge hit to a $73 billion organization.

St. Louis-based SSM Health’s former CEO Bill Thompson made nearly $2 million in 2016, which would yield a roughly $200,000 tax this year. Again, likely not significant for a $6.5 billion operation…

The law also includes a calculation whereby health systems can be taxed for providing excessive parachute payments to high-paid employees upon their departures. Patrick Fry, who retired as Sutter Health’s CEO in January 2016, received $10.6 million in deferred retirement pay that year, bringing his total compensation to nearly $13.5 million…

Luckily for them, health systems have savvy tax experts recommending maneuvers that will reduce their exposure to the new tax. Even then, systems must tread carefully to ensure they’re staying within the law.”

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Not-for-profit health systems working to get around tax on high exec pay, by Tara Bannow,

Opportunity 2

“Doctors and teaching hospitals raked in $8.4 billion in payments from drug companies last year, according to data recently released by the Centers for Medicare and Medicaid Services…

The physicians who received research-related payments number in the hundreds of thousands — about 628,000, by CMS’s count. More generally, they received $2.1 billion overall during the year…

Meanwhile, drug company payments went to about 1,100 teaching hospitals, including $1 billion in research payments and $751 million in non-research payments…

The payments come despite the fact that many physicians, as well as consumers, consider drug companies and medical device manufacturers for rising healthcare costs. A study last fall by the Texas Medical Center Health Policy Institute in Houston found that 19 percent of physicians blame drug and device manufacturers for rising costs, while 47 percent blamed insurance companies.”

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Doctors and hospitals got $8.4 billion in payments from drug companies in 2017, says CMS Of those payments, about $4.7 billion were related to research while $2.8 billion were non-research payments, by Jeff Lagasse,

“A drugmaker’s scheme to bolster sales of a potent painkiller with kickbacks to doctors has caused legal problems for the company but has left largely unscathed the physicians who pushed the drug on their patients.

Insys Therapeutics has been sued by state and local governments, private insurance companies and patients. Several former company executives have been indicted or convicted for their roles in bribing doctors to prescribe the fentanyl spray, Subsys.

At least a dozen civil lawsuits accuse individual doctors of accepting kickbacks from Insys to prescribe the drug which is 100 times more potent that morphine.

Those doctors prescribed the drug – intended only for those with cancer pain – to patients with other ailments, leading to harmful addiction and, in some cases, death.

Yet many of the doctors who benefited the most from the Arizona-based drug company’s payouts still practice medicine without consequences, a national Raycom Media investigation found. Insys did not respond to requests for comment…

“When a pain management guy is getting $100,000 to go to these dinners and they’re prescribing this for elbow pain or that hip pain, that’s criminal,” said Randy Hood, a South Carolina lawyer who represents several patients suing doctors who prescribed Subsys.

Speaker fees and other payments to doctors are legal unless they are connected to the volume of drugs physicians prescribe, according to the federal anti-kickback law…

Between 2013 and 2016, Insys paid 126 doctors at least $50,000 each in speakers’ fees and for travel, entertainment or consulting, Raycom Media’s analysis of federal physicians’ payments found.

Raycom mailed each of the doctors a letter with their payment and prescription histories and asked them to comment.

The payments to these doctors may not be nefarious. One oncologist, who never prescribed Subsys, said he was paid nearly $114,000 for food, travel and clinical development services.

Collectively, Insys paid the doctors more than $14 million…

Of the highest paid doctors, only 18 were oncologists.

Nearly 60 percent were pain specialists. Eight were general practice doctors such as family physicians or internal medicine specialists. Two were sports medicine doctors…”

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Doctors escape punishment for profiting off prescribing opioids to those who don’t need them, by Jill Riepenhoff and Megan Luther,

“A new report finds a large percentage of panel members that review drug applications for the Food and Drug Administration accept payments and other rewards from companies after their drugs are approved. The report led by investigative correspondent Charles Piller appears in today’s issue of the journal Science.

Piller and colleagues looked into the practice of drug developers providing financial benefits to members of FDA advisory committees after the panels review drug applications and vote to recommend approval. Advisory committees, often comprised of physicians and academic scientists, are recruited by FDA to independently evaluate drug applications in addition to the agency’s professional staff. While FDA does not always follow the assessments of these committees, an endorsement from these panels is often a predictor of FDA approval.

The Science team looked into advisory panels that recommended approval of 28 cardiovascular/renal or psychopharmacologic drugs as well as treatments for arthritis from 2008 to 2014, and were later approved by FDA. The reporters matched up participants on these panels to payments listed in the Open Payments database, collected by Centers for Medicare and Medicaid Services in the U.S. Department of Health and Human Services, from 2013 to 2016. The team also scanned conflict-of-interest disclosures in scientific and medical journals, at least those not behind paywalls. (Editor’s note: Much of Science magazine’s content is behind a paywall.) In their inquiries, the reporters looked for payments from the companies whose products were reviewed, as well as competitors of those companies making similar drugs.

The team found 107 advisers taking part in the committees and recommending the 28 drugs for FDA approval. Of the 107 participants, 40 — or 37 percent — received payments of $10,000 or more in compensation or research support after they voted to approve the drugs, either from the developers of the drugs or from competitors. In addition, 26 of the committee participants earned at least $100,000 from these companies, and 7 gained $1 million or more. The reporters also found the 17 top earning advisers, those making $300,000 or more, took in a total of $26 million over this period, of which nearly all, 94 percent, came from the companies making the products they reviewed or competitors.

An FDA spokesperson told Science in a statement that advisory committee members must disclose prospective employers, but not anticipated payments…”

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DA Reviewers Found Accepting Industry Payments After Drug Approvals,

Open Payments is a national disclosure program that promotes a more transparent and accountable health care system by making the financial relationships between applicable manufacturers and group purchasing organizations (GPOs) and health care providers (physicians and teaching hospitals) available to the public. oc:e},”next”===

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