Understanding COI & COC (025/670 forms) and Other Things Health Sciences Faculty Need to Know

1. Understanding COI & COC (025/670 forms) and Other Things Health Sciences Faculty Need to Know UC Davis Health System August 2011

2. Introduction • The main purpose of this educational program is to inform Health Sciences faculty members about potential conflicts of commitment issues and outline faculty members’ obligations under University policies as they apply to conducting and reporting of outside activities (chiefly outside professional activities). • This educational program also briefly explains a Health Sciences faculty member’s general obligations to avoid conflicts of interests (as defined in University policy and California law) and potential violations of state and federal fraud and abuse laws (e.g., Anti-Kickback and Stark laws).

3. Conflict of Interest and Fraud and Abuse Generally

4. Conflict of Interest • Various authorities establish what constitutes a conflict of interest, and what a person with a conflict of interest must do (or refrain from doing) as a consequence. • Under the California Political Reform Act of 1974 (the “Act”) and the regulations of the Fair Political Practices Commission (the “FPPC”), no public official (which includes any University of California employee) may make, participate in making, or in any way use or attempt to use his/her official position to influence, a University decision in which he/she knows or has reason to know that he/she has a disqualifying conflict of interest.

5. Conflict of Interest • A University employee has a conflict of interest if the decision will have a reasonably foreseeable material financial effect on one or more of his/her economic interests, unless the effect is indistinguishable from that on the public generally, or if the law requires his/her participation in the decision. • University of California, UC Davis and UC Davis Health System policies are, in most respects, consistent with the Act and FPPC regulations. See particularly Health System Policy 1705.

6. Fraud and Abuse Laws Numerous federal laws regulate the referral of patients and other business conducted by healthcare providers.  These laws are intended to prevent conflicts of interest between provider financial incentives and best patient care practices that may arise from business relationships between providers.  The federal "fraud and abuse" law is actually a compilation of several laws, including the Federal Anti-Kickback Statute and the Stark Law.

7. The Anti-Kickback Statute • The Federal Anti-Kickback Statute prohibits providers of services or goods covered by a federal healthcare program ("Federal Healthcare Program") from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual, or furnishing or arranging for a good or service for which payment may be made under a Federal Healthcare Program.  The Federal Anti-Kickback Statute is an intent-based statute.  For purposes of the Federal Anti-Kickback Statute, a "Federal Healthcare Program" is defined as "any plan or program that provides health benefits, whether directly through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government; or any State health care program . . ." The Medicare, Medicaid, and TRICARE Programs are all Federal Healthcare Programs.   • The Federal Anti-Kickback Statute is a criminal statute and the penalties for violations of the law can be severe.  They include fines of up to $25,000 per violation, felony conviction punishable by imprisonment up to five years, or both, as well as possible exclusion from participation in Federal Healthcare Programs.

8. The Stark Law • The Stark Law (also known as the "Physician Self-Referral Statute"), generally prohibits the referral of Medicare and Medicaid beneficiaries by a physician to an entity for the provision of "designated health services" if the physician, or the physician's immediate family member, has a financial relationship with the entity, unless a statutory exception applies to that financial relationship.  For purposes of the Stark Law, a "financial relationship" can include an ownership or investment interest in, or a compensation arrangement with, an entity that provides designated health services (which includes inpatient and outpatient hospital services).  Unlike the Anti-Kickback Statute, the Stark Law is a strict liability statute and thus, no proof of bad intent is required.  As a result, any arrangement that does not satisfy all of the criteria of a statutorily-defined Stark Law exception is illegal.    • The Stark law provides for significant civil sanctions for violations including, but not limited to: the denial of payment of a claim; refunds of amounts collected in violation of the statute; and civil monetary penalties.

9. Why is this Important?

10. The Push for “Transparency” by Legislators, Professional Societies, the University and the Public

11. Increased Scrutiny of Physician Relationships with Industry • Voluntary Public Disclosure by the Pharmaceutical Industry (e.g., as recently reported by ProPublica in its “Dollars for Docs” database, The Sacramento Bee and Sacramento News & Review) • Mandatory Reporting and Public Disclosure Under Federal Law • The Physician Payments Sunshine Act is designed to provide for transparency in the relationship between physicians and manufacturers of drugs, devices, or medical supplies for which payment is made under Medicare, Medicaid, or SCHIP. • The Act requires companies to begin recording any physician payments that are worth more than $10 in 2012 and to report them on March 31, 2013. • Reportable payments include stock options, research grants, consulting fees and travel to medical conferences. The details will be posted in a searchable database starting Sept. 30, 2013.

12. Increased Scrutiny of Physician Relationships with Industry • California Law • Requires pharmaceutical companies to adopt compliance programs that include limits on gifts or incentives to physicians (Health and Safety Code section 119402) • Other similar legislative initiatives are foreseeable

13. Conflict Of Commitment and Compensation For OccasionalOutside Professional Activities

14. Regents Standing Order 103.1 (Service Obligations) • No compensation shall be paid to any Officer, faculty member, or other employee of the University unless actively engaged in the service of the University, in accordance with such regulations as the President may establish. • No one in the service of the University shall devote to private purposes any portion of time due to the University nor shall any outside employment interfere with the performance of University duties. Arrangements for private employment by Officers, faculty members, or other employees of the University shall be subject to such regulations as the President may establish.

15. Conflict of Commitment and Outside Activities of Faculty Members Governed by Academic Personnel Manual (APM) 025

16. Academic Personnel Manual (APM) 025 • Principle • “Whether professional or non-professional, compensated or uncompensated, an outside activity that interferes with successful performance of the faculty’s member’s University obligations represents a conflict of commitment.” • Purpose • Identifies what compensated and uncompensated outside professional activities are permitted. • Application • This policy applies to full-time and part-time faculty members, but not emeritus faculty members unless an emeritus faculty member is on recall status. It also applies to academic or other administrators who hold academic appointments.

17. APM 025: Key Definitions • Compensation • Income, assets, or capital, either realized or having the potential to become realized. • Outside Professional Activities • Those activities that advance or communicate the faculty member’s professional and academic expertise through interaction with industry, the community or the public, and through consulting or professional opportunities within the faculty member’s area of professional or academic expertise. • An activity is considered “outside” if it is not part of a faculty member’s University obligations and takes place outside the University context.

18. APM 025: Key Definitions • Outside Non-Professional Activities • Activities that are not directly related to a faculty member’s area of professional, academic expertise and that take place outside the University context, and that are part of the faculty member’s private life. • Example: Physician/faculty member doing stand-up comedy.

19. Compensated Outside Professional Activities • Compensated outside professional activities are the ones most likely to cause real or apparent conflicts of commitment. • There are three categories of compensated outside professional activities based on the extent to which they may raise conflict of commitment issues. These categories have different requirements as to prior approval, inclusion in the applicable day limit, and annual reporting.

20. Day Limits • APM-025 • Full-time faculty members on an academic-year appointment normally may engage in compensated outside professional activities for up to 39 days; full-time faculty members on a fiscal year appointment may engage in compensated outside professional activities for up to 48 days. • However, Health Sciences faculty members are currently limited to 21 days of compensated outside professional activities.

21. Day Limits • Applies to each fiscal year, and unused days may not be carried over to the next year • The Chancellor may approve additional time that exceeds these limits.

22. Categories of Compensated Outside Professional Activities

23. Category I This category includes activities that are likely to raise issues of conflict of commitment. A written request to the Chancellor or the Chancellor’s designee and prior written approval is required. If permitted, these activities are counted within the applicable day limit and must be reported annually.

24. Category I • Examples of Category I activities include: • Assuming an executive or managerial position in a for-profit or not-for-profit business, which is generally not allowable; • Administering a grant outside the University that would ordinarily be conducted under the auspices of the University, which is generally not allowable; • Establishing a relationship as a salaried employee outside the University; • Compensated teaching or research at another institution (other than the occasional lecture or participating in UC-sponsored continuing education programs); and • Any other compensated outside professional activity which common sense and good judgment would indicate are likely to raise issues of conflict of commitment.

25. Category I The “Prior Approval for Compensated Outside Professional Activities (Category I) or for Involving Students in Outside Professional Activities” form, located in the APM-025 Appendix B, must be completed by the faculty member prior to engaging in a Category I activity. The Chancellor or the Chancellor’s designee must also provide written approval prior to the faculty member engaging in a Category I activity.

26. Category II Category II activities are generally unlikely to raise issues of conflict of commitment. They are typically accepted as regularly performed compensated outside professional activities and do not need prior approval. These activities are counted within the applicable day limit and must be reported annually.

27. Category II • Examples of Category II activities include: • Providing expert testimony in administrative, legislative, or judicial proceedings; • Providing consulting services or referrals or engaging in professional practice where such activities are provided by the faculty member acting as an individual; • Serving on the board of directors of an outside entity; • Providing a workshop for education or guidance to industry; • Undertaking compensated outside professional activity not mentioned in Categories I or III and that common sense and good judgment indicate are not likely to raise issues of conflict of commitment.

28. Category III These activities are integral to all disciplines, do not present issues of conflict of commitment, and are not counted within the applicable day limit. These activities do not have to be reported, although the Chancellor may request information regarding such activities.

29. Category III • Examples of Category III activities include: • Serving on a federal, state, or local government agency, committee, panel, or commission; • Acting in an editorial capacity for a professional journal; • Reviewing journal manuscripts, book manuscripts, or grant or contract proposals; • Attending and presenting talks at scholarly colloquia and conferences; • Developing scholarly communications in the form of books or journal articles, movies, television productions, and similar works, even when such activities result in financial gain; • Serving as a committee member or as an officer of a professional or scholarly society; • Accepting a commission for an artistic work or performance that is considered an integral part of a faculty member’s academic portfolio; and • Accepting honoraria (other than for Category II activities) and prizes.

30. Honoraria • Category III activities include “accepting honoraria (other than those received for Category II activities).” The terms “honorarium” or “honoraria” are not specifically defined in APM-025. • However, another University policy describing various forms of compensation defines an honorarium as “a payment or an award granted to an individual in recognition of a special service or distinguished achievement for which custom or propriety forbids any fixed business price (e.g., hourly rate) to be set.” See UC Davis Policy and Procedure Manual 380-76. • APM-670 defines “honoraria” as “payments by agencies outside the University for occasional lectures and similar public appearances beyond normal academic responsibilities to the University… and which are not in return for other services…”

31. Honoraria For purposes of properly characterizing an activity as either being in either Category II or III under APM-025, it is important to focus on the nature of the activity (not simply the word used to describe the payment), since an “honorarium” received for performing a Category II activity is necessarily not an honorarium under Category III.

32. Honoraria • Examples • A physician receives payment for “providing consulting services” or “providing a workshop for industry.” That payment would not constitute an “honorarium” under Category III. • A physician receives payment for “attending and presenting talks at scholarly colloquia and conferences.” That payment would be an honorarium under Category III. • The main distinction between a Category II and Category III activity appears to be whether the entity making the payment is engaged in a commercial (versus scholarly) activity.

33. Uncompensated Outside Professional Activities Guidelines Faculty members may engage in uncompensated outside professional activities if they do not interfere with the faculty member’s full-time commitment to the University. The Chancellor’s designee may use the guidelines for compensated outside professional activities, as a model, to address any possible conflicts of commitment concerns that a department Chair, Dean, or the Chancellor’s designee raises.

34. Compensated and Uncompensated Outside Non-Professional Activities Guidelines Outside non-professional activities are not expressly governed by University regulations; however, they must not interfere with a faculty member’s full-time commitment to the University. The Chancellor’s designee may use the guidelines for compensated outside professional activities as a model to address possible conflicts of commitment concerns that a department Chair, Dean, or the Chancellor’s designee raises.

35. UC Health Sciences Compensation Plan (APM 670 - Health Sciences Compensation Plan and Guidelines on Occasional Outside Professional Activities by Health Sciences Compensation Plan Participants)

36. The Health Sciences Compensation Plan governs compensation arrangements and accounts for compensation plan incomes to the University’s Schools of Medicine, Dentistry, Nursing, Pharmacy, and other health sciences units as deemed appropriate by the President.

37. Membership in the Health Sciences Compensation Plan • Individuals in health sciences schools, disciplines or specialties that have been approved for participation in the Plan shall be members of this Plan if they hold a University appointment at greater than 50 percent of full-time, in any of the following title series: • Professor • Professor in Residence • Professor of Clinical _____________ • Adjunct Professor • Acting Professor • Clinical Professor • Visiting Professor • Health and Sciences School Dean titles • Any other title series approved for membership in this Plan by the President.

38. Compensation • Faculty members participating in this Plan shall receive base salary, be eligible for optional additional compensation, and may retain certain other miscellaneous income from occasional outside professional activities. • The Plan participant must submit an annual report detailing the previous year’s outside professional activities from which the participant retained income to the Department Chair.

39. Compensation That May be Retained by Plan Participants Compensation Plan participants may engage in occasional outside professional activities but not patient care and retain the related income only in accordance with the “Guidelines on Occasional Outside Professional Activities by Health Sciences Compensation Plan Participants.”

40. Standard Compensation Plan Participants may retain payments from up to 21 days of service (not including patient care) per fiscal year to governmental agencies, non-profit health-or education- related organizations, continuing health education programs administered by the University, or to University Extension.

41. Alternative Compensation Plan In addition to the types of outside professional activities approved under the Standard Compensation Plan, Alternative Plan participants may retain additional types of professional income, including consulting income from non-profit and for-profit entities, and income from consulting or testifying as an expert or professional witness.

42. Alternative Compensation Plan • Annual Outside Professional Earnings Approval Threshold. • Department Chair prior approval is not necessary for Plan Participants in good standing, who have not exceeded the established 21-day limit on the number of days devoted to compensated outside professional activities, and whose annual earnings from all outside professional activities will be less than the approval threshold. • The maximum annual outside professional activities earnings approval threshold is $20,000 or 20% of the Health Sciences Compensation Plan salary scale (commonly referred to as total “X” compensation) for an individual faculty member’s rank, step, and academic programmatic unit, whichever is greater. • Plan participants are responsible for tracking and maintaining a total of their annual earnings from all outside professional activities.

43. Alternative Compensation Plan • Annual Outside Professional Earnings Approval Threshold • If the plan participant wishes to engage in an activity that might reasonably be expected to cause his/her outside professional activities earnings to exceed the threshold, approval must be obtained prior to engaging in such activities. • When requesting approval, the participant must provide written details about the activity to his or her Department Chair. This shall include the nature of the services to be provided, the person or entity that will receive and/or pay for the service, the anticipated period of the service, the total expected income from the activity, and the amount of the income expected to exceed the threshold. • The Department Chair will forward this information to the Dean. • If the activity is approved, the participant may retain the entire amount of income from the activity (including the amount that exceeds the approval threshold). • If a request is not approved, the Department Chair will discuss with the Plan participant whether the participant may engage in the activity, but with all income accruing to the Compensation Plan; or whether the participant may not engage in the activity at all.

44. Use of University Resources for Outside Professional Activities • Faculty shall not use University resources or facilities unauthorized on a significant scale for outside professional activities. Faculty Code of Conduct, Part II, C. It is expected that the outside entity or the faculty member will provide for the costs associated with the outside professional activity. • The University’s liability coverage typically does not extend to professional consulting and expert witness activities.

45. Procedures for Managing Compensated Outside Professional Activities • The Health System has developed a single form that is designed to meet the annual reporting requirements under APM-025 and APM-670 (the Health Sciences Compensation Plan) and to identify potential risk under the fraud and abuse laws. • A report of all Category I and II activities must be filed with the Chancellor or the Chancellor’s designee (UC Davis Academic Personnel Office) each year. • Additional information may be requested by the Department Chair to resolve any potential conflict of commitment or conflict of interest issues.

46. Compliance • Department Chairs will monitor compliance with all policy guidelines regarding outside professional activities. • Examples of when a Compensation Plan member may be deemed out of compliance: • Failure to turn over income due to the Plan as required by campus implementing procedures. • Failure to accurately disclose and describe the nature and scope of outside professional activities as required by campus implementing procedures. • Failure to comply may lead to correction action, which is the discontinuation of certain privileges involving compensation.

47. Questions?

48. Understanding COI & COC (025/670 forms) and Other Things Health Sciences Faculty Need to Know UC Davis Health System June 2011