Medicare, Medicaid, Children's Health Insurance Programs; Transparency Reports and Reporting of Physician Ownership or Investment Interests, 78742-78773 [2011-32244]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 76, Number 243 (Monday, December 19, 2011)]
[Proposed Rules]
[Pages 78742-78773]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-32244]



[[Page 78741]]

Vol. 76

Monday,

No. 243

December 19, 2011

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 402 and 403





Medicare, Medicaid, Children's Health Insurance Programs; Transparency 
Reports and Reporting of Physician Ownership or Investment Interests; 
Proposed Rule

Federal Register / Vol. 76 , No. 243 / Monday, December 19, 2011 / 
Proposed Rules

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 402 and 403

[CMS-5060-P]
RIN 0938-AR33


Medicare, Medicaid, Children's Health Insurance Programs; 
Transparency Reports and Reporting of Physician Ownership or Investment 
Interests

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would require applicable manufacturers of 
drugs, devices, biologicals, or medical supplies covered by Medicare, 
Medicaid or the Children's Health Insurance Program (CHIP) to report 
annually to the Secretary certain payments or transfers of value 
provided to physicians or teaching hospitals (``covered recipients''). 
In addition, applicable manufacturers and applicable group purchasing 
organizations (GPOs) are required to report annually certain physician 
ownership or investment interests. The Secretary is required to publish 
applicable manufacturers' and applicable GPOs' submitted payment and 
ownership information on a public Web site.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. Eastern Standard 
Time on February 17, 2012.

ADDRESSES: In commenting, please refer to file code CMS-5060-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address only: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-5060-P, P.O. Box 8013, 
Baltimore, MD 21244-8013.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address only: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-5060-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. Alternatively, you may deliver (by hand or 
courier) your written comments only to the following addresses prior to 
the close of the comment period:
    a. For delivery in Washington, DC-- Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
call telephone number (410) 786-1066 in advance to schedule your 
arrival with one of our staff members.
    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Erica Breese (202) 260-6079.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-(800) 743-3951.

I. Background

A. Statutory Background

    Section 6002 of the Affordable Care Act added section 1128G to the 
Social Security Act (the Act), which requires applicable manufacturers 
of drugs, devices, biologicals, or medical supplies covered under title 
XVIII of the Act (Medicare) or a State plan under title XIX (Medicaid) 
or XXI of the Act (the Children's Health Insurance Program, or CHIP) to 
report annually to the Secretary certain payments or other transfers of 
value to physicians and teaching hospitals. Section 1128G of the Act 
also requires applicable manufacturers and applicable group purchasing 
organizations (GPOs) to report certain information regarding the 
ownership or investment interests held by physicians or the immediate 
family members of physicians in such entities.
    Specifically, manufacturers of covered drugs, devices, biologicals, 
and medical supplies (applicable manufacturers) are required to submit 
on an annual basis the information required in section 1128G(a)(1) of 
the Act for certain payments or other transfers of value made to 
physicians and teaching hospitals (collectively called covered 
recipients) during the course of the preceding calendar year. 
Similarly, section 1128G(a)(2) of the Act requires applicable 
manufacturers and applicable GPOs to disclose any ownership or 
investment interests in such entities held by physicians or their 
immediate family members, as well as information on any payments or 
other transfers of value provided to such physicians. Applicable 
manufacturers must report the required payment and other transfer of 
value information to CMS in an electronic format by March 31, 2013, and 
on the 90th day of each calendar year thereafter. Applicable 
manufacturers and applicable GPOs must report the required information 
about physician ownership and investment interests, including those 
held by immediate family members, as well as information on any 
payments or other transfers of value to such physician owners or 
investors in the same format, by the same date. Applicable 
manufacturers and applicable GPOs are subject to civil monetary 
penalties (CMPs) for failing to comply with the reporting requirements 
of the statute. We are required by statute

[[Page 78743]]

to publish the reported data on a public Web site. The data must be 
downloadable, searchable, and easily aggregated. In addition, we must 
submit annual reports to the Congress and each State summarizing the 
data reported. Finally, section 1128G of the Act generally preempts 
State laws that require disclosure of the same type of information by 
manufacturers.
2. Transparency Overview
    Collaboration among physicians, teaching hospitals, and industry 
manufacturers may contribute to the design and delivery of life-saving 
drugs and devices. However, while some collaboration is beneficial to 
the continued innovation and improvement of our health care system, 
payments from manufacturers to physicians and teaching hospitals can 
also introduce conflicts of interests that may influence research, 
education, and clinical decision-making in ways that compromise 
clinical integrity and patient care, and may lead to increased health 
care costs.
    We recognize that disclosure alone is not sufficient to 
differentiate beneficial, legitimate financial relationships from those 
that create conflict of interests or are otherwise improper. Moreover, 
financial ties alone do not signify an inappropriate relationship. 
However, transparency can shed light on the nature and extent of 
relationships, and may dissuade inappropriate conflicts of interest 
from developing. Given the intricacies of disclosure and the importance 
of discouraging inappropriate relationships without harming beneficial 
ones, we sought to better understand the current scope of the 
interactions among physicians, teaching hospitals, and industry 
manufacturers. We solicited stakeholder feedback through a CMS Open 
Door Forum on March 24, 2011 in order to guide our implementation of 
section 1128G of the Act. The transcript of this Open Door Forum can be 
found on the regulatory docket on Regulations.gov. In addition to this 
feedback, we consulted with the Inspector General of the Department of 
Health and Human Services (HHS), as required by the statute.

II. Provisions of the Proposed Regulations

    The following sections outline the agency's proposals concerning 
implementation of section 1128G of the Act, including clarification of 
the terms and definitions used in the statute, as well as proposed 
procedures for the submission, review, and publication of the reported 
data. For terms undefined by the statute, we sought to provide, where 
necessary, appropriate definitions, and explanations of how we propose 
to interpret them. Due to the timing of the publication of this notice 
of proposed rulemaking, a final rule will not be published in time for 
applicable manufacturers and applicable GPOs to begin collecting the 
information required in section 1128G of the Act on January 1, 2012, as 
indicated in the statute. We will not require applicable manufacturers 
and applicable GPOs to begin collecting the required information until 
after the publication of the final rule; however, we recognize that 
some manufacturers and GPOs may begin to collect certain data 
voluntarily. We seek comment on the amount of time applicable 
manufacturers and applicable GPOs will need following publication of 
the final rule in order to begin complying with the data collection 
requirements of section 1128G of the Act. We are considering a 
preparation period of 90 days, since we believe that was the time 
period intended by Congress based on the timeline indicated in the 
statute and are requesting comments on whether that is a sufficient 
amount of time. Finally, we also seek input on specific challenges that 
applicable manufacturers and applicable GPOs may face when setting up 
the necessary data collection and reporting systems.
    We hope to finalize this rule as soon as possible during calendar 
year (CY) 2012 and, depending on the publication date of the final 
rule, we are considering requiring the collection of data for part of 
2012, to be reported to CMS by the statutory date of March 31, 2013. We 
seek comments on the feasibility of submitting the required information 
for part of CY 2012 by March 31, 2013.

A. Transparency Reports

    Section 1128G(a) of the Act outlines the transparency reporting 
requirements and consists of two parts. The first part, section 
1128G(a)(1) of the Act, outlines the required reports from applicable 
manufacturers on payments or other transfers of value to covered 
recipients. The second part, section 1128G(a)(2) of the Act, outlines 
the reporting requirements for applicable manufacturers and applicable 
GPOs concerning ownership and investment interests of physicians, and 
their immediate family members, as well as information on any payments 
or other transfers of value provided to such physician owners or 
investors. While there is some overlap between these submissions, we 
propose that these two types of information be reported separately to 
ensure that the relevant reporting obligations of applicable 
manufacturers and applicable GPOs are clearly distinguished. We seek 
comments on this general approach. We want to emphasize that compliance 
with the reporting requirements of section 1128G of the Act does not 
exempt applicable manufacturers, applicable GPOs, covered recipients, 
physician owners or investors, or anyone else from any potential 
liability associated with payments or other transfers of value, or 
ownership or investment interests (for example, potential liability 
under the Federal Anti-Kickback statute or False Claims Act).
1. Reports on Payments and Other Transfers of Value Under Section 
1128G(a)(1) of the Act
a. Applicable Manufacturers
(1) Manufacturers
    Section 1128G(a) of the Act requires that applicable manufacturers 
disclose certain payments or other transfers of value to covered 
recipients. In defining applicable manufacturer, we sought a 
comprehensive definition to ensure the full transparency and complete 
reporting envisioned by the statute. Section 1128G(e)(9) of the Act 
defines a ``manufacturer of a covered drug, device, biological, or 
medical supply'' as--:

    Any entity which is engaged in the production, preparation, 
propagation, compounding, or conversion of a covered drug, device, 
biological, or medical supply (or any entity under common ownership 
with such entity which provides assistance or support to such entity 
with respect to the production, preparation, propagation, 
compounding, conversion, marketing, promotion, sale, or distribution 
of a covered drug, device, biological, or medical supply).

Section 1128G(e)(2) of the Act clarifies that an ``applicable 
manufacturer'' of a covered drug, device, biological, or medical 
supply, is one which is ``operating in the United States, or in a 
territory, possession, or commonwealth of the United States.''

    Given these statutory definitions and relevant considerations, we 
propose to interpret ``applicable manufacturer'' for the purposes of 
this regulation as an entity that is:

    (1) Engaged in the production, preparation, propagation, 
compounding, or conversion of a covered drug, device, biological, or 
medical supply for sale or distribution in the United States, or in 
a territory, possession, or commonwealth of the United States; or
    (2) Under common ownership with an entity in paragraph (1) of 
this definition, which provides assistance or support to such entity 
with respect to the production, preparation, propagation, 
compounding, conversion, marketing, promotion, sale, or

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distribution of a covered drug, device, biological, or medical 
supply for sale or distribution in the United States, or in a 
territory, possession, or commonwealth of the United States.

    We recognize that there are other definitions of ``manufacture,'' 
``manufacturer'' and ``manufacturing'' with which industry may be 
familiar (such as those in 21 CFR 207.3, 21 CFR 210.3(b)(12), 21 CFR 
820.3(o), and 42 USC 1396r-8(k)(5)). We note that this proposed 
definition, which generally tracks the statute, is somewhat more 
limited than those definitions.
    Under this definition, manufacturers of a covered drug, device, 
biological, or medical supply (under either paragraph (1) or paragraph 
(2) of the definition) are deemed to be an ``applicable manufacturer'' 
if their products are sold or distributed in the United States (U.S.), 
regardless of where the covered drug, device, biological, or medical 
supply is actually produced or where the entity is actually located or 
incorporated. Given the global nature of these industries, we believe 
that any entity manufacturing covered drugs, devices, biologicals, or 
medical supplies for sale or distribution in the U.S. (or any entity 
under common ownership which provides assistance or support in the 
production, preparation, propagation, compounding, conversion, 
marketing, promotion, sale, or distribution of such items) should be 
subject to the requirements of section 1128G of the Act. The 
opportunity for undue influence or inappropriate relationships caused 
by payments or transfers of value to covered recipients is the same for 
manufacturers of drugs, devices, biologicals, or medical supplies sold 
or distributed in the United States regardless of where the product is 
actually manufactured, and we, therefore, propose to treat them the 
same.
    We also seek to clarify that any manufacturer that meets the 
definition of applicable manufacturer by selling or distributing in the 
United States at least one covered drug, device, biological, or medical 
supply is considered an applicable manufacturer, even though it may 
also manufacturer products that do not fall within that category (as 
defined later in this section). We propose that all payments or 
transfers of value made by an applicable manufacturer to a covered 
recipient must be reported as required under section 1128G of the Act 
regardless of whether the particular payment or other transfer of value 
is associated with a covered drug, device, biological, or medical 
supply. Additionally, we seek to clarify that the proposed definition 
includes entities that hold Food and Drug Administration (FDA) 
approval, licensure, or clearance for a covered drug, device, 
biological, or medical supply, even if they contract out the actual 
physical manufacturing of the product to another entity. We interpret 
these entities as being ``engaged in the production, preparation, 
propagation, compounding, or conversion of a covered drug, device, 
biological, or medical supply.'' We seek comment on this 
interpretation.
    As noted previously, section 1128G(e)(9) of the Act states that 
certain companies which are under ``common ownership'' with an entity 
that produces, prepares, propagates, compounds, or converts a covered 
drug, device, biological, or medical supply are also subject to the 
reporting requirements under this provision, even though they 
themselves may not be involved in the ``manufacturing'' process. 
Specifically, this applies to entities under ``common ownership'' with 
an applicable manufacturer which provide assistance or support to the 
applicable manufacturer with respect to the production, preparation, 
propagation, compounding, conversion, marketing, promotion, sale, or 
distribution of a covered drug, device, biological, or medical supply 
for sale or distribution in the U.S., or in a territory, possession, or 
commonwealth of the U.S. We propose to define ``common ownership'' as 
when the same individual, individuals, entity, or entities, directly or 
indirectly, own any portion of two or more entities. The common 
ownership definition would apply to a range of corporate arrangements, 
including, but not limited to, parent companies and subsidiaries and 
brother/sister corporations.
    We are also considering an alternate interpretation that would 
limit the common ownership definition to circumstances where the same 
individual, individuals, entity, or entities own 5 percent or more of 
total ownership in two or more entities. This would be subject to the 
same requirements as the proposed definition described previously, but 
would only apply to interests of 5 percent of more. We seek comments on 
our proposed definition of ``common ownership,'' including, whether a 
more specific definition is needed and, if a minimum percentage 
threshold is adopted, whether 5 percent is appropriate. We intend to 
finalize the agency's position on this in the final rule based on 
comments received.
    If two entities are under common ownership with one another, and 
both individually meet the definition of an applicable manufacturer 
under paragraph (1) of the definition, then we propose that the 
entities should report separately under section 1128G of the Act. For 
example, if company A and company B are both owned by company C, and 
companies A, B and C all meet the definition of applicable manufacturer 
under paragraph (1), then all three have to report separately. However, 
if only one company under common ownership meets the definition of 
applicable manufacturer under paragraph (1), and the other company is 
required to report under paragraph (2) of the definition, then we 
propose that the affected entities can choose whether or not to report 
together. For example, if only company C meets the definition of 
applicable manufacturer under paragraph (1) and companies A and B meet 
the definition of applicable manufacturer under paragraph (2), then the 
companies can decide whether to report together. If an applicable 
manufacturer under paragraph (1) reports for itself as well as for 
entities under common ownership that are required to report under 
paragraph (2), the report should clearly name all of the entities that 
are included in the report. Given the various relationships between 
entities under common ownership, we propose that if an applicable 
manufacturer under paragraph (1) reports for at least one additional 
entity under common ownership, the applicable manufacturer may decide 
whether to identify the payments as those from the entity under common 
ownership, or whether to combine them with their payments or other 
transfers of value.
    In addition to payments or other transfers of value to covered 
recipients made by applicable manufacturers themselves, applicable 
manufacturers (under both paragraphs (1) and (2) of the definition) are 
also required by statute to report payments and other transfers of 
value provided indirectly to covered recipients through third parties, 
if the applicable manufacturer is aware of the identity of the covered 
recipient. This is addressed in more detail in the discussion of third 
party payments found later in this preamble.
(2) Covered Drug, Device, Biological, or Medical Supply
    The reporting requirements are limited to applicable manufacturers 
of a ``covered drug, device, biological, or medical supply.'' The 
phrase ``covered drug, device, biological, or medical supply'' is 
defined in section 1128G(e)(5) of the Act as any drug, biological 
product, device, or medical supply for which payment is ``available'' 
under Medicare, Medicaid,

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or CHIP. Many drugs, devices, biological, and medical supplies are 
reimbursed separately under these programs, making payment availability 
clear. However, others are paid for as a part of a composite rate 
payment, such as the Medicare hospital inpatient prospective payment 
system (IPPS), the outpatient prospective payment system (OPPS), or the 
end-stage renal disease (ESRD) prospective payment system. Since 
payment, while indirect, is still being provided for the bundled drug, 
device, biological or medical supply, we propose that payment is 
considered ``available'' under Medicare, Medicaid or CHIP for items 
included in a composite payment rate. Therefore, we propose that drugs, 
devices, biologicals, or medical supplies included in a composite 
payment rate, as well as those reimbursed separately, are considered to 
be covered drugs, devices, biologicals, or medical supplies under 
section 1128G of the Act.
    Given these proposals, we propose to define ``covered drug, device, 
biological, or medical supply'' as:

    Any drug, device, biological, or medical supply for which 
payment is available under Title XVIII of the Act or under a State 
plan under Title XIX or XXI (or a waiver of such plan), either 
separately, as part of a fee schedule payment, or as part of a 
composite payment rate (for example, the hospital inpatient 
prospective payment system or the hospital outpatient prospective 
payment system). With respect to a drug or biological, this 
definition is limited to those drug and biological products that, by 
law, require a prescription to be dispensed. With respect to a 
device or medical supply, this definition is limited to those 
devices (including medical supplies) that, by law, require premarket 
approval by or premarket notification to the Food and Drug 
Administration.

    We are proposing to limit drugs and biologicals in the definition 
of ``covered drug, device, biological, and medical supply,'' to drugs 
and biologicals that, by law, require a prescription to be dispensed, 
thus excluding drugs and biologicals that are considered ``over-the-
counter'' (OTC). We believe this limitation will reduce the number of 
manufacturers subject to the reporting requirements by excluding those 
that only manufacturer OTC drugs or biologicals. We believe that this 
exclusion may be appropriate for manufacturers that manufacture only 
these products (and not also products which fall within the proposed 
definition of ``covered drug, device, biological, or medical supply''), 
since physicians and teaching hospitals have less influence over 
patients' choice of OTC products. We seek comments on the proposal to 
limit covered drugs and biologicals to those that require a 
prescription to be dispensed. In the event we adopt this 
interpretation, applicable manufacturers who manufacturer only OTC 
drugs or biologicals (and not also products which fall within the 
proposed definition of ``covered drug, device, biological, or medical 
supply''), would not be required to report at all under section 1128G 
of the Act. However, manufacturers who manufacture both OTC drugs or 
biologicals and at least one product that falls within the definition 
of a covered drug, device, biological or medical supply would be 
required to report all payments or transfers of value to covered 
recipients required by section 1128G of the Act (whether or not 
associated with a covered drug, device, biological, or medical supply), 
as previously explained.
    Similarly, we are also proposing an additional limitation to the 
definition as it pertains to devices and medical supplies, which would 
limit them to those devices (including medical supplies) that, by law, 
require premarket approval by or notification to FDA. This would 
exclude many Class I devices and certain Class II devices, which are 
exempt from premarket notification requirements under 21 U.S.C. 360(l) 
or (m), such as tongue depressors and elastic bandages. Some of these 
devices and medical supplies are so routinely provided in the course of 
medical care that the Congress may not have intended to capture 
manufacturers of such items under these reporting requirements. We 
believe this limitation may be appropriate for applicable 
manufacturers, because manufacturers that solely produce these exempt 
products have not been shown to have extensive relationships with 
covered recipients. Additionally, we believe this limitation might be 
appropriate because these financial relationships (to the extent they 
exist) are less likely to influence patient care. However, we are also 
concerned that this would be overly limiting for the definition of 
applicable GPOs, which also incorporates the phrase ``covered drug, 
device, biological, or medical supply.'' We discuss this more in the 
applicable GPO definition section. We seek comment on this additional 
limitation that we are proposing. We note that in the event this 
interpretation is adopted, applicable manufacturers who manufacture 
only devices or medical supplies that are exempt from premarket 
notification requirements (and not also products which fall within the 
proposed definition of ``covered drug, device, biological, or medical 
supply''), would not be required to report at all under section 1128G 
of the Act. However, manufacturers who manufacture both devices or 
medical supplies that are exempt from premarket notification 
requirements and at least one product that falls within the definition 
of a covered drug, device, biological or medical supply would be 
required to report all payments or transfers of value to covered 
recipients required by section 1128G of the Act (whether or not 
associated with a covered drug, device, biological, or medical supply), 
as previously explained.
b. Covered Recipients
    Under section 1128G(a)(1) of the Act, applicable manufacturers are 
required to disclose certain payments or other transfers of value made 
to covered recipients, or to entities or individuals at the request of, 
or designated on behalf of, a covered recipient. Section 1128G(e)(6) of 
the Act defines ``covered recipient'' as: (1) A physician, other than a 
physician who is an employee of an applicable manufacturer; or (2) a 
teaching hospital. Section 1128G(e)(11) of the Act defines 
``physician'' to have the meaning set forth in section 1861(r) of the 
Act, which includes doctors of medicine and osteopathy, dentists, 
podiatrists, optometrists and licensed chiropractors. ``Employee'' is 
also defined in section 1128G(e)(7) of the Act to have the meaning set 
forth in section 1877(h)(2) of the Act, which is defined as follows: 
``An individual who is considered to be ``employed by'' or an 
``employee'' of an entity if the individual would be considered to be 
an employee of the entity under the usual common law rules applicable 
in determining the employer-employee relationship (as applied for 
purposes of section 3121(d)(2) of the Internal Revenue Code of 1986).'' 
We note that these common law rules are discussed in 20 CFR 404.1007 
and 26 CFR 31.3121(d) through 1(c).
    The term ``teaching hospital'' is not explicitly defined in section 
1128G of the Act or elsewhere in the Act. One possible way to define 
the term ``teaching hospital'' is by linking it to Medicare graduate 
medical education (GME). We believe this is an appropriate way to 
identify teaching hospitals because GME payments are provided to 
support the training of medical residents, and hospitals that receive 
such payments are easily identifiable. Therefore, we propose to define 
a teaching hospital as any institution that received payments under 
section 1886(d)(5)(B) of the Act (IPPS Indirect Medical Education 
(IME)), section 1886(h) of the Act (direct GME), or

[[Page 78746]]

section 1886(s) of the Act (psychiatric hospitals IME) during the most 
recent year for which such information is available. While we recognize 
that this definition may not capture hospitals with accredited resident 
programs that do not receive IME or GME payments, we are unable to 
include these hospitals since we cannot readily identify them based on 
Medicare payment data. We seek comment on this proposed definition.
c. Identification of Covered Recipients
    In order to accurately distinguish covered recipients, section 
1128G of the Act requires that applicable manufacturers report the 
covered recipient's name and business address, and for physician 
covered recipients, report the physician's National Provider Identifier 
(NPI), and specialty. The collection of this information is necessary 
for applicable manufacturers, in order to distinguish individual 
covered recipients when reporting to CMS. Similarly, it is also 
important for CMS when aggregating the data. However, it is not simple 
given the number of covered recipients. In order to identify physicians 
covered recipients, we suggest that applicable manufacturers use the 
National Plan & Provider Enumeration System (NPPES), which CMS 
currently maintains and updates on its public Web site. The NPPES Web 
site includes a database of physician NPIs and has an NPI Registry 
function which allows applicable manufacturers to look up individual 
physician's NPIs.\1\ Similarly, the full database can be downloaded 
from the CMS Web site.\2\ The NPPES system is updated frequently and 
NPIs do not generally change over time, so we believe this is the best 
source of information for applicable manufacturers to obtain physician 
NPIs. We realize that the NPPES system may not contain NPI information 
for every physician covered recipient as defined in this provision. 
However, we believe that NPPES represents the most comprehensive 
listing of physicians available. If a physician is not listed in the 
NPPES NPI registry, the applicable manufacturer will be responsible for 
obtaining the physician's individual NPI directly from the physician, 
to the extent that the physician has an NPI.
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    \1\ NPI Registry can be found at https://nppes.cms.hhs.gov/NPPES/NPIRegistryHome.do.
    \2\ Database can be downloaded at https://nppes.viva-it.com/NPI_Files.html.
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    We are also considering whether we should require, under the 
authority granted in section 1128G(a)(1)(A)(viii) of the Act, that 
applicable manufacturers report another unique identifier, such as 
State license number, for physicians who are identified, but do not 
have an NPI. We seek comments on what other unique identifiers could be 
used, including whether these unique identifiers are readily obtainable 
by applicable manufacturers.
    With respect to teaching hospitals, we propose to publish a list of 
hospital covered recipients (that is, those hospitals that received 
Medicare direct or indirect GME) on the CMS Web site once per year. We 
believe publication of this list is necessary because it may not be 
immediately apparent to applicable manufacturers whether a particular 
hospital meets our proposed definition of a teaching hospital, and 
there is no currently published database that includes this 
information. The list for the reporting year would include the most 
recent data available. We propose that the list of teaching hospital 
covered recipients should include the name and address of each teaching 
hospital. We seek comments on this proposal.
d. Payments or Other Transfers of Value
    ``Payment or other transfer of value'' is defined broadly in 
section 1128G(e)(10)(A) of the Act as ``a transfer of anything of 
value.'' This includes all payments or other transfers of value given 
to a covered recipient, regardless of whether the covered recipient 
specifically requested the payment or other transfer of value. In 
addition, payments or transfers of value made to an individual or 
entity at the request of or designated on behalf of a covered recipient 
must be reported under the name of the covered recipient. We propose 
that this includes payments or other transfers of value provided to a 
physician (or physicians) through a physician group or practice. We 
propose that payments or other transfers of value provided through a 
group or practice should be reported individually under the name(s) of 
the physician covered recipient(s).
    In addition, there may be other situations when a covered recipient 
may request that a payment or other transfer of value be transferred by 
the applicable manufacturer to another individual or entity instead of 
being provided directly to himself/herself or the hospital itself. As 
required in section 1128G(a)(1)(A) of the Act, these payments should be 
reported under the name of the covered recipient since they are made at 
the request of, or designated on behalf of, a covered recipient. 
Additionally, we propose that applicable manufacturers report the name 
of the entity or individual that received the payment at the request of 
or designated on behalf of the covered recipient. Reporting the entity 
or individual paid will maximize transparency about the details of the 
payment or other transfer of value, by allowing end users to discern 
whether a covered recipient actually received the payment, and if not, 
where the payment went. We do not believe it is feasible to provide a 
review period for these entities or individuals before the data is made 
publicly available on the CMS Web site. Instead, we believe that review 
by the covered recipient is sufficient. We welcome comment on this 
approach. We believe that the collection of this information is within 
the discretion provided in section 1128G(a)(1)(A)(viii) of the Act to 
require reporting of additional categories of information regarding a 
payment or other transfer of value.
e. Payment and Other Transfer of Value Report Content
    The specific categories of information required to be reported for 
each payment or transfer of value provided to a covered recipient are 
set forth in section 1128G(a)(1)(A) of the Act. We have provided the 
following explanations and details on how we propose that applicable 
manufacturers report some of this information to CMS.
(1) Name
    When reporting the name of physician covered recipients, we propose 
reporting the first name, last name, and middle initial for physician 
covered recipients.
(2) Business Address
    We propose that applicable manufacturers report the full street 
address. For teaching hospital covered recipients, we propose using 
only the address included in the CMS-published list of teaching 
hospitals. For physician covered recipients, we propose that applicable 
manufacturers report the physician's primary practice location address 
since this is more easily recognizable to end users of the data. The 
practice location can be found in NPPES as the ``provider business 
practice location.''
(3) Specialty and NPI
    Applicable manufacturers are also required to report specialty and 
NPI for physician covered recipients. If using NPPES, we suggest using 
the ``provider taxonomy'' field when reporting the physician specialty. 
We propose that applicable manufacturers only report a single specialty 
for each physician covered recipient. We propose that applicable 
manufacturers use only the specialties available for the ``provider

[[Page 78747]]

taxonomy'' field in NPPES; details on these terms are available 
online.\3\ As explained previously, for NPI, we propose that applicable 
manufacturers report the physician's individual NPI, rather than any 
group NPI, with which the physician may be associated.
---------------------------------------------------------------------------

    \3\ Health care provider taxonomy codes are available through a 
link on the NPPES Web site: https://nppes.cms.hhs.gov/NPPES/StaticForward.do?forward=static.instructions.
---------------------------------------------------------------------------

(4) Date of Payment
    Applicable manufacturers must provide the date upon which a payment 
or transfer of value was provided to the covered recipient. Some 
payments or transfers of value may be provided over multiple dates, 
such as a consulting agreement with monthly payments. We propose that 
applicable manufacturers use their discretion over whether to report 
the total payment on the date of the first payment as a single line 
item, or to report each individual payment as a separate line item. 
Under this proposal, either approach would comply with these 
regulations. We are also considering requiring manufacturers to report 
multiple payments in a single consistent manner. We seek comments on 
these proposals.
(5) Associated Covered Drug, Device, Biological, or Medical Supply
    Section 1128G(a)(1)(A)(vii) of the Act requires applicable 
manufacturers to report the name of the covered drug, device, 
biological, or medical supply associated with that payment, if the 
payment is related to ``marketing, education, or research'' of a 
particular covered drug, device, biological, or medical supply. We 
realize that not every financial relationship between an applicable 
manufacturer and a covered recipient is explicitly linked to a 
particular covered drug, device, biological, or medical supply. 
However, in cases when a payment or other transfer of value is 
reasonably associated with a specific drug, device, biological, or 
medical supply, the name of the specific product must be reported. For 
example, if a sales representative takes a physician to dinner to 
explain the benefits of the applicable manufacturer's new product, the 
name of the product must be included since it was associated with the 
dinner. We propose that the applicable manufacturer should report a 
related covered drug, device, biological, or medical supply (if there 
is one) using the name under which the product is marketed, since this 
name is probably most recognizable to the consumer. In the event that a 
covered drug, device, biological or medical supply does not yet have a 
market name, the applicable manufacturer should report the scientific 
name. Additionally, we propose that applicable manufacturers report 
only one covered drug, device, biological, or medical supply as related 
to a payment or other transfer of value, even though there arguably may 
be multiple products related to the payment. We are considering, as an 
alternative, allowing applicable manufacturers to report multiple 
covered drugs, devices, biologicals, or medical supplies as related to 
a single payment or other transfer of value. Allowing the reporting of 
multiple covered drugs, devices, biologicals and medical supplies may 
be easier for applicable manufacturers since many financial 
relationships are not specific to one product only, but would make 
aggregating payments by product difficult. We seek comment on this 
approach. Finally, if an applicable manufacturer is not reporting the 
name of the drug, device, biological, or medical supply as appropriate, 
then the applicable manufacturer may be subject to penalties under 
section 1128G(b) of the Act.
(6) Form of Payment and Nature of Payment
    The statute requires reporting on both the form of payment and the 
nature of payment for each payment or transfer of value made by an 
applicable manufacturer to a covered recipient. The statute provides a 
list of categories for both the form of payment and nature of payment 
and gives the Secretary discretion to define additional categories, if 
necessary. These categories are described in more detail later in this 
section.
    We propose that the categories within both the form of payment and 
the nature of payment should be defined as distinct from one another. 
We believe that any overlap among the categories will decrease the 
overall utility of the information submitted to CMS. For example, a 
payment for activities under the nature of payment category 
``education'' should be separate from activities under the nature of 
payment category ``research.'' If a payment or other transfer of value 
for an activity is associated with multiple categories, such as travel 
to a meeting under a consulting contract, we propose that the travel 
expenses should remain distinct from the consulting fee expenses and 
both categories would need to be reported to accurately describe the 
relationship. However, we believe that reporting multiple categories to 
describe a single payment or transfer of value may be confusing for end 
users, so we propose that for each payment or other transfer of value 
reported, applicable manufacturers may only report a single nature of 
payment and a single form of payment. For example, if a physician 
received meals and travel in association with a consulting fee, we 
propose that each segregable payment be reported separately in the 
appropriate category. The applicable manufacturer would have to report 
three separate line items, one for consulting fees, one for meals and 
one for travel. The amount of the payment would be based on the amount 
of the consulting fee, and the payments for the meals and travel. For 
these lump sum payments or other transfers of value, we propose that 
the applicable manufacturer break out the disparate aspects of the 
payment that fall into multiple categories for both form of payment and 
nature of payment. This approach should be easier for users to 
understand since they will know the totals for each form of payment, 
and each nature of payment, rather than totals for various combinations 
of categories, which may differ across applicable manufacturers. In 
addition, this should lead to greater consistency within the database 
because applicable manufacturers will separate all payments, rather 
than each applicable manufacturer combining payments differently. We 
seek comment on the proposal to require reporting payments under a 
single form of payment and nature of payment. We welcome comments about 
the usefulness of this data as well as any operational issues that 
applicable manufacturers might face in reporting it.
    We also solicit comment on an alternative approach of allowing a 
payment or other transfer of value for an activity that is associated 
with multiple segregable categories to be reported as a single lump 
sum, rather than separately by each segregable category. This approach 
may be more compatible with existing business processes, but it might 
also make the public disclosure database more confusing for end users. 
We welcome comment on the costs and relative advantages and 
disadvantages of this approach.
f. Forms of Payments
    Section 1128G(a)(1)(A)(v) of the Act lists the following forms of 
payment that applicable manufacturers must use to describe payments or 
other transfers of value:
     Cash or a cash equivalent.
     In-kind items or services.
     Stock, a stock option, or any other ownership interest, 
dividend, profit, or other return on investment.

[[Page 78748]]

     Any other form of payment determined by the Secretary.
    We do not propose to add any forms of payment beyond those outlined 
in the statute because we believe what is provided in the statute is 
sufficient to describe payments and other transfers of value. We seek 
comments on whether other categories are necessary or would be helpful. 
Additionally, we believe that these terms are understandable as written 
and propose that each form of payment be defined by the term's 
dictionary definition. Applicable manufacturers must assign each 
individual payment or other transfer of value, or separate parts of a 
payment, to one and only one of these categories.
g. Nature of Payment
    Section 1128G(a)(1)(A)(vi) of the Act lists the categories for the 
nature of payment or other transfer of value that applicable 
manufacturers must use to describe each payment. As explained 
previously, we propose that each of these categories should be distinct 
and that only one nature of payment can be indicated for each 
individual payment or other transfer of value reported. When selecting 
natures of payment, we encourage applicable manufacturers to consider 
the purpose and the manner of the payment or other transfer of value. 
If a payment could conceivably fall into more than one category, we ask 
applicable manufacturers to make reasonable determinations about the 
nature of payment reported for the payment or transfer of value. 
Section 1128G(a)(1)(A)(vi) of the Act lists the following categories 
for nature of payment:
     Consulting fees.
     Compensation for services other than consulting.
     Honoraria.
     Gift.
     Entertainment.
     Food.
     Travel (including the specified destinations).
     Education.
     Research.
     Charitable contribution.
     Royalty or license.
     Current or prospective ownership or investment interest.
     Direct compensation for serving as faculty or as a speaker 
for a medical education program.
     Grant.
     Any other nature of the payment or other transfer of value 
(as defined by the Secretary).
    We believe that these terms have meanings to the general public 
that are familiar to the industry and propose defining each nature of 
payment category by its dictionary definition. To ensure consistency in 
the reporting and selection of categories, we will allow applicable 
manufacturers to submit with their data a document describing the 
assumptions used when categorizing the natures of payments. Submission 
of the assumptions document will not be mandatory, but we believe that 
applicable manufacturers may want to explain the reasoning behind their 
categories. Additionally, we believe that the information may be useful 
for CMS to monitor how applicable manufacturers are reporting data and 
whether significant differences among applicable manufacturers exist. 
The assumptions documents will not be posted on the public Web site 
because they may contain information applicable manufacturers would 
consider proprietary. However, based on our review and assessment of 
these assumptions, we may choose to offer further guidance to 
applicable manufacturers regarding how natures of payment should be 
classified. We recognize that many of these categories are similar, so 
the assumptions document can also help us understand the assumptions 
made by applicable manufacturers when classifying payments or other 
transfers of value. We seek comment on this proposal, including whether 
we should make submission of the assumptions document mandatory instead 
of voluntary.
    We are providing some explanation of the following categories to 
provide additional context: Charitable contribution, food, research, 
and direct compensation for serving as faculty or as a speaker for a 
medical education program. These explanations are not exhaustive 
(unless specified as such), but rather are intended to provide guidance 
to applicable manufacturers when they are categorizing payments.
(1) Charitable Contributions
    Charitable contributions to, at the request of, or on behalf of 
covered recipients by applicable manufacturers must be reported. For 
purposes of the reporting requirement, a charitable contribution is any 
payment or transfer of value made to an organization with tax-exempt 
status under the Internal Revenue Code of 1986 that is not more 
specifically described by one of the other nature or payment 
categories. Payments that do not meet this requirement made to, at the 
request of, or designated on behalf of a covered recipient must be 
reported in another appropriate category.
(2) Food and Beverage
    We propose that applicable manufacturers should report the value of 
any food or beverage items provided to covered recipients, subject to 
the minimum threshold as discussed in more detail in section 
II.A.1.h.(1). of this proposed rule. This would be more straightforward 
in circumstances where covered recipients who partake in the meal are 
easily identifiable (for example, when a sales representative takes a 
specific number of physician covered recipients to a restaurant). 
However, we recognize that in instances where group meals are being 
provided in group settings (for example, buffet-style food in a 
physician's office), it may be more difficult to keep track of which 
covered recipients are partaking in the food and beverage. We propose 
that in this type of scenario, applicable manufacturers should report 
the cost per covered recipient receiving the meal (even if the covered 
recipient does not actually partake of the meal). For example, if once 
during the calendar year, a sales representative from an applicable 
manufacturer brings $25 worth of bagels and coffee to a solo 
physician's office for a morning meeting, regardless of the number of 
individuals who partake (such as non-covered recipient staff members), 
the per covered recipient cost is $25. Since this falls above the $10 
minimum threshold for reporting a payment or other transfer of value, 
which is statutorily required and discussed in detail in section 
II.A.1.h.(1). of this proposed rule, this meal must be reported. 
However, if the practice group includes five physicians, then the per-
covered recipient cost is $5 (regardless of whether all five physicians 
actually consumed any of the food provided), so the payment would not 
need to be reported. We recognize that this may be difficult for large 
group practices or hospital-based physicians, where an applicable 
manufacturer may be bringing bagels for a meeting with two specialists. 
We are considering whether to adopt a different approach for these 
situations, such as counting the number of physicians by department. We 
seek comment on these proposals and whether there is a more equitable, 
but not overly burdensome, way to report these payments or other 
transfers of value. Additionally, we propose that applicable 
manufacturers do not need to report any offerings of buffet meals, 
snacks or coffee at booths at conferences or other similar events where 
it would be difficult for applicable manufacturers to definitively 
establish the identities of

[[Page 78749]]

the individuals who accept the offerings.
(3) Research
    We seek to limit the research category to bona fide research 
activities, including clinical investigations that are subject to both 
a written agreement or contract between the applicable manufacturer and 
the organization conducting the research, as well as a research 
protocol. We propose to use this method to distinguish the research 
nature of payment category from other natures of payment categories 
because this method is also used to identify payments or other 
transfers of value eligible for delayed publication to protect the 
proprietary interests of applicable manufacturers. More details and an 
explanation of the written agreement and research protocol, as well as 
a definition of clinical investigation, are discussed more fully in the 
section of this preamble regarding delayed publication.
    We recognize that reporting payments or other transfers of value 
for research activities may be complicated, since many research 
activities include large payment amounts which are spread across 
numerous activities and parties. Additionally, the payments are often 
not provided directly to a covered recipient, but to a clinic, 
hospital, or institution administering the research that is often led 
by a physician-covered recipient(s) as the principal investigator(s). 
This situation is further complicated because many applicable 
manufacturers use contract research organizations (CROs), as defined in 
21 CFR 312.3(b), or other similar entities, such as site management 
organizations (SMOs) to manage their clinical research activities. Due 
to the complexities in the flow of research payments, we have outlined 
a proposed method for reporting research payments. However, we request 
comment on whether our proposed method is viable and not overly 
burdensome, and whether an alternative method would be preferable.
    We propose to separate the classification of research payments to 
clarify whether the payment or other transfer of value went indirectly 
or directly to the covered recipient. Indirect research would be used 
when a research payment is made to a clinic, hospital (other than a 
teaching hospital), or institution conducting the research (either by 
an applicable manufacturer or a CRO entity) and that organization in 
turn pays the physician covered recipient (or multiple physician 
covered recipients) serving as a principal investigator(s). Conversely, 
direct research would be used when a research payment or other transfer 
of value was provided directly to a physician covered recipient or 
teaching hospital covered recipient by an applicable manufacturer or 
CRO entity. When reporting payments or other transfers of value 
designated as research, we propose that applicable manufacturers must 
report the payment or other transfer of value as either ``indirect 
research'' or ``direct research.''
    When reporting indirect or direct research, we propose that the 
payment or other transfer of value should be reported individually 
under the names and NPIs of physician covered recipients serving as 
principal investigators. For indirect payments, this includes the 
physician covered recipient(s) serving as principal investigator(s) who 
would ultimately receive payments from the clinic, hospital, or other 
research institution, assuming the applicable manufacturer is aware of 
the identity of the principal investigator(s). This is consistent with 
section 1128G(a)(1)(B) of the Act, which requires payments to an entity 
or individual at the request of or designated on behalf of a covered 
recipient to be disclosed under the name of the covered recipient. 
Payments or other transfers of value reported as indirect research 
should also include the name of the entity or individual that received 
the payment or other transfer of value.
    Teaching hospitals are also defined as covered recipients, and may 
conduct research led by a physician covered recipient(s) acting as (a) 
principal investigator(s). While these payments could be reported as 
direct research to the teaching hospital covered recipient, we do not 
want to establish different reporting requirements for physician 
covered recipients acting as principal investigators at teaching 
hospitals versus other research institutions. To maintain consistency, 
we propose that research payments provided to teaching hospitals and 
ultimately to physician covered recipients must be reported for both 
the teaching hospital covered recipient, and the physician covered 
recipient(s). The payment or other transfer of value to the teaching 
hospital covered recipient should be reported as a direct research 
payment; whereas the payment or other transfer of value for the 
principal investigator(s) (physician covered recipient(s)) should be 
reported as indirect research.
    We understand that reporting the amount of the payment or other 
transfer of value may be difficult because neither the applicable 
manufacturer nor the CRO generally know how the research payment is 
distributed because the payment includes all items and activities 
associated with the research project, not only the physician's time and 
services. This is particularly important for indirect research, since a 
principal investigator(s) may be receiving his/her usual salary from 
the institution for conducting the study. Additionally, we do not 
believe the total costs should be attributed personally to the 
principal investigator(s). However, we do believe it would be 
burdensome for applicable manufacturers to accurately determine the 
exact amount a physician covered recipient received. Finally, we also 
believe that reporting the total research payment amount provides 
additional transparency to end users about the applicable 
manufacturers' total research payments.
    Based on these considerations, we propose that for both direct and 
indirect research, applicable manufacturers must report the entire 
payment amount for each research payment (whether to the covered 
recipient or research institution), rather than the specific amount 
that was provided to the covered recipient. However, we propose that on 
the public Web site, we would report the payment amount separately and 
would not aggregate it into the total for physician covered recipients. 
For teaching hospitals, we believe end users would understand that the 
research payment covered all aspects of the research, so we believe it 
is appropriate to aggregate this into the teaching hospital's total 
payment amount. However, for physician covered recipients we believe 
attributing the full research payment to the physician could be 
misleading, due to the nature of research payments as described. We 
seek comment on these proposals.
    We are also considering attributing the total payment to the 
covered recipient for direct research. We believe this may be necessary 
because in direct research, the covered recipient is individually 
receiving the payment, so the specific amount the covered recipient is 
receiving is clearly defined and available to the applicable 
manufacturer.
    We recognize that the proposed reporting requirements for research 
payments and transfers of value may not cover all circumstances in 
which applicable manufacturers make payments or other transfers of 
value to covered recipients for research-related activities (for 
example, post-marketing research or other research or studies not 
conducted pursuant to a written contract between the applicable 
manufacturer and the organization conducting the research, and those 
studies without a research protocol). We

[[Page 78750]]

solicit comments about which existing nature of payment category 
(previously described) would apply to these other types of research, 
whether the scope of the ``research'' nature of payment should be 
broadened, and/or whether another nature of payment category should be 
added to address such research. Finally, we note that some of the 
reporting requirement will duplicate requirements already required 
under FDA regulations at 21 CFR part 54.
(4) Direct Compensation for Serving as a Faculty or as a Speaker for a 
Medical Education Program
    We propose that this category be interpreted broadly to encompass 
all instances in which applicable manufacturers pay physicians to serve 
as speakers, and not just those situations involving ``medical 
education programs.'' We believe that this interpretation is consistent 
with the authority granted in section 1128G(a)(1)(A)(vi)(XV) of the Act 
to add additional nature of payment categories. Alternatively, we are 
considering adding another nature of payment category to describe 
situations when a covered recipient provides speaking services that are 
outside of medical education programs; however we believe that fewer 
categories for nature of payment is preferable. Additionally, it is 
simpler to only have one category for speaker fees to minimize 
potential inconsistencies in how applicable manufacturers categorize 
payments. We welcome comment on this proposal and the appropriate 
distinction between this nature of payment category and other 
categories, such as honoraria.
    We realize that this interpretation does not allow for 
differentiation between continuing medical education (CME) accredited 
speaking engagements, and all other speaking engagements. We are 
considering, and welcome comments on, whether to limit this category to 
CME-accredited speaking engagements and report other speaking 
engagements in another category, such as compensation for services 
other than consulting, or additional category.
(5) Other
    Under the Act, all payments or transfers of value from applicable 
manufacturers to covered recipients (other than those excluded under 
section 1128G(e)(10)(B) of the Act) must be reported. For simplicity, 
and under the discretion provided in section 1128G(a)(1)(A)(vi)(XV) of 
the Act, we propose the addition of a nature of payment category to 
serve as a catch all for all payments or other transfers of value that 
do not fit into one of the listed natures of payment. Any payments or 
transfers of value that are not specifically excluded, and do not fit 
into another category should be reported with a nature of payment of 
``other.''
h. Exclusions
    Section 1128G(e)(10)(B) of the Act excludes the following types of 
payments and other transfers of value from the reporting requirements:
     Transfers of value less than $10, unless the aggregate 
amount transferred to, requested by, or designated on behalf of the 
covered recipient exceeds $100 in a calendar year.
     Product samples that are not intended to be sold and are 
intended for patient use.
     Educational materials that directly benefit patients or 
are intended for patient use.
     The loan of a covered device for a short-term trial 
period, not to exceed 90 days, to permit evaluation of the covered 
device by the covered recipient.
     Items or services provided under a contractual warranty, 
including the replacement of a covered device, where the terms of the 
warranty are set forth in the purchase or lease agreement for the 
covered device.
     A transfer of anything of value to a covered recipient 
when the covered recipient is a patient and not acting in the 
professional capacity of a covered recipient.