On March 18, 2022, AdvaMed announced updates to the Code of Ethics on Interactions with Health Care Professionals (“Code”), a voluntary code that provides medical technology companies with guidance on ethically compliant interactions and relationships with healthcare professionals. The changes will take effect on June 30, 2022. The updates are part of a concerted effort by the medical device industry to respond to recent regulatory guidance and health industry trends. Below are 7 things that you need to know about these latest modifications.

  1. Using Data-Driven Technologies to Improve Patient Care: AdvaMed has updated the Code to address the increasing role of data and analytics technologies in the healthcare industry. Medical devices enable “data collection, aggregation, and analysis”, which can be utilized to provide new insights, improve patient outcomes, and enhance the quality and efficiency of healthcare delivery. The Code suggests that medical technology companies are well-positioned to leverage data and technology and provide solutions in the form of both technology and services to enhance the delivery of targeted outcomes.
  1. Certification Adopting Code Remains Voluntary: While the Code still strongly encourages medical device companies to certify adoption of the Code and implement an effective compliance program, minor changes were made to the guidelines. While certification is still voluntary, the updated Code suggests that companies certify to AdvaMed on a one-time basis instead of annually. AdvaMed will continue to require that members supply contact information for compliance reports to facilitate reporting of possible violations of the Code, which is published on AdvaMed’s website.
  1. Maintain Support for Consulting Arrangements: In November 2020, the Office of Inspector General for the Department of Health and Human Services (“OIG”) issued a Special Fraud Alert on company-conducted speaker programs (the “Fraud Alert”). The Fraud Alert identified several characteristics that potentially indicate that a speaker program could violate the federal anti-kickback statute. These “suspect” characteristics included above fair market compensation or compensation that takes into account the volume or value of past or future business generated by the healthcare provider. The Code has been updated to recommend that medical device companies maintain appropriate documentation for consulting arrangements including “the process for determining a legitimate need, fair market value compensation, and other relevant factors”.
  2. Alcohol Limits for Company-Conducted Events: In the Fraud Alert, the OIG identified the availability of alcohol or expensive meals at company-conducted events as another suspicious factor that may indicate that a speaker program is in violation of the federal anti-kickback statute. AdvaMed has also updated the Code to incorporate new guidelines for the provision of alcohol at company-conducted educational programs or meetings. The Code does not prohibit alcohol at these events but rather notes that any provision of alcohol should be modest and comply with the Code’s guidelines for meals and refreshments. The Code suggests that medical device companies adopt controls around the provisions of alcohol including “per-person drink limits, per-drink spend limits, limitations on the types of alcohol permitted (e.g., beer and wine only), or disallow alcohol at certain events[.]”.
  1. Virtual Interactions Are Preferred When Possible: As a result of the COVID-19 pandemic, many non-essential interactions between medical device companies and health care providers have shifted from in-person to virtual events. The Code has been updated to reflect that virtual programs are an appropriate setting for certain events and should be considered as an alternative to in-person programs if “the legitimate need could be met in a virtually-conducted program”. Similar to in-person meetings, the Code supports the provision of modest meals or refreshments during virtual company-conducted meetings and encourages medical device companies to create tracking processes to ensure that meals and refreshments for virtual events meet the guidelines — including delivery to individuals who are appropriate meeting participants.
  2. Industry Involvement in Value-Based Care: Value-based care has emerged over recent years as an alternative reimbursement methodology, focusing on reducing healthcare costs and improving patient outcomes. On December 2, 2020, the OIG issued a final rule that adopted new safe harbors designed to advance the transition to value-based care in the healthcare industry. These changes became effective on January 1, 2022. As part of the final rule, the OIG noted that medical device companies are ineligible for certain safe harbor protection.

AdvaMed noted in the Code that medical device companies may be involved in value-based care in a variety of ways including:

  • Engaging healthcare professionals to assist in developing, evaluating, or implementing arrangements to advance value-based care;
  • Training and educating healthcare professionals about arrangements that advance value-based care;
  • Providing information about the use of medical technology to facilitate value-based care arrangements so long as medical device companies do not interfere with healthcare decision-making or provide information to healthcare providers as an unlawful inducement.

Without specifically referencing the Special Alert, AdvaMed reminds medical device companies in the Code that the safe harbors and related governmental guidance are designed to facilitate innovative approaches and that “even if no individual safe harbor may be fully applicable”, a value-based care arrangement may nevertheless be permissible based on the particular facts and circumstances of the arrangement. The federal anti-kickback statute is an intent-based statute and failure to fall within a safe harbor does not automatically result in a violation of the law.

  1. Key Implications:

Review Policies and Procedures and Provide Company-Wide Education:  Medical technology companies should review their policies and procedures and make necessary changes in advance of the Code’s effective date on June 1, 2022. Companies should also provide education on a company-wide basis with a focus on employees who regularly interact with health care providers (e.g., sales and marketing representatives). These efforts are particularly important for companies operating in states with laws that require compliance with the AdvaMed Code such as California, Connecticut, and Nevada.

Engagement of Health Care Providers:

As a result of the updates to the Code, healthcare providers may be engaged by medical device companies to participate in programs and events about data collection and analytics as well as value-based care arrangements. Medical device companies may request that healthcare providers participate virtually in certain programs given the Code’s guidance that virtual events should be considered as an alternative to in-person programs when possible. Finally, healthcare providers may be asked to assist in the preparation of documentation to demonstrate the rationale for any consulting arrangement in which they may be involved and that the compensation received for consulting services is consistent with fair market value.

Monitor Federal/State Laws and Governmental Guidance:

While the Code provides useful and practical guidelines, it does not replace current laws, regulations, and standards. As such, it is important for medical device companies and health care providers to continue to monitor regulatory updates on a federal and state level as well as governmental guidance and enforcement given the evolving nature of the health care industry.