The Physician Payment Sunshine Act, part of the healthcare reform bill, was adopted in March 2010. But it wasn’t until February 2013 that the U.S. Centers for Medicare & Medicaid Services (CMS) released final regulations to implement that act. (See “What the Sunshine Act brings to light,” AAOS Now, March 2013.)
Under the Sunshine Act, data on payments and gifts made to physicians and teaching hospitals by medical device and pharmaceutical companies must be publicly available on a searchable federal database, starting in September 2014. A recent survey of physicians indicates that most do not know about these requirements, and that 63 percent of those surveyed were “deeply concerned” about the searchable website. This article provides a broad summary of the Act and regulations; specific questions should be referred to knowledgeable healthcare counsel.
How will the reporting process work?
Medical device and pharmaceutical companies will submit annual reports to CMS of “payments or other transfers of value” made to physicians or teaching hospitals. “Payments or other transfers of value” include the transfer of anything of value, although certain identified payments are excluded (such as those less than $10/$100 aggregate annual, certain educational materials, and in-kind items for charity care).
Under the Sunshine Act, the following information must be reported:
- the name and address of the physician
- the amount and date of the payment
- the form of the payment, such as cash or stocks
- the nature of the payment, such as consulting fees, gifts, or entertainment expenses
In addition, companies and group purchasing organizations (GPOs) must annually report information about ownership or investment interests held by physicians and members of their immediate families. CMS is currently developing an electronic system to assist with the reporting process.
Before the collected information is posted to the public website, companies, GPOs, and physicians will have 45 days to review and correct the information. The companies will have an additional 15 days to correct the erroneous information before submitting and attesting to the updated information to finalize the data submission.
If a dispute cannot be resolved within the stipulated timeframe, CMS will publish the most recent attested information, with the data marked as “disputed” while the parties work on a resolution.
Terms to understand
Indirect payments or transfers of value—Transfers made by medical device or pharmaceutical companies or GPOs to a covered recipient (physician or teaching hospital) through a third party (such as a medical professional society or nonphysician provider). Payments must be reported if the companies or GPOs require or otherwise cause the third party to select a specific recipient. However, if the companies or GPOs are not aware of or do not know the identity of the recipient, the indirect payments are excluded from the reporting requirements.
Educational materials—Educational materials such as anatomic models that are ultimately intended to be used with patients are excluded from the reporting requirements. Overhead expenses, such as printing and time, are included in the educational materials exclusion so long as they are directly related to the development of the materials and the materials directly benefit patients or are intended for patient use. However, medical device and pharmaceutical companies must report the costs of educational materials provided to physicians for their own education that do not “directly” benefit patients.
Payments of less than $10; incidental items—Payments of less than $10 do not need to be reported unless total payments to the physician exceed $100 annually. The $10 threshold will increase every year according to the consumer price index. Incidental items worth less than $10 (eg, pens and note pads) provided at large-scale conferences do not have to be reported, nor do samples or coupons intended for patient use.
Food and beverage allocations—If the per person cost exceeds the minimum threshold amount ($10 per event), companies must report the food and beverage as a payment or other transfer of value for each covered recipient who actually participates in the group meal. Companies do not have to track or report food or drinks, such as buffet meals or coffee, made generally available at a conference or large-scale event.
Continuing medical education (CME) expenses—Medical device and pharmaceutical companies are not required to report payments made to a speaker at a CME program if the following conditions are met:
- The program meets requirements and standards of one of several groups, including the Accreditation Council for Continuing Medical Education or the American Medical Association.
- The company does not select the speaker or give the CME provider a distinct, identifiable set of individuals to be considered as speakers for the program.
- The company does not directly pay the covered recipient speaker.
Companies need not report payments made to CME providers that are used to subsidize attendees’ tuition fees, but must report payments or other transfers of value, such as travel and meals, associated with attendance at an educational event. Companies also must report payments or transfers of value related to unaccredited or noncertified educational programs.
Research-related payments—All research-related payments will be included on the public website, even if the product has never received clearance from the U.S. Food and Drug Administration. However, companies will report research-related payments separately, using a different template. Companies will not need to indicate whether the research payment was direct or indirect, and should report each research payment once as a single interaction.
The name of the entity paid and the name(s) of the principal investigator(s) must be provided. In addition, the following information will generally be required:
- the study name
- the name of the covered product
- the National Drug Code, if any
However, the CMS will allow for slight modification for reporting related to preclinical research. The total research payment amount should include the “aggregated amount of any payments for services included in the written agreement/research protocol,” including costs associated with patient care (such as diagnoses, examinations, laboratory expenses, healthcare professional times), the provision of study drugs, devices, biological and medical supplies, and other in-kind items.
Richard N. Peterson, JD, is the AAOS General Counsel.