Sunshine Act website debuts this year
Kathleen L. DeBruhl, JD, and David D. Haynes Jr, JD
Since Aug. 1, 2013, manufacturers of drugs, devices, biologics, and medical supplies have been collecting information on payments or other valuable items or services provided to physicians and teaching hospitals. Under the Physician Payments Sunshine Act, a part of the Patient Protection and Affordable Care Act (ACA), manufacturers must disclose this information annually to the Centers for Medicare and Medicaid Services (CMS).
Certain manufacturers and group purchasing organizations (GPOs) are also required to disclose information about their physician owners or investors and immediate family members of physicians who are owners or investors. The collected data must be reported to CMS by March 31, 2014 and will be published on a public website on Sept. 30, 2014.
Who are covered recipients?
The ACA requires disclosure of details about payments or other valuable items or services provided to physicians (doctors of medicine and osteopathy, dentists, podiatrists, optometrists, and licensed chiropractors) and teaching
What type of information must be disclosed?
The following information must be disclosed on physicians:
- the physician’s full name, National Provider Identification number, business address, and specialty
- state(s) where licensed and applicable license number(s)
- the date of the payment or transfer of value
- the drug, device, biologic, or medical product associated with the payment or transfer of value, indicated by the item’s market name
- the form of the payment or transfer of value, such as cash or cash equivalents, in-kind items or services, stocks, stock options or other ownership interests, dividends, profits, or returns on investment
- the nature of the payment or transfer of value; for example, consulting fees, honoraria, gifts, entertainment, food, travel, education, charitable contributions, research, royalty or license payments, current or prospective ownership interests, grants, or compensation for serving as faculty or speaker for a medical education program
- the market name of the covered drug, device, biologic, or medical supply
Payments such as consulting fees that may include travel and meals must be broken down into those categories, with the amount of the payment applicable to each category listed separately. In addition, any payments or other items of value related to research, as defined by the Sunshine Act, must also comply with additional rules for research payments.
CMS will allow covered recipients 45 days to review and correct the information before it is published.
Who must disclose?
Companies that do not fit the traditional definition of a manufacturer may also be required to disclose information under the Sunshine Act. For example, the act not only covers manufacturers that are engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biologic, or medical supply for sale or distribution in the United States, or any U.S. territory, possession, or commonwealth, it also includes entities under common ownership with such a manufacturer that provide assistance or support with respect to the production, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered drug, device, biologic, or medical supply.
CMS defines “common ownership” as circumstances where the same individual(s) or entity(ies) directly or indirectly own 5 percent or more total ownership of two entities (including parent corporations, direct and indirect subsidiaries, and brother-and-sister corporations). It also includes physician-owned distributors (PODs) where a manufacturer owns part of the distributorship.
A GPO that purchases, arranges for, or negotiates the purchase of a product for a group of individuals, not solely for the use of the GPO itself, is also required to collect and disclose information regarding payments to physicians. Furthermore, CMS expressly stated that PODs are included as GPOs for compliance purposes.
An important definition
A “covered drug, device, biological, or medical supply” is defined as any drug, device, biologic, or medical supply for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program. The definition is limited to those drugs and biologics that require a prescription to be dispensed—not those that are “over-the-counter”—and to those devices or medical supplies that require premarket approval by, or notification to, the U.S. Food and Drug Administration (FDA)—not medical supplies such as tongue depressors or elastic bandages.
Payment for a covered drug, device, biologic, or medical supply is considered available whether the item is reimbursed separately or as part of a bundled payment.
CMS has identified certain exclusions from the disclosure requirements of the Sunshine Act. These exclusions include, but are not limited, to the following:
- transfers of value less than $10, unless the aggregate amount transferred to, requested by, or designated on behalf of a covered recipient, exceeds $100 in any calendar year
- product samples that are not intended to be sold or 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 device by the covered recipient
- discounts, including rebates
- a dividend or profit distribution from an ownership or investment in a publicly traded security or investment fund
- payments solely for the services of the covered physician recipient with respect to a civil or criminal action or an administrative proceeding, such as expert witness fees
- payments or transfers of value made to a covered recipient through a third party where the manufacturer does not know the identity of the covered recipient
Monitor your data
Once the data is provided to CMS by the manufacturers and GPOs, the information will be made publicly available, and may be utilized by patients, other consumers, the media, employers, competitors, state and federal law enforcement agencies, and consumer advocacy groups. Failure to report carries monetary penalties of up to $150,000 annually—up to $1 million annually for a manufacturer’s knowing failure to report.
Although manufacturers are obliged to collect data and submit it to CMS, physicians who may possess an ownership or investment interest in a manufacturer or GPO should ask for notice and an opportunity to review data before it is submitted to CMS. CMS is anticipated to launch a physician portal early this year to allow physicians to review their consolidated disclosure report before publication. Such a portal may also be used as a mechanism to correct mistakes in the data provided by the manufacturers or GPOs.
Physicians who want to avoid or minimize public scrutiny once this information is disclosed should use these resources and contact an attorney to ensure compliance with the requirements of the Sunshine Act.
Kathleen L. DeBruhl, JD, and David D. Haynes Jr, JD, are with Kathleen L. DeBruhl & Associates, LLC, a law firm specializing in highly complicated healthcare regulatory matters involving physician ownership and financial relationships, reimbursement, fraud and abuse, and compliance.
- Federal Register: Medicare, Medicaid, Children's Health Insurance Programs; Transparency Reports and Reporting of Physician Ownership or Investment Interests. Accessed Dec. 16, 2013.
- 42 CFR § 403.900 et. seq. (2013) Centers for Medicare and Medicaid Services: Open Payments. Accessed Dec. 16, 2013.
- 78 Fed. Reg. 9461-9462 (February 8, 2013)
- 76 Fed. Reg. 78751-78752 (December 19, 2011) Accessed Dec. 16, 2013.