15 things you should know about the final rule of the Physician Payment Sunshine Act

Back on December 19, 2011, CMS solicited public comment on the Physician Payment Sunshine Act, and in response, it received 373 comments. Since then pharmaceutical and medical device manufacturers have been waiting for the final rule, and late Friday, CMS finally issued it. beckyprofile

We’ve combed through the 287-page tome and come up with a list of what we consider some of the most significant points that will impact the industry moving forward, as well as a few interesting notes of clarification. Here are the 15 things you need to know about the final ruling:

The biggies

  • Data collection is set to begin August 1, 2013, which allows about 180 days for manufacturers to prepare and figure out how they’re going to compile their aggregate spend reports.
  • That data will then have to be reported to CMS on or before March 31, 2014.
  • There will be no ramp up on the dollar amount or the scope of reporting for 2013 except that only a partial year’s worth of data need be reported. But on the flip side, there will be no retroactive reporting either.
  • CMS specified that reporting requirements only apply to those entities that “operate” in the U.S. — that is, have a physical location in the U.S.
  • Manufacturers need to register at CMS’s site in order to submit their annual reports. Reports will be submitted electronically with data values delivered in CSV format.
  • There will be a 45-day review and correction period on a CMS-secure website to help ensure the accuracy of the data being reported.
  • CMS was pretty vague about the public website where all this information will end up. In the final rule, CMS states: “We agree that it is important that the final website is user-friendly and provide accurate and understandable information to the public,” but absolutely no specifics are provided.
  • Congress is just about the last to know. CMS will report to Congress on April 1, 2015 the data that was collected in 2013 and reported in 2014. Pretty old news by then.

The fines

  • Fines for knowingly violating the Sunshine Act will be counted separately from inadvertent violations. This means that an individual manufacturer could be fined up to $1,150,000 per reporting period.
  • Maximum fines apply to individual entities, so if a company chooses to file a consolidated report, each entity can be fined separately.
  • Not reporting an NPI for a physician who does have one will be considered a violation and will be subject to penalty.

Did you know?

  • Payments made by the manufacturer through a third party intended for an HCP/O are to be reported by the manufacturer, not the third party.
  • Wholesalers and distributors will be subject to Sunshine Act reporting if they hold the title to a covered product at some point in the production and distribution cycle. In such a case, the manufacturer does not have to report on that product because the wholesaler/distributor will be doing so. However, if the manufacturer does make any payments to HCPs related to the product independent of the wholesaler/distributor, then they do have to report. Confusing, huh?
  • Transfers of value provided to a group should be attributed to the physician on whose behalf the gift was made. Manufacturers do have the flexibility to assign value evenly or unevenly depending on who is making use of the payment. CMS provides the example of a dermatology textbook sent to a group practice, noting that it would be fair in such a case to distribute the value of the textbook among the dermatologists in the practice and not include the other doctors to whom the textbook is irrelevant.
  • The food and beverage conundrum was put to rest. Manufacturers only need report the per-person cost of those who actually partake of a meal. In other words, if you drop breakfast off at an office and the receptionist and nurses partake along with the docs, you find the per-person cost based on all the partakers, and then report only on the doctors’ portion.

In the final rule CMS took time to address the anticipated costs and the intangible benefits expected to be gained from the Sunshine Act’s implementation. While it predicts the initial cost for the first year to be about $269 million and $180 million each year thereafter, CMS cites numerous non-monetary benefits of the increased transparency under the Sunshine Act. These include greater availability of information for informed consumer decision-making when choosing doctors and treatment plans, and the deterrence of under-handed financial relationships that increase healthcare costs. All of this should make it easier to identify conflicts of interest and hopefully lower the total cost of healthcare.

And now we wait for the fall-out and the eleventh-hour fire drill by those who procrastinated. Are you stuck stressing out about the Sunshine Act? Have any questions? Leave your thoughts, questions, and comments below!



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