The Physician Payment Sunshine Act: Shining a Light on New Reporting Requirements for Payments to Physicians and Hospitals

April 2013Advisories

Beginning August 1, 2013, certain medical device and drug manufacturers, as well as group purchasing organizations, will be required to report to the Centers for Medicare and Medicaid Services (CMS) direct and indirect payments and so-called “transfers of value” made by them to physicians and teaching hospitals. CMS will then make this information publicly available. This reporting is mandated by the Physician Payment Sunshine Act that is part of the 2010 Affordable Care Act.

The Sunshine Act does not require physicians and teaching hospitals to report or approve the information submitted about them. However, physicians and teaching hospitals should keep in mind that although all information submitted will become publicly available, they will have a chance to dispute the information prior to it becoming available. Good record-keeping and communication with manufacturers should assist the process of correcting errors.

Key components of the Sunshine Act include the following:

  • What is Reported. All direct and indirect payments and transfers of value made to physicians and teaching hospitals that do not fall under one of 14 exceptions listed in the Sunshine Act will need to be reported. Exceptions include payments under $10, discounts and rebates, certain products or materials intended solely for patient use (such as product samples), and items provided under contractual warranties. Importantly, the final rules do not provide guidance regarding how the amount of transferred value is calculated or at what point its value is determined. 
  • Reporting Period. All payments and transfers of value made during the August 1-December 31, 2013 period must be submitted to CMS by March 31, 2014. Reports for each subsequent calendar year must be submitted by the following March 31st. 
  • Challenging a Report. Beginning in 2014, physicians and teaching hospitals will be able to sign up to receive notifications from CMS when they are mentioned as the recipients of payments or transfers of value. If a physician or teaching hospital disagrees with a report, it may submit a dispute to CMS within 45 days of the submission of the report. CMS will then forward the dispute to the applicable manufacturer for resolution between the parties. If the parties are unable to come to a resolution and submit a correction (if necessary) to CMS within 60 days of the submission of the report, the information will nevertheless be published according to the data provided by the applicable manufacturer, but will be marked as being disputed. 
  • Publication of Reports. Data for 2013 will be made public by CMS by September 30, 2014 and on a yearly basis thereafter for subsequent years. Limited exceptions, including for information related to medicines in the process of development, allow for delays of up to four years in the publication of submitted data. However, all information will eventually be made public.

Although physicians and hospitals are not subject to new requirements by the Sunshine Act, they should make sure that data submitted by applicable manufacturers about them is accurate. The following are suggestions for physicians and hospitals to consider in light of the Sunshine Act:

  • Consider adding to any agreements with manufacturers an obligation of the manufacturer to provide an advance draft copy of its report to CMS.
  • Consider specifying the amount of “transferred value” or a methodology for calculating that amount in any agreements with manufacturers.
  • Finally, agreed-to and rapid alternative dispute resolution mechanisms to determine disputes regarding the amount of “transferred value” should be considered.

Importantly, organized record-keeping and communication with manufacturers will be key, as will knowledge of applicable reporting exceptions and procedures.

For additional information regarding the Sunshine Act, please contact Attorney Jack Eiferman as follows:

Jack A. Eiferman
[email protected]

This newsletter should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and any specific legal questions you may have.

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