Sunshine Rules - What`s Important To Know Now

Physician Payment Sunshine Act
Thomas Sullivan
Acknowledgement of Support
Thomas Sullivan is a Principal in Rockpointe Corporation and their subsidiary
The Potomac Center for Medical Education; these entities have received
educational grants or performed work from grants from the following
companies in the last 24 months:
Bristol Myers Squibb
Eli Lilly
CSL Behring
Astra Zeneca
Daiichi Sankyo
St. Jude Medical
GE Healthcare
We believe that this support shows a commitment by companies to provide
quality education to physicians around the country.
*Expelled from school in the first grade for switching classes with identical twin brother.
How about those Ravens
Media: Dollars for Doctors
Background: How Did We Get Here?
• Rising healthcare costs
– 17-22% of state budgets spent on Medicaid
• Perceived conflicts of interest
• Large/high-profile pharma settlements
– Failure to report $$
• The Physician Payment Sunshine Act was originally
drafted by Senators Chuck Grassley (R-IA) & Herb Kohl
(D-WI) in 2007 and re-introduced in 2009
– The Act’s stated intent is to shed light on direct payments
from product manufacturers to physicians and other
medical practitioners
• Sec. 6002 of PPACA incorporated the “Sunshine Act”
• Gives transparency to payments to physicians from
pharmaceutical and medical device companies
• Full disclosure of physician payments in a searchable,
public database makes it easier to investigate and
eventually prosecute health care fraud
Are We Just Wasting Sunscreen?
• “Our results show that the disclosure laws in the
two states we examined had a negligible to small
effect on physicians switching from branded
therapies to generics and no effect on reducing
prescription costs.”
• “Transparency is important in its own right, but if
deterring unnecessary, costly prescribing is a
concern for policymakers, more direct action may
be required.”
• Negligible to small effects of the disclosure laws in
Maine and West Virginia for both statins and SSRIs.
Arch Intern Med. 2012;172(10):819-821.
Final Rule?
• On December 19, 2011, HHS issued a proposed rule
for “Sunshine Act”.
• Still no final rule from CMS
• In May 2012, CMS established a “Working Group”
– Includes both technical and policy staff from CMS
– Will assess the staff and resource requirements needed
to fully implement the program
– CMS issued RFP soliciting outside help
• Sept 12, 2012
– Senate Aging Committee Roundtable on Sunshine Rule
• Context of payments so patients understand
• Questions on CME and meals
• Experience with state laws and CIA’s
Rule Sent to OMB
• Proposed Final Rule sent to OMB (White House)
November 2012
• Consumer Groups Voiced Opposition to AMA
Letter December 27, 2012
• Still at OMB (Time line to be determined)
– Flexibility on timing once at OMB
Physician Members of Congress Letter to CMS
May 2012
• 8 physicians and 1 nurse:
– Overwhelming administrative burden for companies,
– Failure to exempt CME
– Adverse impact on medical research in the U.S.
• 24% less likely to do research if payments public; ACRO
– Impact on small companies
– Compliance will cost billions
• High penalties will result in greater reporting  more $$
Letters.. Letters.. Letters
• Letters have been sent from consumer groups,
industry, and others requesting quick
resolution and publication of the sunshine
• AMA Letter to Marilyn Taverna clarifying that
the intent of the law was not to have indirect
payments including CME Included in reporting
Everyone is Suspect
• “The administration should implement the
(sunshine) act without any further delay so
that it can begin, as soon as possible, to rein in
the undue and harmful influence of money on
– Letter from former NEJM Editors to White House
1-16-13 Politico
AMA Issues
• Expand the act beyond its intentions by proposing that some indirect
transfers, such as certified continuing medical education in which
sponsoring manufacturers have no input into the content, speakers or
attendees, be included in the reporting.
• Allow physicians to be listed as receiving payments or transfers if they
were employed or affiliated by an organization that got them — even if
those physicians individually never received them.
• Not provide physicians a sufficient mechanism for appealing or challenging
any information appearing on the list. Manufacturers submit the
information and have 45 days to make any appeals, but physicians have no
guarantees that they will see companies’ lists on an ongoing basis so they
may make corrections. AMA asserted that this process would deny
physicians “substantive and procedural du process rights.”
Timeline and Responsibility
• Start Dates (Former)
– ???2013: Data Collection Begins
– March 31, 2014: Partial year 2013 data submitted to
– Prior to September 30, 2014: 45 Day Review Period
– September 30, 2014: CMS to publish 2013 data on
public website
– GAO Stated Public Reporting Could Take Until
December 2014 may be 2015….
Who Reports
• Applicable manufacturers of covered drugs, devices,
biologicals, and medical supplies
– Report all payments or other transfers of value to covered
recipients and physician ownership and investment interests
– Certain entities under common ownership with an applicable
manufacturer must also report
– Products available for payment under Medicare, Medicaid, CHIP
• Applicable Group Purchasing Organizations (GPOs)
– Report only physician ownership and investment interests
– Definition includes physician owned distributors (PODs)
that purchase products for resale
• Excluding OTC Only Makers
Proposed Definitions
• Covered recipients
– Physician/and or group practice
• Includes
– MD’s, DO’s, Dentists, Dental Surgeons, Podiatrists, Optometrists,
or Chiropractors
– Teaching hospital
– Any Hospital Receiving Medicare Payments for Direct
Graduate Medical Education, IPPS Indirect Medical
– Other Hospitals Not off Hook – Indirect Payments to Staff
• Reporting anything valued over $10 or $100
cumulative within a year (down to the penny)
What Information Must Be Reported?
Covered recipient name and address
NPI Number and Specialty
The amount and date of payment
Form of Payment
– Cash or cash equivalent or In-kind items or services
– Stock, stock option, ownership interest, dividend,
• Nature of such payment
– If payment or transfer relates to marketing, education,
or research of a drug, device, biological, or medical
supply, the product must also be identified
Natures of Payment
Food and beverage
Travel and lodging (including
specific destination)
Research (direct and indirect)
Charitable contribution
Direct compensation for
serving as Faculty for Medical
Education Program
• Consulting fees
• Compensation for services
other than consulting
• Royalty or license
• Current or prospective
ownership or investment
• Any categories of
information the Secretary
determines appropriate
• Payments made indirectly to a covered recipient through a third
party when applicable manufacturer is unaware of the identity
of the covered recipient.
• Payments under $10, unless annual aggregate is > $100
• Samples
• Educational materials that directly benefit patients or are
intended for patient use
• 90 Day Equipment Loans
• Warranty
• If Doctor is a Patient
• In Kind for Charity and Discounts
• Dividends from Public Company
• Payments for Legal Work
Educational Materials
• Sunshine Act
– Educational materials must consist of materials (such as
pamphlets) that directly benefit patients or are intended
for patient use.
– CMS clarified that this exclusion is limited to "materials"
(including, but not limited to, written or electronic
materials) and does not include services or other items.
• Implication: Implies that other educational materials that
do not fall within another exception must be reported
– CMS solicited comments on whether educational materials
provided to covered recipients (for example, a medical
textbook) should be interpreted as educational materials that
‘‘directly benefit patients’’
Charitable Contributions
• Sunshine Act:
For purposes of the reporting requirement, a
charitable contribution is any payment or transfer
of value made to an organization with tax-exempt
status under the Internal Revenue Code of 1986
that is not more specifically described by one of
the other nature or payment categories.
Proposed Rule and Third Parties
• Act generally excluded payments to third parties
– If manufacturer is unaware of recipient’s identity
• However
– If manufacturer is aware of identity  they must report
• Broad standard for “awareness”
– Actual knowledge or acts in deliberate ignorance/reckless
disregard of identity of covered recipient
• “Publicly Available”
– Example: Dept chair = publicly available  must be
reported (page 38-39)
• Under Current Definition
– Transfers of Value may include exhibit fees and
– Attendee list is available upon purchase
– Could be considered disregard if they fail to order
a registration list
– What if company rep sees some one they know on
exhibit floor at the meeting…….
Exhibit Booths
Do not need to report offering of buffet meals,
snacks or coffee at booths at conferences or
similar events where it would be difficult to
definitely establish the identities of the
individuals who accept the offering (page 29)
Civil Monetary Penalties
• Honest Mistakes
• $1,000 - $10,000/ Per Payment
• Maximum Penalty $150,000
• Knowingly Incompliant
• $10,000 - $100,000 Per Payment
• Maximum Penalty $1,000,000
• Penalty Criteria
Length of Time
Nature and Amount Reported
Degree of Diligence
45-Day Review Period
• Manufacturers, GPOs, covered recipients and physician owners
and investors may review and submit corrections before CMS
makes the information available to the public
• CMS will notify the parties for review
– CMS list serves and an online posting.
– May also preemptively register with CMS to receive
• Log in to review information
• In the event of disputes, CMS will provide physicians/teaching
hospitals contact info for manufacturers and GPOs on request
• Physician/teaching hospital must directly contact applicable
manufacturer or GPO and resolve any dispute
• In the event that a dispute cannot be resolved, CMS proposes
publishing both versions of the data
Sunshine Act:
Fraud and Abuse Risks
Implications of the Sunshine Act for Providers
• Powerful new tool for prosecutors
– Inquiry into billing/services patterns; overuse/misuse
• Disclosure of industry Payments to physicians and
teaching hospitals poses several distinct risks:
– Violation of fraud and abuse laws
• Anti-Kickback Law
• False Claims Act
• Stark Law
– Non-compliance with federal regulations on conflicts in
clinical research, or
– Reputational risk due to the appearance of impropriety
International Issues
U.S. Foreign Corrupt Practices Act (FCPA)
UK Bribery Act
French Transparency Act
Global Transparency
What Do You Need to Do?
Understand Aggregate Spend Program
Be aware of unexpected reporting
Timeliness is everything
No Minimum payment
Start Collecting NPI numbers on
Attendees (may need)
• Training/education/compliance/risk
• Wait – The Sunshine Rules Should be
Released Q1 2013
For More Information
Thomas Sullivan
[email protected]

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