CMS Finalizes Physician Payment ‘Sunshine’ Rule

A final rule, released Feb. 1 by the Centers for Medicare and Medicaid Services (CMS), requires medical device and drug manufacturers to report payments to physicians and teaching hospitals.

The rule also authorizes CMS to make publicly available information about ownership or investment interests that physicians (or their immediate family members) have in these manufacturers and group purchasing organizations (GPOs).

The data collection is to begin Aug. 1 and the reporting period will run through December 2013. The data must be reported to CMS by March 31, 2014, and the agency plans to post the information on its Web site by Sept. 30, 2014.

The disclosure and transparency requirements, which implement Section 6002 of the health care reform law, are intended to reduce the potential for conflicts of interest that could result in financial incentives that bias medical judgment and patient care.

“Disclosure alone is not sufficient to differentiate beneficial financial relationships from those that create conflict of interests or are otherwise improper,” CMS said in the rule. “Moreover, financial ties alone do not signify an inappropriate relationship. However, transparency will shed light on the nature and extent of relationships, and will hopefully discourage the development of inappropriate relationships and help prevent the increased and potentially unnecessary health care costs that can arise from such conflicts.”

Penalties for Noncompliance

The final rule requires that manufacturers must report annually “all payments or transfers of value (including gifts, consulting fees, research activities, speaking fees, meals, and travel) to covered recipients.”

Those who violate the reporting requirements will be subject to civil monetary penalties, capped annually at $150,000 for failure to report, and $1 million for knowing failure to report. CMS and the Health and Human Services Office of Inspector General reserve the right to audit, evaluate, or inspect manufacturers and GPOs for compliance.

“You should know when your doctor has a financial relationship with the companies that manufacture or supply the medicines or medical devices you may need,” said Peter Budetti, CMS deputy administrator for program integrity, in a Feb. 1 statement. “Disclosure of these relationships allows patients to have more informed discussions with their doctors.”

In addition, manufacturers and GPOs must report ownership and investment interests held by physicians (or the immediate family members of physicians) in such entities. This does not apply, however, to ownership or investment interests held by teaching hospitals.

In certain cases, research payments made under a product research or development agreement will be delayed from publication on the public Web site, CMS said. “Publication of a payment or other transfer of value will be delayed when made in connection with research on or development of a new drug, device, biological, or medical supply or a new application of an existing drug, device, biological, or medical supply or clinical investigations regarding a new drug, device, biological, or medical supply.”

Resolving Disputes
The law requires CMS to provide covered recipients at least 45 days to review and dispute the information related to them that was submitted by device and drug manufacturers and GPOs. CMS will notify them when the reported information is ready for review. Any disputed transfer of value will be resolved directly between the recipient and the relevant manufacturer or GPO, CMS said. In response to comments requesting additional time to resolve disputes initiated late in the 45-day period, the agency said it finalized a 15-day opportunity to resolve disputes before the information is published publicly, following the 45-day review and correction period.

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