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April 18, 2014

Final Rule for Physician Payments Sunshine Act Recently Released

The long-awaited final regulations for the Physician Payments Sunshine Act (“Sunshine Act” or “Act”) were finally released on February 1, 2013. I previously discussed the Sunshine Act (seeHere Comes the Sun, Are you Prepared?,10/18/2012), but with the final rule now implemented, providers should take a second look at it and reconsider its implications.

The Act requires applicable manufacturers of drugs, devices, biological, or medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program (“CHIP”) to report payments or transfers of value provided to physicians or teaching hospitals. Additionally, applicable manufacturers and group purchasing organizations (“GPOs”) must annually report to CMS certain information regarding ownership or investment interests held by physicians (or their immediate family members).

The Act was proposed in December 2011 and CMS had expected to issue the final rule by the end of 2012. However, due to the overwhelming number of remarks received during the comments period from concerned providers, manufacturers, and GPOs, the Act took considerably more time to become final.

The final rule addresses some of the concerns raised through the comments period, but certainly not all. One of the biggest revisions is to exempt speaker fees for accredited and certified CME programs from the reporting requirements. There are several other exemptions from the reporting requirements, including, but not limited to:

  • over-the-counter drugs and class I and II medical devices (such as elastic bandages and suture materials)
  • incidental items worth less than $10 (e.g., pens and note pads) as well as general food and drinks offered to all participants at conferences or large-scale events
  • gifts or payments valued at less than $10 — unless the aggregate amount paid to the physician exceeds $100 annually
  • educational materials and items intended for use by or with patients

Additionally, the final rule makes numerous changes to definitions included in the proposed rule and adds several new terms.

The estimated costs, as stated by CMS, for the manufacturers and GPOs to comply with the Act is $269 million for the first year, with costs thereafter estimated to be $180 million.  CMS estimates physicians will expend $250 during the first year for compliance, but many stakeholders have expressed the opinion that this is grossly underestimated.

The applicable manufacturers and group purchasing organizations are required to start collecting data on August 1, 2013. This data must be formalized in a report to CMS by March 31, 2014. The data is set to appear on a public website by September 30, 2014.

The final rule still creates a great deal of uncertainty. It is highly recommended that providers consider their existing relationships and revisit the Act when creating new ones. They should take time to review internal policies and examine all contacts for conflicts of interest.

© 2014 by McBrayer, McGinnis, Leslie & Kirkland, PLLC. All rights reserved.

About the Author

Molly Nicol Lewis, McBrayer Law Firm, Health Care Attorney
Associate

Molly Nicol Lewis is an Associate of McBrayer, McGinnis, Leslie & Kirkland, PLLC. She practices in the firm's Lexington office, where she is a member of the Health Care Law section.

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