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The Physician Payment Sunshine Rules

Comments on the Physician Payment Sunshine Rules are Now Closed(February 2, 2012):  Last week, the Centers for Medicare & Medicaid Services (CMS) closed its public comment period regarding proposed regulations for what is being called the Physician Payment Sunshine Rules. Generally, these rules require drug and device manufacturers to report payments, in cash or otherwise, to physicians. CMS is then authorized to publish these disclosures on a website for the public to review when researching and choosing their physicians. While a number of requirements and/or informal guidance may already limit or otherwise affect payment to physicians by drug and device manufacturers (for instance, the PhRMA Code), these new rules will require nearly every payment to physicians in this context be publicly reported and available. This may present new challenges for physicians, manufacturers and their interactions and relationships.

I.   The Physician Payment Sunshine Rules:

Implementing Section 6002 of the Affordable Care Act, Transparency Reports and Reporting of Physician Ownership or Investment Interests, the law requires that drug or biologic manufacturers, device or medical supply manufacturers and group purchasing organizations submit information regarding any payments to physicians on an annual basis. These payments include not only cash, but also gifts, consulting fees, research activities, speaking fees, meals and travel expenses. The reporting requirements mandate that a drug or device manufacturer or GPO must disclose all payments to physicians greater than $10 if such amounts do not exceed $100 per year. If payments to a specific physician are greater than $100, the manufacturer or GPO must report every payment to the physician, even those less than $10. These are very low dollar requirements, and will substantially affect the reporting requirements for nearly every manufacturer or GPO in the country. Under the proposed law, nearly every meal with a physician will require disclosure.

II.   Effect on Physicians:

While manufacturers and GPOs are responsible for actually reporting amounts paid, the Physician Payment Sunshine rules do not affect their business and business practices as much as it will likely affect physicians. Specifically, the law is intended to give the public complete transparency in a provider’s relationships, thus allowing the public to discern whether a physician is making a medical decision based on any factors other than what is best for the patient. In essence, it is taking the intent of Stark and Anti-Kickback laws – to ensure that medical decisions by a physician are made solely in the best interest of the patient – and requiring that any financial interests of a physician be publicly disclosed (even if such interests do not violate the Stark and Anti-Kickback laws). While the law requires compliance by manufacturers and GPOs, it primarily affects the reputation of physicians. As such, physicians and their associates should understand the ins and outs of the proposed rules, so that they can better protect both the reputation of the physician as well as the integrity of the practice as a whole.

III.   Penalties for Failure to Report:

Under the Physician Payment Sunshine law, CMS can assess fines in two situations. The proposed rules state that a manufacturer or GPO that unknowingly fails to report payment or other consideration given to a physician may be liable for $1,000 to $10,000 per violation, not to exceed $150,000 per year. On the other hand, a knowing failure to report payment may subject a company to $10,000 to $100,000 in penalties, capped at $1,000,000 per year. To enforce the law, CMS and the Office of Inspector General (OIG) have reserved the authority to “audit, evaluate, or inspect” applicable entities for compliance. In addition, CMS has mandated that device and drug manufacturers and GPOs maintain documentation of payments made to physicians for at least five years from the date in which the applicable data was made available on CMS’ disclosure website.

IV.   What if the Reported Information is Wrong?

One issue that may concern many physicians is the inaccurate reporting of information. While manufacturers and GPOs have the duty and the authority to report payment information to CMS, the information reported can only substantially impact physicians. As such, if information is incorrectly reported to CMS, a physician may be improperly associated with a certain drug, device or company, and such association may harm the integrity of that physician’s practice. CMS has taken a “hands-off” approach on this issue, leaving it to the involved parties to “resolve disputes about the information reported.” It is also proposing that “if the dispute cannot be resolved, the transaction will be noted as disputed, and both amounts will be published.” Such an approach will likely only confuse patients researching their physicians and negatively impact the integrity of a physician practice.

Healthcare LawyerThe new law can present complex problems for physicians and device and drug manufacturers alike. Liles Parker can handle dispute resolution between parties, reporting and appeals of agency decisions. Moreover, Liles Parker attorneys are experienced in assisting providers with implementation of compliance initiatives and other compliance activities to make sure that problems are addressed before they arise. For more information or a free consultation, please do not hesitate to call us.  Please call Robert W. Liles, Esq. at: 1 (800) 475-1906.

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