CMS Releases Physician Payment Sunshine Act Final Rule

February 28, 2013

The Centers for Medicare and Medicaid Services (CMS) released the long-awaited final rule associated with the Physician Payment Sunshine Act, which was part of the 2010 health-reform legislation. Applicable manufacturers (Applicable Manufacturers) and group purchasing organizations (GPOs) must begin collecting data regarding interactions with physicians and teaching hospitals (Covered Recipients) on Aug. 1, 2013. The data must be reported annually to CMS beginning March 31, 2014.

The regulations define an Applicable Manufacturer as an entity operating in the United States that is either (1) engaged in the production, preparation, propagation, compounding or conversion of a covered drug, device, biological or medical supply (a Covered Item), but not if such Covered Item is solely for use by or within the entity itself or by the entity’s own patients; or (2) an entity under common ownership of an entity described in (1) that provides assistance and support, which is necessary or integral, to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale or distribution of a Covered Item.

The regulations require Applicable Manufacturers and GPOs to report payments and transfers of value or ownership and investment interests in Applicable Manufacturers or GPOs by Covered Recipients. In addition to other elements, the report must include: (i) who received the payment or transfer of value; (ii) the nature of the payment or transfer of value; (iii) the related Covered Item; and (iv) the amount of the payment or transfer of value.

Applicable Manufacturers and GPOs will not have to report certain payments and transfers of value, including, but not limited to: (i) payments or transfers of value below certain individual and aggregate amounts; (ii) product samples, coupons, vouchers, discounts, rebates; (iii) educational materials for patients; (iv) in-kind items for charity care uses; and (v) dividends from investments in publicly traded securities or mutual funds.

The final rule provides special rules for research payments, continuing education programs, and food and beverage payments. The rule also provides for delayed publication of data for payments or transfers of value made under an agreement regarding the research or clinical investigation of a new drug, device, biological or medical supply.

Reports must be electronically submitted and CMS must provide a review period where the data can be reviewed for accuracy, errors and omissions. Penalties for failing to report can reach a maximum annual total of $1,150,000. Any monetary penalties received must be used to carry out the necessary data aggregation and dissemination associated with the Physician Payment Sunshine Act.

If you have any questions regarding the Physician Payment Sunshine Act or the final regulations, please contact one of the authors.