Many of us are vaguely aware of the so-called Sunshine Act, part of the ObamaCare legislation. Briefly put, this Federal statute requires manufacturers of medical devices and pharmaceuticals to make public disclosure of many payments to licensed physicians and to academic research hospitals (but not other hospitals).
The statute is enormously complex; it is one of those statutes that, regrettably, likely requires manufacturers, physicians and research hospitals to seek the advice of counsel. Final rules were promulgated by the Centers for Medicare and Medicaid Services (“CMS”) earlier this month. In very broad outline:
- Covered Manufacturers must start collecting data as of August 1st of this year.
- By March 31, 2014, and for every full year thereafter, a covered manufacturer must provide information about payments to CMS.
- Annually CMS will publish a report naming those people who paid monies to physicians and academic hospitals in connection with any “Covered Product,” for the whole world to see.
There are granular and specific rules concerning Group Purchasing Organizations (“GPOs”) and physician owned distributors (“PODs”). And with respect to all else, the devil is in the details.
Covered Products include any drug, device, biologic or medical supply with respect to which there is “available” payments under Medicare, Medicaid or CHIPs (Children’s Health Insurance Programs). Covered Manufacturers do not include either distributors or wholesalers who don’t hold title to Covered Products, or manufacturers for internal use only (including use by the manufacturer with its own patients).
There must be reporting of most payments or other transfers of value, and value is measured as “on the open market.” Payments may be made directly by a manufacturer, or through a third party instructed or controlled by a manufacturer; but manufacturers need report only those things of which they have actual or constructive knowledge.
There are some rather bizarre exceptions for providing things of value worth less than $10; picture a medical conference where a manufacturer can provide a tuna fish sandwich but not a lobster roll. There are also exceptions for certain but not all educational materials, certain but not all product samples (or coupons for product samples) if utilized by patients, and for discounts or rebates on products purchased by doctors. There are also rules concerning how manufacturers can avoid reporting while sponsoring accredited or certified continuing medical education programs under the auspices of five specific professional organizations (such as the American Medical Association).
The statutory purpose is to bring into daylight the benefits that manufacturers may provide to physicians in order to induce physicians to utilize products of those manufacturers. This is a reporting statute; nothing is banned. It is designed to reach all sorts of benefits provided to doctors, whether they are payments, funding of projects, grants of stock or options or other ownership evidences, lavish travel or meals, whatever.
As you might have imagined, both manufacturers and physicians are going to want to take a careful look at the information that will be published about them. The statute provides a forty-five day period for review of proposed publications during which manufacturers, physicians and academic hospitals may review the text of proposed publication, followed by a fifteen day period to object. If the objection cannot be resolved, the information will be published anyway (with a footnote saying that it is disputed).
Certain but not all provisions of state laws now on the books are pre-empted by this statute. Other provisions are not. Any given situation in any given state must be analyzed on its own merits. In addition to the survival of certain but by not all state regulation of similar import, the anti-kickback laws continue to apply in parallel, as do other Federal laws such as the Stark Act.
Lots of information and forms can be obtained at www.cms.gov/regulations-and-guidance/legislation/national-physician-payment-transparency-program/index.html.
Covered Manufacturers and potentially covered manufacturers need to start now to put into place data gathering procedures and technologies so as to be ready to comply starting this August. Good luck to all.