Sunshine Act Worries Some Providers

Section 6002 of the Affordable Care Act (a.k.a. “Sunshine Act”) imposes new reporting requirements on financial relationships between medical and pharmaceutical makers and physicians and teaching hospitals. While lauded for its attempt to bring greater transparency to industry financial relationships some wonder whether the implementation methods planned by the Centers for Medicare & Medicaid Services (CMS) would expand the Act beyond the boundaries envisioned by Congress.

The Sunshine Act would require drug, device, biological, and medical supply manufacturers to annually report to the Secretary of Health and Human Services a list of payments or other transfers of value made by manufacturers to physicians, dentists and teaching hospitals. The list must identify the physician’s name, address, specialty and NPI numbers, amount and date of payment, form and nature of payment as well as the name of the drug, device, biological, or medical supply company making the payment.

The Secretary will make this information publicly available in a format that is easily searchable, clear and understandable. That Sunshine Act also requires that the information be easily aggregated and downloaded.

What is a payment or a transfer of value? Anything in cash or cash equivalent, in‐kind items or services, stock, a stock option, or any other ownership interest, dividend, profit, or other return on investment.

For doctors and teaching hospitals the disclosure law means that consulting fees, compensation for services other than consulting, honoraria, gifts and entertainment will have to be reported. Manufacturers must also report expenditures for food, travel (including the specified destinations), education, research, charitable contribution, royalty or license; current or prospective ownership or investment interest, direct compensation for serving as faculty or as a speaker for a medical education program, grant, or any other nature of payment.

With the exception of transfers the value of which is less than $10 per gift, not to exceed $100 annually, product samples and education materials, many of the physician-industry relationships that have previously been the industry norm may now have to be re-thought by doctors or face possible questions from patients or regulators.

CMS designated its Center for Integrity as the Sunshine Act enforcer. And that has many physicians and other industry members concerned.

In a strongly worded letter to CMS, the American Medical Association, a leading physician group, sexpressed its concerns about the anticipated methods of enforcement of the Act.

By putting the [integrity center] in charge of the collection and distribution of public reports on physician-industry interactions, CMS is making it appear that it is now the ethical police of the profession. It creates the impression that any physician who appears on the list, no matter how limited financially or legitimate the nature of the interaction, is somehow engaged in behavior that could be seen as ethically or legally suspect. Rather than encourage transparency, CMS’ proposed final rule could have a chilling effect on beneficial interactions between doctors and researchers that help advance medicine.

Irrespective of the means that CMS selects to implement the Act, as part of their overall compliance efforts, it is a good idea for providers to evaluate their industry relationships.

If you have questions about Medicare participation, the Sunshine Act, or have other legal needs, please contact us.