By Jack E. Angel, Education Foundation Executive Director, Coalition for Healthcare Communication

Jan. 17, 2012 – The Affordable Care Act (ACA), passed to improve America’s healthcare system and reduce its costs, included the “Sunshine” provision to create a national registry of payments and transfers of other items of value from healthcare manufacturers and group purchasing organizations (GPOs) to physicians and teaching hospitals. Recently, the Centers for Medicare & Medicaid Services (CMS) released a Sunshine Act Proposed Rule to implement the provisions and is soliciting public comments to be considered before final rules are published later this year.

The Coalition supports the purpose behind the Sunshine provision of the ACA – the transparency of relationships between industry and health care providers – but is very concerned that the current plan for implementation by CMS will create unnecessary compliance burdens and defeat the purposes of cutting healthcare costs and improving patient care. The Coalition also is worried that the burdens imposed by the proposed regulations will dissuade healthcare providers from participating in continuing medical education (CME) and other important relationships with industry

After reviewing the proposed rule, the Coalition is troubled that the endpoint of the proposed rule may be a sea of granular information that could cost billions of dollars over the next 10 years. The taxpayers will bear both the direct costs of the government administration of the program and the indirect costs of compliance by the medicines industry. There is little evidence to suggest that the program will improve the healthcare system or control costs.  

CMS Proposed Rule

CMS’ proposal to implement the law enacted by Congress is incredibly complex and detailed, illustrating the complexity of this transparency initiative. This complexity and the attendant costs of compliance should cause rational people to step back and question whether these rules really contribute to better healthcare or simply are another government mandate that is likely to create several unintended consequences that may end up harming patients. 

The 120-page CMS document deals largely with the administrative aspects of implementing the regulation. Compliance will cost the companies, the government and, ultimately, patients and taxpayers, millions of dollars per year. In short, the intended policy is simple, but its implementation is wildly complex.

CMS Estimates of the Cost of Compliance

As required by law, the government must estimate the impact of new regulations. Some examples of the impact this regulation will have on healthcare entities are below. Understand that these are CMS estimates, not those of industry, so they may well underestimate the actual costs of compliance. According to CMS, the Sunshine proposed rule will:

• Cost manufacturers collectively $195 million in the first year and $148 million each year thereafter.
• Cost physicians $24,000 per year to monitor and review the required reports in the first year, and $13,000 each year thereafter.
• Cost the federal government, on average, $183 million per year to administer the program. (There is no estimate provided for cost of possible additional state disclosure requirements allowed under the provision.) 
• Potentially add to CMS coffers funds from civil monetary penalties (CMPs) derived from prosecuting those who do not follow the fine print of the regulation. However, CMS provides no estimate on the expected revenue from CMPs.

Practical Impact

There also are a number of practical implications that will result from the proposed rule, including:

• In certified CME programs, CMS would required providers of education supported by industry to report the value of the education provided for each attendee. Under current CME accreditation rules, company sponsors do not know who the attendees are and do not compute an economic value of the program for attendees.
• For all other education and research activities sponsored by medicine companies, the industry will now be required to value and report on each event. This will undoubtedly have a chilling effect on the number of physicians willing to participate in any sort of company-sponsored information exchange. While this may be the objective of many of the rule’s supporters, it could well wind up hurting patients.
• For the communications industry, there is the potential of significant additional burdens, many of which are unforeseen at this point.

Although the overall cost of this regulation is just a drop in the bucket in relation to the entire cost of delivering healthcare in the United States, this rule stands out like a sore thumb. While Congress is attempting to reduce costs, this new program adds costs without demonstrating value.

Coalition Interest

Aside from the Coalition’s general concern as good citizens about government regulation strangling our country’s progress, the Coalition is primarily concerned that the Sunshine program will drive a wedge between the medicines industry and healthcare providers. Companies have both a right and a responsibility to enable providers to have the best available information on medicines. If providers avoid industry-provided education, it will inhibit this sharing of information.  

In summary, the Coalition supports transparency and will support efforts to achieve it. But we believe that the regulations should be clear, reasonable, and no more complicated than necessary.

Action

As we have said many times, government is not a spectator sport. Federal law requires CMS and other agencies to provide opportunity for citizens to comment on proposed rules. Individuals and organizations wishing to comment on this regulation must do so by Feb. 17, 2012. The Coalition will be commenting and welcomes your suggestions on the specific topics that should be addressed. Members should also feel free to comment directly to CMS. If you need assistance, we will be delighted to provide it.

[Editor's note:  Jack Angel can be reached at jeangel@cohealthcom.org or (203) 661-3314.]