April 22, 2013 – In April 18 comments to the Centers for Medicare & Medicaid Services (CMS) the Coalition for Healthcare Communication (CHC) recommended that the agency address key concerns before moving forward with planned FAQs regarding compliance with and implementation of the Sunshine Act final rules. CHC believes that its suggestions “will advance the goal of transparency while ensuring that the reporting process is as clear, consistent and efficient as possible for CMS, the industry and the public,” the comment states.
“Our member companies, which include publishers of medical news, information, research and scholarly data on the latest medical science intelligence, believe that important issues must be considered and clarified before the agency publishes FAQs on the Sunshine rules,” said Jack Angel, Executive Director, Coalition for Healthcare Communication Foundation. A number of these issues involve educational materials – textbooks, journal reprints, journal supplements and digitally delivered materials – which are prepared by professional publishers and sent to physicians but were not specifically mentioned in the Sunshine rule provisions, he said.
“If confusion or perceived reporting burdens cause reduced publication or restricted distribution of these valuable educational items, physicians will no longer receive crucial information and patient care will suffer,” Angel explained.
In its comments, the CHC discusses each type of educational material individually. Those comments are summarized here:
The CHC asserts that providing textbooks to physicians has been in practice for decades and supports better care for patients. Additionally, textbooks are intended for professional, not personal use. Accordingly, textbooks should be excluded from the reporting requirement because these materials, like other educational materials, ensure “that clinicians are equipped with the most current medical information,” the CHC comment states. The CHC also asserts that the FDA regulates the distribution of medical education materials, which gives the Department of Health & Human Services “sufficient reason … to exempt them from reporting.”
Reprints – copies of published articles from peer-reviewed journals – “reinforce the latest medical developments and facilitate the diffusion of medical innovation in the clinical setting,” according to the CHC. Deeming reprints – which likely cost well under $10 each – subject to Sunshine reporting would cause an untenable reporting burden on both covered entities and physicians, because covered entities would have to collect information on the identity of each physician who received a reprint and track when that physician reached the $10 threshold, and because physicians would have to log in each reprint they received from each covered entity to confirm that this tabulation is accurate.
“Instead, we recommend that [reprints] be treated like the distribution of pens and pencils,” which do not have to be tracked or reported, the comment states. “A contrary determination by CMS creates a real risk that physicians would choose to not receive reprints … a loss for healthcare providers and, ultimately, patients.”
The CHC believes that supplements, which are special educational publications that publishers deem acceptable for mailing with the associated medical journal, would be subject to the same complications that reprints face, according to the comment, which also states that, “in the final analysis, any diminution of the availability of these educational materials would affect patient care.”
Digitally Delivered Educational Materials
Tracking this category, which covers educational materials (including reprints and supplements) that are delivered electronically, would be difficult to calculate as well, because neither the publisher nor the sponsor would have the complete or specific knowledge of the recipients. “This obvious reporting complication is a serious question in the administration of this regulation and needs to be addressed before data collection begins,” the CHC advised.
Angel underscored a point made in the CHC comment. “Receiving these materials provides no financial benefit to physicians. Making them reportable would impose great costs on industry, government and physicians, and have a negative effect on patient care,” he said. “We trust that these issues will be addressed by CMS appropriately.”
On Feb. 1, the Centers for Medicare & Medicaid Services (CMS) issued a final rule implementing the Sunshine Act provisions of the Affordable Care Act. The final rule, entitled “Transparency Reports and Reporting of Physician Ownership or Investment Interests,” was published Feb. 8 in the Federal Register (78 FR 9458). Having a published final rule ends the limbo that the biopharma industry has been in since the proposed rule was issued in December 2011. The final rule fixes some of the problems that were raised in comments on the proposal, but challenges remain as industry prepares to comply with the rule while managing physician relationships and public relations fallout.
This Coalition for Healthcare Communication summary is background for agencies and publishers who act as third-party payers on behalf of clients who must submit reports under the Sunshine final regulations. Each covered client will decide how to best interpret these rules. In doing so, many clients likely will create a U.S Department of Health & Human Services (HHS)-authorized “assumptions document” that will contain their assumptions in developing the reports and be sent to HHS as part of the reports. Agencies and publishers are not required to report payments to physicians made for their own purposes, unrelated to a client project.
This summary incorporates significant input and analysis from attorneys at Alston & Bird LLP and other experts, and outlines the basic tenets of the rule that pertain to our clients. While we have attempted to simplify the language and concepts as much as possible, the rule is complicated and sometimes arcane, and this summary fully reflects that. Senior executives may find it most useful to only scan this quickly and forward to it to company compliance staff for more careful review. At the end of the summary, find a list of other reports and resources, including a quick reference list.
The Coalition summary also points to areas where further interpretation will be needed from the government or by the clients, such as what “education” entails, how to quantify educational “transfers of value” in promotional settings, how to calculate the per meal costs at educational programs, and where certain types of publications – such as supplements and single-sponsor medical journals – fall on the spectrum of covered and noncovered materials.
Meanwhile, the Coalition and its industry partners are contemplating petitions to HHS seeking reconsideration and clarification of certain parts of the rule. Final comments are due in mid-March.
Section 6002 of the Affordable Care Act – also known as the “Physician Payments Sunshine Act” – added section 1128G to the Social Security Act and requires that applicable drug and device manufacturers report payments or other transfers of value to physicians and to teaching hospitals to HHS. The Act also requires applicable manufacturers and group purchasing organizations (GPOs) to report certain physician ownership and investment interests. The final rule’s effective date is April 9, 2013, although industry does not have to begin collecting the required data until Aug. 1, 2013, and does not have to report the 2013 data to CMS until March 31, 2014.
The rule finalizes requirements for manufacturers to report annually on the covered payments and provides definitions of numerous terms, such as “applicable manufacturer” and “covered drug, device, biological, or medical supply.” In addition, the rule clarifies how manufacturers should report and characterize payments or other transfers of value, including indirect payments provided to a covered recipient through a third party such as an agency or publisher. The rule also details which payments are excluded from the reporting requirements.
In addition, while not covered in detail here, the rule finalizes the requirements for applicable manufacturers to report information about grants of certain ownership or investment interests to physicians and their family members.
The rule finalizes the processes and requirements for submitting reports to CMS, including the specific data elements required to be included in the reports and the report format. The rule also details the processes for the review, dispute, and correction period when applicable manufacturers and GPOs, covered recipients, and physician owners or investors are given that opportunity. Further, the rule describes the information that will be included on the publicly available Website. Finally, the rule includes details on the processes for reporting the research payments that are eligible for delayed publication.
The final rule also includes details regarding the statutorily authorized, i.e., fines, for failure to report. It also clarifies the statutory requirements for the pre-emption of State laws.
Definitions: Transparency Reports on Payments and Other Transfers of Value
The final rule lists the following definition for “applicable manufacturer”:
Applicable manufacturer means an entity that is operating in the United States and that falls within one of the following categories:
(1) An entity that is engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply, but not if such covered drug, device, biological, or medical supply is solely for use by or within the entity itself of by the entity’s own patients. This definition does not include distributors or wholesalers (including, but not limited to, repackagers, relabelers, and kit assemblers) that do not hold the title to any covered drug, device, biological, or medical supply.
(2) Any entity under common ownership or control with an entity in paragraph (1) of this definition, which provides assistance or support to such entity with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale or distribution of a covered drug, device, biological, or medical supply.
Covered Drug, Device, Biological or Medical Supply
CMS finalized its proposed definition of “covered drug, device, biological, or medical supply” as any of those products for which payment is available under Medicare, Medicaid or certain other government programs and which requires a prescription to be dispensed or premarket approval by or notification to the FDA. Excluded from the definition are over-the-counter drugs and compounding pharmacies.
“Covered recipients” includes physicians (other than bona fide employees of an applicable manufacturer) and teaching hospitals. CMS defines “physicians” as doctors of medicine and osteopathy, dentists, podiatrists, optometrists, and chiropractors who are licensed by the State in which they practice. CMS declined to expand the definition to include other provider types, such as nurse practitioners or residents. CMS defined “teaching hospital”: any institution that received Indirect Medical Education (IME) payments, Graduate Medical Education payments, or psychiatric hospital IME payments in the most recent year for which information is available.
Identification of Covered Recipients
Physicians. Section 1128G of the Act requires that applicable manufacturers report a physician covered recipient’s name, business address, National Provider ID (NPI), and specialty. If the physician’s NPI is not available on the National Plan and Provider Enumeration System (NPPES) Website, an applicable manufacturer must make a good-faith effort to obtain the NPI from the physician; a “good-faith effort” is requesting an NPI from a physician, checking the NPPES database, and calling the NPPES help desk. If an applicable manufacturer cannot determine the physician’s NPI or the physician does not have one, the space may be left blank.
CMS is requiring that, for all physician covered recipients, applicable manufacturers must report the State(s) and applicable State professional license number(s) for at least one State where the physician maintains a license.
Teaching Hospitals. CMS will publish a list of hospital-covered recipients annually, at least 90 days before the beginning of a reporting year.
Payments or Other Transfers of Value
Section 1128G(a)(1)(A) of the Act requires that applicable manufacturers report a “payment or other transfer of value” made to a covered recipient or “to an entity or individual at the request of or designated on behalf of a covered recipient.” If it is at the request of or on behalf of a covered recipient, it must be disclosed under the name of the covered recipient. CMS provided this guidance on what constitutes “value” for purposes of transfers of value. First, payments or other transfers of value that do not have a discernible economic value for the covered recipient specifically, but nevertheless have a discernible economic value generally, must be reported. Second, even if a covered recipient does not make a formal request for the payment or transfer of value, it still must be reported. Finally, all applicable manufacturers must make a reasonable good faith effort to determine the value of a payment or other transfer of value. While not official, one trade association lawyer has suggested an “eBay test,” i.e., the price the product or service would fetch on eBay.
CMS determined that payments provided to a group or practice should be attributed to the individual physician who requested payment or on whose behalf the payment was made, or who is intended to benefit from the payment or other transfer of value. Payments provided to one covered recipient, but directed by the applicable manufacturer to another specific covered recipient, should be reported in the name of the covered recipient that ultimately received the payment because the intermediate covered recipient was passing through the payment.
CMS determined that applicable manufacturers must report, in the name of the covered recipient, all payments made at the request a covered recipient, as well as the name of the entity that received the payment.
CMS provided some guidance on its interpretation of the phrases “at the request of” and “designated on behalf of.” If a covered recipient directs that an manufacturer provide a payment or other transfer of value to a specific entity or individual, rather than receiving it personally, then the payment is being made “at the request” of such covered recipient and must be reported under the name of the covered recipient and the name of the entity paid. However, if a covered recipient neither accepts the payment nor requests that it be directed to another individual or entity, then the payment does not need to be reported.
Payments and Other Transfers of Value Report Contents
The specific categories of information required to be reported for each payment or other transfer of value provided to a covered recipient are set forth in Section 1128G(a)(1)(A) of the Act. The following should be included in each report: the physician covered recipient name, business address, specialty and NPI, date of payment, optional context (brief contextual information for each payment or transfer of value), related covered drug, device, biological or medical supply, and form of payment and nature of payment.
Information for Manufacturers
Manufacturers must report a related product name for all payments when there is a related product. If there is not at least one covered product, then manufacturers should report “none” or “non-covered product.” If a payment is related to at least one covered product as well as to a non-covered product, the manufacturer must report the name of the covered product and may report the name of the non-covered product.
When a payment is associated with multiple covered products, a manufacturer may report up to five covered products for each interaction, but the manufacturer should not report a percentage of the interaction dedicated to each product. As for the product name, CMS determined that an applicable manufacturer must report the market name of the product and must include the National Drug Code (NDC), if any. If a market name is not yet available, the manufacturer should use the name registered on ClinicalTrials.gov. For devices and medical supplies, §403.904(c)(8)(ii) allows reporting of either the name under which the device or supply is marketed or the therapeutic area or product category.
Further, the statute provides a list of categories for both the form of payment (e.g., cash, stock) and the nature of the payment (e.g., consulting fee, food, honorarium). If a payment or other transfer of value is associated with multiple categories, such as traveling to a meeting under a consulting contract, the travel expenses should remain distinct from the consulting fee expenses. For each payment, manufacturers may report only a single nature of payment and single form of payment. For lump sum payments, an applicable manufacturer must break out the distinct parts of the payment that fall into multiple categories for both form of payment and nature of payment.
Form of Payment
Section 1128G(a)(1)(A)(v) lists the forms that manufacturers must use to describe each payment or transfer of value. The final categories at §403.904(d) are: (1) cash or cash equivalent; (2) in-kind items or services; (3) stock, stock option, or any other ownership interest; and (4) dividend, profit, or other return on investment.
Nature of Payment
The payment categories are:
- Consulting fee
- Compensation for services other than consulting, including serving as faculty or as a speaker at an event other than a continuing education program
- Food and beverage
- Travel and lodging (including the specified destinations)
- Charitable contribution
- Royalty or license
- Current or prospective ownership or investment interest
- Compensation for serving as faculty or as a speaker for an unaccredited and non-certified continuing education program
- Compensation for serving as faculty or as a speaker for an accredited or certified continuing education program
- Space rental or facility fees (teaching hospitals only).
Charitable Contributions. This category should be used only when a manufacturer makes a payment to a charity on behalf of a covered recipient and not in exchange for any service or benefit. As an example, this category would not be appropriate when a physician provides consulting services and requests that her payment be made to a charity. Instead, this payment would be reported as a consulting fee with the physician as the covered recipient, but the entity paid would be the charity.
Food and Beverage. In the proposed rule, CMS said that in group settings, a manufacturer should report the cost per covered recipient, even if the covered recipient did not eat. In response to broad public objections in the comments, in the final rule CMS said that for meals in a group setting (other than buffet meals provided at conferences or other large-scale gatherings), manufacturers should report the per person cost (not the per covered recipient cost) of the food or beverage for each covered recipient who actually eats the meals. If the per person cost exceeds the $10 minimum threshold amount, then the manufacturer must report the value for each physician who actually participated in the group meal.
The exception for meals/snacks/buffets is very limited. CMS states explicitly that the exception does not apply “to meals provided to select individuals at a conference where the sponsoring applicable manufacturer can establish identity of the attendees.” For example, a buffet dinner meeting at a promotional educational event would not meet the exception because it is not a widely attended event where the meal’s sponsor does not know who attends.
Regarding meals that are dropped off at a covered recipient’s office (e.g., lunch dropped off by a sales representative), CMS said, “manufacturers are responsible for keeping track of food and beverages provided to covered recipients.” Further, CMS stated that applicable manufacturers should divide the total value of the food provided by the number of people who actually partook in the food and beverage including both covered recipients and noncovered recipients (such as support staff). If the per person cost exceeds the $10 minimum threshold amount, then the manufacturer must report the food or beverage as a payment or other transfer of value for each physician who participated in the meal.
For example, a sales representative brings a catered lunch costing $165 to a 10-physician group practice. Six of the 10 physicians and five support staff participate in the meal. Because the meal cost $15 per participant ($165/11 participants = $15), the meal needs to be reported for the six physicians who participated in it. However, the meal does not need to be reported for the four other physicians in the group who did not participate in the meal.
CMS notes in the final rule that applicable manufacturers are responsible for keeping track of food and beverages provided to covered recipients and must use the same attribution method for all meals, regardless of whether the manufacturer’s representative stayed in the office for the entire meal. The agency also stipulates that covered recipients who do not want to receive meals should make clear to manufacturers that they do not accept them. In other words, the finalized methodology “will no longer attribute meals to physicians who do not attend the meal, so a physician who does not want to receive meals should not attend or accept them.”
CMS decided that food and beverages provided at conferences and like settings, where it would be difficult to establish the identities of people partaking in the food, do not need to be reported. Examples of this would be coffee/beverages/snacks served in an open area at a general meeting.
Direct Compensation for Serving as a Faculty or as a Speaker for a Medical Education Program. CMS determined that payments for faculty at accredited or certified continuing education payments need not be reported. This exception requires the following: the event meets the accreditation standards of one of several listed accreditation bodies, the applicable manufacturer does not pay the covered recipient directly, and the applicable manufacturer does not recommend or select the speakers.
This exception applies to accredited providers who are part of agencies and publisher groups as well as noncommercial CME providers. The controlling distinction is created by the decision to exempt certified CME from reporting as long as it follows the accreditation rules of CME standards organizations (e.g., ACCME) and the sponsor company does not suggest speakers.
CMS also states explicitly that attendance at certified CME events need not be reported as a payment or transfer of value. However, for FDA-regulated promotional education, both the meal and the speaker fees to faculty clearly must be reported. The rule is silent about whether attendees at a promotional education event should be reported. The Coalition likely will join in a petition to CMS to strongly urge CMS to explicitly rule that attendance at a promotional education event is not reportable.
Consulting Fees. This category is intended to include fees paid by a manufacturer to a covered recipient for services traditionally viewed as consulting services.
Compensation for Services Other than Consulting. This category is intended to capture compensation for activities or services that traditionally are not considered consulting services (e.g., speaking engagements unrelated to continuing education or promotional activities). One practice that might fall under this category includes professional writing support, sometimes referred to as ghostwriting. The rule makes it clear that writing support for an article where a author contributes nothing but his/her name to the article would be considered a reportable event, but is silent on the common situation where writing support is incidental to an active author’s activity. It is not clear whether that value would need to be reported.
Honoraria. HHS says that honoraria are distinguishable from the above category in that they generally are provided for services for which custom prohibits a price from being set.
Gifts. This general category includes anything provided to a covered recipient that does not fit into another category. The provision of items with a cost above the $10 minimum threshold would need to be reported as a gift.
Entertainment. This category is intended to include, but is not limited to, attendance at recreational, cultural, sporting, or other events that generally would have a cost.
Travel and Lodging. This category includes travel, including any means of transportation, as well as lodging.
Education. This category includes payments or transfers of value for classes, activities, programs, or events that involve the imparting or acquiring of particular knowledge or skills, such as those used for a profession. As noted above, it is not clear that mere attendance at a promotional education event is covered by this category. One of the challenges for industry will be how to calculate the value of FDA-regulated promotional education. Materials for physician education only, such as textbooks, must be reported. Materials for patient education, including in-office models or posters and out of office print or electronic patient education materials are not reportable. Other educational tools, such as journal supplements, computer platforms, and data and information reports for physicians, are not addressed in the final rule.
Royalty or License. This category includes, but is not limited to, the rights to use patents, copyrights, other intellectual property, and trade secrets, including methods and processes.
Current or Prospective Ownership or Investment Interests. This category includes ownership or investment interests currently held by the covered recipient, as well as ownership interests or investments that the covered recipient has not yet exercised.
Grant. CMS explained this category as “payments to covered recipients in support of a specific cause or activity.”
Recognizing that the above still requires interpretation, CMS determined that applicable manufacturers could submit along with their data a voluntary, nonpublic document describing the assumptions used when categorizing the natures of payments. Accordingly, agencies and publishers should expect that clients will have varying assumptions on classifications.
Section 1128G(e)(10) of the Act excludes specific types of payments or other transfers from the reporting requirements. Although CMS received numerous comments recommending additional exclusions, CMS believes it does not have authority to add exclusion categories. CMS generally uses dictionary definitions, but offers the following clarifications:
Existing Personal Relationships. Under the final rule, payments or transfers to a covered recipient made solely in the context of a personal, non-business-related relationship are excluded from reporting requirements.
Payments or Other Transfers of Value of Less Than $10. The statutory de minimis thresholds ($10 each items and a total of $100 per year) for reporting will be in place for CY 2013. CMS will begin increasing the de minimis thresholds based on the consumer price index (CPI) for reporting in CY 2014. The final rule gives manufacturers flexibility in reporting small payments, such that they may be reported individually or bundled with other small payments or transfers in the same nature of payment category.
Many commenters supported the exclusion of food and beverages at conferences from reporting requirements and indicated that CMS should extend this to other items provided at conferences. This exclusion appears in the “under $10” section of the rule. Under the final rule, small incidental items that are under $10 (such as pens and note pads) that are provided at large-scale conferences and similar large-scale events will be exempted from the reporting requirements.
Educational Materials that Directly Benefit Patients or Are Intended for Patient Use. CMS received many comments questioning the meaning of “materials” and “directly benefit patients or are intended for patient use,” as used in the definition of this exclusion. CMS believes that anatomical models or wall models provided to help explain a procedure to patients would be considered educational material because they are ultimately intended to be used with patients. If educational materials are provided to a physician on a flash drive to be distributed to patients, then the flash drive would be included in the exclusion (but not if the drive was provided as a gift alongside the materials). CMS states that overhead expenses, such as printing and time, should be included in the exclusion if directly related to the development of the materials that directly benefit patients or are intended for patient use.
CMS does not consider items that are educational to covered recipients (such as medical textbooks and journal reprints) to fall within the exclusion, as they are not directly beneficial to patients. The Coalition and other commenters argued in comments on the proposed rule that all materials provided to educate physicians (including textbooks and journals) should be included in the exclusion, because educating physicians clearly benefits patients. CMS responded that educational items not intended for patient use are important for physicians, but that it does not believe that these materials fall within the statutory exclusion. CMS also states that pursuant to the statutory text, “the exclusion is limited to educational materials only, and not marketing or promotional materials.” Experts predict that mass media probably are not reportable, but it is likely that other types of publications, such as journal supplements sent to specific lists of physicians, would be covered.
Discounts and Rebates. Discounts and rebates for covered drugs, devices, biologicals, and medical supplies provided by applicable manufacturers to covered recipients are excluded from reporting.
Product Samples. Under the statute, product samples not intended to be sold and intended for patient use are excluded from reporting requirements. Under the final rule, any drug, device, biological or medical supply provided as a sample to a covered recipient that is intended for use by patients will be included in the exclusion. This includes single-use or disposable devices, demonstration devices, or evaluation equipment provided to covered recipients that are intended for patient use. Under the final rule, all coupons and vouchers for a manufacturer’s products that are intended for patient use to defray costs will be included in this exclusion category, as CMS views them as materially similar to samples.
Nonmedical Professional. The final rule codifies the exclusion for transfers to the covered recipient if the transfer is solely for non-medical professional services provided as a licensed nonmedical professional.
Civil or Criminal Action or Administrative Proceeding. The final rule excludes the transfer of anything of value to a physician if the transfer is payment solely for the services of the covered recipient with respect to an administrative proceeding, legal defense, prosecution, or settlement or judgment of a civil or criminal action or arbitration.
Indirect Payments or Other Transfers of Value through a Third Party
Payments or other transfers of value made indirectly to a covered recipient through a third party are excluded from reporting requirements only where the applicable manufacturer is unaware of the identity of the covered recipient. CMS did not agree with comments recommending that indirect payments be reported only when under the control of the applicable manufacturer or if made at the request of or designated on behalf of a covered recipient. As an example of a circumstance where a manufacturer’s payment is passed indirectly to a covered recipient, unbeknownst to the applicable manufacturer, CMS describes a payment to a consulting firm for professional services where the consulting firm incidentally employs a physician on the project.
Under the final rule, an indirect payment or other transfer of value is one that an applicable manufacturer requires, instructs, or directs to be provided to a covered recipient, regardless of whether the applicable manufacturer specifies the specific covered recipient. An unrestricted donation to a physician professional organization to use at the organization’s discretion, where the organization chooses to use the donation to make grants to physicians, would not constitute a reportable “indirect payment.” If the donation was earmarked for the purpose of funding grants for physicians, such grants would be reportable as indirect payments.
CMS determined that a manufacturer is “unaware” if it does not know the identity of a covered recipient, and that “know” means that the manufacturer has actual knowledge of the identity or acts in deliberate ignorance or reckless disregard of the identity. For example, CMS would not require reporting if an applicable manufacturer hires a market research firm to conduct a double-blinded market research study, which includes paying physicians $50 for responding to a set of questions, even though the manufacturer clearly intends a portion of the payment to be provided to physicians. The rule is intended to prevent manufacturers from directing payments to a discrete set of covered recipients whose identities the manufacturer may not actually know, but could ascertain easily. For example, reporting would be required where a manufacturer directs an agent to make payments to the top billing cardiologists in a certain city or the chiefs of staff of a certain class of hospitals.
In response to comments suggesting manufacturers should not be responsible for tracking and reporting indirect payments or other transfers of value indefinitely, the final rule provides that, for the purposes of this exclusion, an applicable manufacturer must be unaware of the identity of a covered recipient during the reporting year and the second quarter of the subsequent year following the transfer of the payment from the third party to the covered recipient. For example, if a payment was made in November 2013 to a professional society with instructions to use the money to provide grants to physicians, and the society provided the names of the grantees to the
manufacturer in April 2014, the payment would be reportable as part of the manufacturer’s CY 2014 report.
As noted above, under the final rule, an indirect payment made to a speaker at a certified continuing education program is not a reportable indirect payment or other transfer when all of the following conditions are met: (1) the program meets the accreditation or certification requirements and standards of specified accrediting and certifying bodies; (2) the applicable manufacturer does not select the covered recipient speaker or provide the third party vendor with a distinct, identifiable set of individuals to be considered as speakers for the accredited or certified continuing education program; and (3) the applicable manufacturer does not pay the covered recipient speaker directly.
CMS disagreed with comments suggesting that payments related to prescriber education required as part of Risk Evaluation and Mitigation Strategies (REMS) should have a blanket exclusion from the reporting requirements. CMS states that payments made in connection with prescriber education required by REMS should be reportable on the same basis as other education payments. However, CMS does say that written materials approved by the FDA for distribution to physicians, such as “Dear Healthcare Provider” letters, do not have to be reported.
Report Submission and Review
These are the rules clients must follow in their reports to CMS. In the final rule, CMS said it sought to balance the need to provide flexible processes for data collection and submission with the need for system standardization.
Prior to Submission
CMS recommends that applicable manufacturers voluntarily provide covered recipients the opportunity to review data prior to submission to CMS, but doing so is not mandatory. Although it does not prescribe a process for such review, CMS opines that ongoing notice throughout the year of any reportable interactions would be ideal.
As discussed above, reports including 2013 data will not be due until March 31, 2014.
Registration. Manufacturers and GPOs that have payments or other transfers of value and/or physician ownership or investment interests to disclose for the previous calendar year must register and submit reports.
File Format. In response to commenters suggested that CMS issue reporting templates and more details on reporting, CMS plans to publish additional information along with greater detail on the submission process. CMS will allow submission of only a single report for the entire reporting period, and submission extensions will not be granted.
Attestation Process. Following data submission (either the original or in the form of a change or update), an authorized representative (chief executive officer, chief financial officer or chief compliance officer) will be required to submit a signed attestation certifying the timeliness, accuracy, and completeness of the data.
Report Content. For each payment and other transfer of value, the following information is required (as discussed throughout the rule): manufacturer name; covered recipient (with identifying information, including specialty and NPI); date, form, and nature of the payment or transfer; name(s) of the related covered drug, device, biological, or medical supply, as applicable (including NDCs, if any); name of entity that received the payment or other transfer of value, if not provided to the covered recipient directly; whether the payment or other transfer of value was provided to a physician holding ownership or investment interests in the applicable manufacturer (yes/no); and a statement providing additional context (optional).
For each research-related payment or other transfer of value, the following information is required: manufacturer name; name of research institution/entity receiving payment; total amount of research payment; name of study; name(s) of related covered drug, device, biological or medical supply; NDCs of related covered drugs and biologicals, if any; principal investigator(s) and required identifying information; context of research (optional); ClinicalTrials.gov identifier (optional); and whether the payment or other transfer of value should be granted a delay in publication because it was made pursuant to a product research agreement, development agreement, or clinical investigation (yes/no).
45-Day Review Period for Applicable Manufacturers, Applicable GPOs, Covered Recipients, and Physician Owners or Investors
The statute gives manufacturers, GPOs, covered recipients, and physician owners or investors the opportunity at least 45-days to review submitted data prior to its release to the public.
Notification of Review and Correction Period
CMS determined that notification to physicians and teaching hospitals must be provided annually to announce the review and correction period, including specific instructions. Under the final rule, CMS will notify physicians and teaching hospitals using e-mail list serves, online postings (including both on the CMS Website and the in the Federal Register) and directly (likely by e-mail) to any physicians or teaching hospitals that have registered (voluntarily) with CMS ahead of time. Covered entities must register if they wish to review data attributed to them.
Length of Review and Correction Period
Due to the statutory date for publication of the submitted data on the public Website, CMS finalized the proposed 45-day review and correction period. Following the end of the review and correction period, manufacturers and GPOs will have an additional 15 days to correct data for purposes of resolving disputes, after which they may submit (and provide attestation for) updated data to CMS to finalize their data submissions. Given the short length of this period, CMS plans to encourage covered recipients and physician owners and investors to initiate disputes as soon as possible within the 45-day review and correction period to maximize the likelihood of successful resolution and accurate data available for publication. There is no limit to the number of times a particular transaction can be reviewed and disputed. However, only the current and previous years will be available for review and correction. CMS believes that the data should be finalized and no longer open to disputes and updates after a certain time period. Undisputed data will be finalized for publication after the close of the annual 45-day review and correction period.
CMS will use a secure Website such that manufacturers and GPOs will be able to access and review only the data they submitted or that was submitted for them within a consolidated report. Covered recipients and physician owners and investors will be granted access only to data regarding payments or other transfers of value and/or ownership or investment interests submitted on their behalf.
Based on comments received, CMS believes it has a responsibility to facilitate the capability for correcting the data and resolving disputes among the parties but should not be actively engaged in mediating dispute resolutions. CMS plans to provide the opportunity for covered recipients or physician owners or inventors to review and correct data submitted on their behalf. CMS also will monitor the rate of disputes and resolutions, including whether a manufacturer or GPO has an abnormally high number of disputes or rate of unresolved disputes.
On the secure CMS Website, if a covered recipient or physician owner or investor decides to initiate a dispute, the system will flag the transaction automatically and notify the appropriate manufacturer or GPO. If a dispute is not resolved within the allotted time period (including re-attestation to the data) CMS will publish the original, attested data, marked as disputed. In justifying this rule, CMS notes that it is the manufacturers and GPOs that are responsible for collecting, reporting, and attesting to the accuracy of information and subject to penalties for failure to report.
CMS intends to monitor the volume and terms of disputes and resolutions and provide additional guidance regarding situations when the cost of resolving a dispute may outweigh the benefits.
The statute requires CMS to publish, on a publicly-available Website, the data reported by applicable manufacturers and applicable GPOs for CY 2012 by Sept. 30, 2013, and for each year thereafter, it must report the data by June 30. Due to the timing of the final rule, no data will be collected for CY 2012. The first data publication will occur in 2014 and cover data collected in 2013.
In the proposed rule, CMS had solicited comments regarding the format of the public Website it would utilize for data publication. CMS received comments offering suggestions on the Website’s format and content. CMS expressed its intention to engage stakeholders during the development of the Website. In addition, in response to several comments, including the comment submitted by the Coalition for Healthcare Communication, CMS stated that the Website would clearly articulate that a payment or other transfer of value does not indicate such payment was legitimate nor does it indicate that such payment represents a conflict of interest. Finally, CMS stated it would establish mechanisms to allow researchers to access submitted data that is not publically available.
For applicable manufacturers, the following information is required:
- Applicable manufacturer’s name
- Covered recipient’s –
- Name (for physicians, first and last name and middle initial)
- Specialty (physician only)
- Primary business street address (practice location)
- NPI (physician only)
- Amount of payment or other transfer of value in U.S. dollars
- Date of payment or other transfer of value
- Form of payment or other transfer of value
- Nature of payment or other transfer of value
- Name(s) of the related covered drugs, devices, biological, or medical supplies, as applicable
- NDCs of related covered drugs and biological, if any
- Name of the entity that received the payment or other transfer of value, if not provided to the covered recipient directly
- Statement providing additional context for the payment or other transfer of value (optional)
For research payments or other transfers of value, the following information is to be submitted:
- Name of research institution/entity receiving payment
- Total amount of research payment
- Name of study
- Name(s) of the related covered drugs, devices, biologicals or medical supplies
- NDCs of related covered drugs and biologicals, if any
- Principal investigator(s) (including name, specialty and primary business address)
- Context of research
- ClinicalTrials.gov identifier (optional)
For each physician ownership or investment interest, the following information will be submitted:
- Applicable manufacturer or applicable GPO name
- Physician owner or investor’s –
- Primary business street address
- Whether the ownership or investment interest is held by a physician or an immediate family member of a physician
- Dollar amount invested
- Value and terms of each ownership or investment interest
- Any payments or other transfers of value provided to the physician owner or investor, including:
- Amount of payment or other transfer of value in U.S. dollars
- Date of payment or other transfer of value
- Form of payment or other transfer of value
- Nature of payment or other transfer of value
- Name(s) of the related covered drugs, devices, biologicals, or medical supplies, as applicable.
- NDCs of related covered drugs and biologicals, if any
- Name of the entity that received the payment or other transfer of value, if not provided to the physician directly
- Statement providing additional context for the payment or other transfer of value (optional)
Note that a payment or other transfer of value needs to be reported only once.
Fines, Civil Monetary Penalties
Section 1128G(b) of the Act authorizes the imposition of civil monetary penalties (CMPs) for failure to report information on a timely basis in accordance with the Secretary’s regulation. Failure to submit the required information is punishable by a CMP of at least $1,000 but no more than $10,000 for each payment or other transfer of value or ownership or investment interest not reported as required, not to exceed $150,000 in the aggregate. Knowing failure to report as required is punishable by a CMP of at least $10,000 but no more than $100,000 for each payment or other transfer of value or ownership or investment interest, not to exceed $1,000,000 in the aggregate. CMS also proposed a five-year recordkeeping requirement.
By statute, CMS is required to submit annual reports to Congress and to the States. The report to Congress is due annually on April 1, beginning in 2013, and it is to include aggregated information on each applicable manufacturer and applicable GPO for the preceding calendar year, as well as any enforcement action taken and penalties paid. CMS stated that based on the final rule’s publication date, it will submit the first Congressional report on April 1, 2015, which will include data collected in CY 2013 that was submitted in March 2014.
Relation to State Laws
Section 1128G(d)(3) preempts any State or local laws requiring reporting, in any format, of the same type of information concerning payments or other transfers of value made by applicable manufacturers to covered recipients, unless the information is being collected by a Federal, State, or local government agency for public health surveillance, investigation, or other public health purposes or health oversight.
Without a doubt, the Sunshine Act final rule is complex and leaves us with many unanswered questions as the effective date closes in. The Coalition hopes that this summary helps you parse through some of the complexities, and we are happy to take your questions about specific measures. We are working to identify a list of issues that may need to be forwarded to CMS for review and clarification, and will work to get answers or interpretations that make sense. Please let us know how we can help.
We have listed several resources below that may provide you with more background and information:
Policy and Medicine: “Quick Reference Guide”: http://www.policymed.com/2013/02/physician-payment-sunshine-act-final-rule-quick-reference-guide.html
Links to Additional Policy & Medicine Stories on Final Sunshine Act Regulations
Top 50 Things to Know About the Final Sunshine Act Regulations
Final Sunshine Rule and Continuing Medical Education (CME)
Payments Related to Research and Delayed Publication
45-Day Review Period and Penalties
Cost and Regulatory Impact Analysis
Nature of Payment Categories
Final Sunshine Act Regulations: Definitions
Alston & Bird LLP: Feb. 4, 2013, Memo to Clients: Physician Payment Sunshine Act Final Rule/AlstonBird Summary
FDA Law Blog: CMS Belatedly Issues Sunshine Rule; HP&M Promptly Issues Summary http://www.fdalawblog.net/fda_law_blog_hyman_phelps/2013/02/cms-belatedly-issues-sunshine-rule-hpm-promptly-issues-summary.html
Prevision Policy: CMS Sunshine Rule: Patient and Nurse Practitioner Materials Protected from Disclosure; CME Distinctions Added, Sunshine-02112013-PVP
Medical Marketing & Media: “CMS Warms to Some Stakeholders, Burns Others with Sunshine,” http://www.mmm-online.com/cms-warms-to-some-stakeholders-burns-others-with-sunshine-rule/article/279940/
Although the Final Rule did not have an applicable manufacturer heading for this list, it can be inferred that the data elements are for manufacturers.