In February, the Center for Medicare and Medicaid Services (CMS) released the final rule of the Physician Payment Sunshine Act, which requires applicable manufacturers of drugs, devices, biologics or medical supplies to disclose financial relationships, payments, and other transfers of value to physicians and teaching hospitals.  With the June 1 Healthcare Practitioners (HCP) Expenses and Transfers of Value reporting deadline for Nevada fast approaching, followed by Massachusetts and Washington D.C. on July 1, it is important for life sciences companies to review the data submission schedule for the coming year, as well as evaluate the nuances and particulars of the amended regulation and the recently updated OPEN PAYMENTS fact sheets on CMS’ official site.

First and foremost, industry insiders should be familiar with the Sunshine Act deadlines. Data collection officially begins August 1, 2013 and the first report, which will include data from August 1 to December 31, 2013, is due to CMS by March 31, 2014. All data submission will be conducted through a web interface, the details of which have not yet been provided.  The data from this report period will be made public by September 30, 2014.

In addition to the release of deadline dates, what else has been clarified in the final rule?  For the most part, CMS stayed faithful to the requirements of the proposed rule.  There were, however, a number of important clarifications and changes:

  • The definition of “applicable manufacturer” has been further qualified to constitute companies “operating in the United States.”  Previously, applicable manufacturers engaged in the production, propagation, preparation, compounding, or conversion of a covered product “for sale in the United States” were required to report.  This has been changed to consist of a physical location in the United States.
  •  The threshold for “common ownership” has been set at 5 percent, but companies under common ownership still have the flexibility to submit separate or consolidated reports.  This is of particular importance for companies with subsidiary relationships.
  • The definition of an applicable group purchasing organization (GPO) has been changed to exclude the purchase, arrangement, and negotiation for covered products for use by the GPO, itself.
  • Previously, whether a product was “covered” depended on whether the product qualified for reimbursement under Medicare, Medicaid, or CHIP.  This definition has been expanded to include products reimbursed separately or as part of a bundled payment.  This change was made in response to comments citing the variety of reimbursement structures.
  • Reporting requirements for indirect payment through third parties have been changed to exclude instances in which the covered recipient is unknown to the applicable manufacturer.
  • Covered recipients must (when applicable) be identified by at least one state license number in addition to an NPI number.  Covered recipients only include physicians and teaching hospitals (CMS will provide a list of who qualifies as a “teaching hospital”).
  • Research-related spending activities — including pre-clinical, Phase I-IV, and investigator initiated research — is to be reported separately from all other spending.  Services, meals, travel, etc. related to research, however, will still be reported under their respective categories.
  • Group spending activities are to be reported per attendee only for covered recipients who were actually in attendance.  This eliminates the possibility of spending being attributed to partners and office staff who were not present.  Exclusions to group reporting rules include buffets, snacks, soft drinks, coffee, etc. and small items under $10 made available to all participants of a conference or similar large gathering.
  • Form and Nature of Payment categories have been finalized.

Earlier this month, CMS updated its website to include new information regarding the National Physician Payment Transparency Program: OPEN PAYMENTS. OPEN PAYMENTS is dedicated to providing guidance and information on the reporting requirements of The Physician Payments Sunshine Provision of the Affordable Care Act (Section 6002). The new information consists of three different fact sheets regarding the program, directed to applicable manufacturers, GPOs, physicians, and teaching hospitals, respectively. CMS is encouraging physicians to register with OPEN PAYMENTS and to sign-up for the associated listserv in order to receive updates relating to the program. Furthermore, the physicians fact sheet provides a list of the types of professional physicians legally authorized to practice; for example, Doctor of Dentistry, Doctor of Optometry, Doctor of Medicine, etc.

There is also a continuing medical education program, titled, “Are You Ready for the National Physician Transparency Program?”  Physicians will be able to receive 1.00 AMA PRA Category 1 credit by participating and receiving a minimum score of 70 percent.  This will enable participants to learn more about the OPEN PAYMENTS website, key dates, and the steps involved in collecting and reporting physician data as well as actions physicians can take to verify the information that will be reported in advance of the publication of the data on the website.

After reviewing the latest information from CMS, some industry experts may be left wondering what steps need to be taken to prepare their team in time for data submission on August 1 of this year.  Although adapting to these changes may seem daunting for life sciences personnel, the implementation of an Aggregate Spend reporting tool can ensure compliance and peace of mind during the transition to new Sunshine Act standards.