Avoid Getting Burned

Affordable Care Act provisions publicize special business relationships and payments.Avoid Getting Burned

ACR members should pay attention to part of the Affordable Care Act health reform law that includes "sunshine provisions" for payments and other value transfers received from pharmaceutical and medical device companies.

These provisions may undergo public scrutiny and force members to evaluate their clinical and financial arrangements with this industry. This brief Q&A will help you prepare for the latest example of health care "transparency."

What are the physician payment "sunshine provisions?"

Section 1128G of the Act requires medical device, pharmaceutical, biological, and medical supply manufacturers to collect and report information about their "payments and transfers of value" to physicians and teaching hospitals to the U.S. Department of Health and Human Services (HHS).1 Additionally, the provisions stipulate that manufacturers and group purchasing organizations (GPOs) report details regarding physician ownership and investment in those entities. Manufacturers and GPOs must begin collecting payment data in the calendar year that began Jan. 1, 2012. They must file an initial report with HHS by March, 31, 2013, that lists covered payments during 2012. However, CMS issued long-awaited proposed regulations in December. Significantly, CMS would delay manufacturers' obligations to collect and report physician payments until a final rule emerges, likely later in 2012.2

Most importantly, HHS must post the reported information on a publicly available website to go live on Sept. 30, 2013. Thus, ACR members who have received compensation from — or who own or invest in — pharmaceutical or device manufacturers will see the "sunshine" of public access in just over 12 months.

What data about physician and teaching hospital payments or value transfers must manufacturers report?

Beginning March 31, 2013, manufacturers must disclose information such as the recipient's name, business address, specialty if a physician, and National Provider Identifier. You can review the other mandatory elements at http://1.usa.gov/tOTyuF.

Manufacturers are also required to report whether their payment or other value transfer was related to marketing, education, or research specific to a covered drug, device, biological, or medical supply. If related, they must provide the names of those covered drugs, devices, biologicals, or medical supplies. Additionally, the HHS secretary may adopt regulations to expand the scope of covered types of payments or value transfers.

What information about physician ownership and investments will manufacturers and GPOs have to report?

Beginning March 31, 2013, manufacturers and GPOs must report the following to HHS:

• The dollar amount invested by each physician or his or her immediate family member holding an ownership or investment interest in the applicable manufacturer or GPO during the preceding year, except interests in a publicly traded security or mutual fund

• The ownership or investment interest terms

• Any payment or other transfer of value provided to a physician with such an ownership or investment interest (or to an entity or individual at the request of, or designated on behalf of, a physician holding such an ownership or investment interest)

The HHS Secretary may create additional reporting requirements through regulation.

If manufacturers and GPOs fail to report physician payments or ownership, what penalties will they face?

Failure to report will result only in monetary sanctions. Any manufacturer or GPO that does not report the required payment or ownership/investment information will be subject to a $1,000 to $10,000 penalty for each item not reported, up to a maximum of $150,000 per annual submission. A knowing failure to report such data will subject a manufacturer or GPO to a $10,000 to $100,000 penalty per payment or value transfer not reported, up to a maximum of $1 million per annual submission.

What items are exempt from disclosure?

The Act exempts several types of payments or value transfers from disclosure, including:

• Payments under $10, unless the aggregate amount to a radiologist exceeds $100 per calendar year

• Loan of a device payable under Medicare or Medicaid for up to 90 days, so a radiologist must evaluate the device

• Product samples and educational materials that directly benefit patients and are intended for patient use

• Items or services provided under a contractual warranty, including the replacement of a covered device, if the warranty terms are specified in the purchase or lease agreement for the covered device

• Discounts (including rebates)

The Act will delay publication of information about payments or ownership/investment interests related to a product research or development agreement for services furnished on research on a potential new medical technology or a new application of an existing medical technology. This delay also applies to information related to a clinical investigation for, or the development of, a new drug, device, biological, or medical supply. HHS will only disclose that this information either occurs on the date of FDA approval or clearance or four years after payment or other value transfer is made, whichever is earlier. The government will treat such information as confidential and exempt it from any Freedom of Information disclosure, until first disclosed on the HHS website.

Will I have time to review any applicable payment or ownership before the government posts it on the website?

Yes. Before the government posts any of your payment from, or ownership/investment interest in, a manufacturer or GPO, you will have at least 45 days to review and submit corrections to HHS. Members should also carefully scrutinize their clinical and financial arrangements with the pharmaceutical and medical device industry to determine what might be subject to federal reporting and website posting.

Unfortunately, the act does not yet provide for a method to educate the public on the context of any payment, such as how consulting for a manufacturer-sponsored clinical trial could benefit patient care. Be prepared to explain the purpose of your arrangements to hospitals, government agencies, and the media.

1. 42 U.S. Code § 1320a-7h; Transparency Reports and Reporting of Physician Ownership & Investment Interests.
2. Federal Register, Vol. 76, No. 243, Proposed Rule on Transparency Reports and Reporting of Physician Ownership & Investment Interests; pp. 78742-78773 (Dec. 19, 2011).

By Bill Shields, J.D., LL.M., CAE, and Tom Hoffman, J.D., CAE
Bill Shields, J.D., LL.M., CAE (This email address is being protected from spambots. You need JavaScript enabled to view it.), is ACR general counsel.
Tom Hoffman, J.D., CAE (This email address is being protected from spambots. You need JavaScript enabled to view it.), is ACR associate general counsel.

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