Supplier success in a post‐reform healthcare market depends on a lot of factors, including a fundamental and thorough understanding of the foundation of healthcare reform. This is part of an ongoing series designed to help Repertoire readers understand the implications of reform.
The Physician Payments Sunshine Act is a provision within the Affordable Care Act, requiring drug and device manufacturers, group purchasing organizations and distributors to report payments or gifts of $10 or more made to physicians, hospitals and other providers on a yearly basis.
This program is overseen by CMS, the Centers for Medicare & Medicaid Services, and requires organizations to submit reports outlining all items of value that are given to their customers. In addition, manufacturers and group purchasing organizations (GPOs) must report any ownership interests held by physicians and their immediate family members.
The goal or purpose of the law is to increase patient safety by increasing transparency in conflicts of interest between healthcare providers and any outside pharmaceutical or device companies and GPOs. It is hoped that publishing this information will allow patients to better understand the financial relationships their doctors may have with external organizations.
Important dates
The final rule for the Physician Payments Sunshine Act was published on February 8, 2013. Drug and device manufacturers, distributors and group purchasing organizations were to have started collecting data on August 1, 2013. Information on payments or gifts collected between August 1 and the end of 2013 was to have been reported to CMS by March 31, 2014. This information will be published to a public website by CMS on September 30, 2014. Following 2014, information will be published annually on June 30 of each year.
Once an item is reported to CMS, CMS is required by law to give providers 45 days to review, dispute and correct any reported information prior to it being made public.
Who must report?
The law states that all applicable manufacturers – any entity or organization that is engaged in the production, preparation or manufacturing of a product – are responsible for reporting information to CMS. Companies that assist or support these manufacturers by marketing, selling, promoting or distributing their products are also considered applicable manufacturers under this law.
Direct and indirect payments
When reporting under the Sunshine Act, companies must look at both direct and indirect payments or transfers of value. A direct payment is any payment made directly from a company to a provider. The law states that any payment over $10 (or $100, aggregated annually) must be reported as a direct payment.
An indirect payment can be broken up into two types. The first type is a payment through a third party, where company A requests that company B pay a provider for their time. The second type is where a provider requests a payment to a third party on their behalf, such as a charitable organization.
Exemptions
Some items are exempt from being reported under the Sunshine Act:
- Over-the-counter drugs and class 1 or 2 medical devices, such as elastic bandages or sutures.
- Payments or gifts under $10, unless the total aggregated amount for the year is over $100.
- Incidental items, such as pens or note pads.
- Product samples that are for patient use and not intended to be sold.
- Educational materials for patients.
- Supplier or manufacturer discounts.
What must be reported?
When reporting to CMS, physicians must include their contact information, name, address, specialty, license and NPI numbers. They must also include specific information on the payment, including the amount, date, nature of the payment and how it was paid.
Challenges
Implementing the Sunshine Act won’t be without challenges, including these three:
- An April 2013 survey by Kaiser showed that 42 percent of the public did not know the Affordable Care Act was still law of the land and was being implemented. If almost half of the population doesn’t know this law exists, it is possible that physicians may not know about the Sunshine Act.
- Physicians who are familiar with the Sunshine Act may be reluctant to report their information. CMS recognizes that reporting a payment under the Sunshine Act does not protect physicians from liability under other laws, such as the Anti-Kickback Statue or False Claims Act. Making these payments public could open providers up for scrutiny under these laws.
- Finally, questions remain around how the public will use this information. Will patients log on and view their physician’s relationships prior to making a decision to go to the doctor? At this point, we don’t know.
What can you do to prepare for the Sunshine Act?
Follow your company’s guidelines on reporting. Most organizations are setting up ways to track this through their existing expense systems. If guidelines are lacking, remember to track and report payments or gifts made to physicians, hospitals and other providers over $10 each or $100 aggregated annually.
If a physician requests a payment, educate them on the law and inform them that you are required to report this information to CMS at the end of the year.
To learn more about the Healthcare Reform Navigation Series, contact Tim Brack, director of training, education and meetings, at 770.263.5270 or tbrack@mdsi.org.
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