CMS issues Sunshine Act

December 20, 2011
Pharmaceutical Commerce, Pharmaceutical Commerce - November/December 2011,

Proposed rules are sure to generate intense industry feedback

Having been publicly prodded by Senators Herb Kohl (D-WI) and Charles Grassley (R-IA), and with another Senate Special Committee on Aging hearing set for Dec. 15, HHS came through with its proposed rules on the Physicians Payments Sunshine Act, which were originally due Oct. 1. The release of the rules caused the hearing to be cancelled, but the senators said that it will be rescheduled for early next year.

The most immediate effect of the rules will be a probable postponement of when data on manufacturer spending with physicians and other healthcare providers needs to be collected; this was originally to begin on Jan. 1, with final reporting to CMS on March 31st, 2013, for the prior year (Pharmaceutical Commerce, Sept/Oct, p. 1). Now, CMS is proposing to delay the data collection start to at least 90 days after final rules are adopted. There is a Feb. 17 deadline for submitting comments on the rules, to be followed by CMS’ issuance of final rules-which could stretch out for months, but CMS is bravely saying that it hopes that some part of 2102 will still see required data collection.

Industry observers and compliance managers who were worried about the many ambiguities of the original legislation now have more concrete document to work with. But they might be regretting the day the document was issued, because the reporting requirements are very complex, starting with the simple problem of identifying physicians whose reimbursements might be reported (CMS notes that not all doctors have a National Provider Identifier, or NPI, number, and so proposes to use the National Plan & Provider Enumeration System [NPPES] number, for example). More broadly, the proposed rules will extend more deeply into physicians’ and GPOs’ finances—there could be requirements for reporting the investment portfolios of the physicians, when they are investors in GPOs. Both “direct” payments to clinical researchers and some “indirect” payments (through a contract research organization [CRO], for example) need to be reported, which brings CROs into the mix.

CMS, as required by law, reports the cost of implementing, which it estimates at around $224 million in the first year, dropping to $183 million per year thereafter (however, CMS doesn’t seem to include the capital cost of IT systems here). Overall, the regulations are expected to apply to 1,000 device and supply manufacturers, 150 pharma companies, and 420 GPOs.