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The Centers for Medicare & Medicaid Services Feb. 1 released a final rule that will require manufacturers of drugs, devices, and other medical supplies to report certain payments provided to physicians or teaching hospitals.
The final rule, which implements Section 6002 of the Affordable Care Act, also will make information publicly available about physician (or immediate family members of a physician) ownership or investment interests in applicable manufacturers and group purchasing organizations (GPOs).
A CMS fact sheet called the rule “National Physician Payment Transparency Program: Open Payments” (CMS-5060-F). The rule will be published in the Federal Register Feb. 8.
The rule had been under review at the White House Office of Management and Budget since late November 2012.
CMS said the rule will increase public awareness of financial relationships between drug and device manufacturers and certain health care providers. The agency said the transparency is intended to help reduce the “potential for conflicts of interest that physicians or teaching hospitals could face as a result of their relationships with manufacturers.”
To give applicable manufacturers and applicable GPOs sufficient time to prepare, CMS said data collection will begin Aug. 1, and the first year reporting period will run through December 2013. Data are due to be reported to CMS by March 31, 2014, and CMS said it will release the data on a public website by Sept. 30, 2014. CMS originally said companies would need to begin reporting 90 days after the final rule was published.
The Medical Imaging & Technology Alliance (MITA) in a Feb. 1 statement commended the delayed data collection date. “We appreciate that CMS has given device manufacturers 180 days after publication to implement the final regulations, so that our members have sufficient time to successfully implement the law,” MITA said.
CMS said it anticipates that much of the total estimated burden of the final rule will fall on applicable manufacturers and applicable GPOs. The agency estimated that the total cost of the reporting provisions will be approximately $269 million in the first year and $180 million annually thereafter. The agency cautioned, however, that those numbers are “rough estimates and subject to considerable uncertainty. Better estimates might well be 25 percent higher or lower.”
The so-called sunshine rule was issued as a proposed rule in December 2011 (6 MELR 5, 1/11/12), with comments due in February 2012 (6 MELR 154, 3/7/12). In May 2012, CMS said that it would not require any data collection until January 2013 and that a final rule Act would be issued later in 2012 (6 MELR 324, 5/16/12).
Sen. Chuck Grassley (R-Iowa) was one of the co-authors of the sunshine provision in the health care reform law, which came about after his investigative and oversight work into questionable financial relationships between drug companies and doctors. In a Feb. 1 statement, Grassley noted that the disclosures included in the law are in patients' best interests.
“Disclosure brings about accountability, and accountability will strengthen the credibility of medical research, the marketing of ideas and, ultimately, the practice of medicine. The lack of transparency regarding payments made by the pharmaceutical and medical device community to physicians has created a culture that this law should begin to change substantially,” Grassley said. “I will stay vigilant about how this law is implemented, especially after the delays seen already. The goal is straightforward, and CMS needs to make certain the reporting and disclosure are complete and clear.”
CMS in the final rule said transparency into payments made to physicians is necessary to avoid potential conflicts of interest.
“We recognize that collaboration among physicians, teaching hospitals, and industry manufacturers contributes to the design and delivery of life-saving drugs and devices and we received many comments supporting this statement. However … payments from manufacturers to physicians and teaching hospitals can also introduce conflicts of interest that may influence research, education, and clinical decision-making in ways that compromise clinical integrity and patient care, and may lead to increased health care costs,” CMS said.
CMS in the rule noted that “disclosure alone is not sufficient to differentiate beneficial financial relationships from those that create conflict of interests or are otherwise improper. Moreover, financial ties alone do not signify an inappropriate relationship. However, transparency will shed light on the nature and extent of relationships, and will hopefully discourage the development of inappropriate relationships and help prevent the increased and potentially unnecessary health care costs that can arise from such conflicts.”
According to CMS, both the Institute of Medicine and other experts, such as the Medicare Payment Advisory Commission, have noted that recent increases in both the amount and scope of industry involvement in medical research, education, and clinical practice have led to considerable scrutiny. The groups said that enhanced disclosure and transparency would discourage the inappropriate use of financial incentives and lessen the risk of such incentives interfering with medical judgment and patient care.
“You should know when your doctor has a financial relationship with the companies that manufacture or supply the medicines or medical devices you may need,” Peter Budetti, CMS deputy administrator for Program Integrity, said in a Feb. 1 statement. “Disclosure of these relationships allows patients to have more informed discussions with their doctors.”
According to CMS, the final rule requires that applicable manufacturers must report annually “all payments or transfers of value (including gifts, consulting fees, research activities, speaking fees, meals, and travel) from applicable manufacturers to covered recipients.”
Violators of the reporting requirements will be subject to civil monetary penalties (CMPs), capped annually at $150,000 for failure to report, and $1 million for knowing failure to report. CMS said that the HHS Office of Inspector General and CMS reserve the right to audit, evaluate, or inspect applicable manufacturers and applicable GPOs for their compliance with the reporting requirements.
In addition to reporting on payments, the applicable manufacturers and GPOs must report ownership and investment interests held by physicians (or the immediate family members of physicians) in such entities. However, the law does not require applicable manufacturers or applicable GPOs to report ownership or investment interests held by teaching hospitals.
Under the final rule, applicable manufacturers are required to report numerous types of payments to physicians and teaching hospitals, such as consulting fees, food and beverages, and research payments.
In certain instances, however, research payments made to a recipient by an applicable manufacturer under a product research or development agreement will be delayed from publication on the public website, CMS said. “Publication of a payment or other transfer of value will be delayed when made in connection with research on or development of a new drug, device, biological, or medical supply, or a new application of an existing drug, device, biological, or medical supply; or clinical investigations regarding a new drug, device, biological, or medical supply.”
The law requires CMS to provide covered recipients at least 45 days to review and dispute the information related to them that was submitted by applicable manufacturers and applicable GPOs. CMS will notify the covered recipients when the reported information is ready for review. The information on the website must be easily aggregated, downloaded and searchable, CMS said.
Any disputed transfer of value will be resolved directly between the covered recipient and the relevant applicable manufacturer or applicable GPO, CMS said. In response to public comments requesting additional time to resolve disputes initiated late in the 45-day period, the agency said it finalized a 15-day opportunity to resolve disputes before the information is published publicly, following the 45-day review and correction period.
In statements, stakeholder groups praised CMS for finally releasing the regulations. MITA and its member companies “have long supported the Sunshine Act and commend CMS for issuing the final regulations.”
The Advanced Medical Technology Association (AdvaMed) Feb. 1 said it was still reviewing the final rule, but Christopher White, general counsel and AdvaMed senior executive vice president, said the group was pleased CMS provided adequate time for companies to put in place the business systems necessary to ensure compliant reporting.
“AdvaMed supports appropriate disclosure of relationships between medical technology companies and physicians. Strong ethical standards are critical to ensuring appropriate collaboration between the medical device industry and physicians. Medical device companies are unique in that they must rely on physician experience and feedback to develop better treatments for patients,” White said. “Disclosure should be limited to information that is helpful to patients in their decision-making process, should be available in a meaningful and easily-understood format that provides the appropriate context for patient education, must not be unnecessarily burdensome, should not compromise proprietary information, and should preserve arrangements with physicians beneficial to patients and continued medical innovation.”
Blair Childs, senior vice president for public affairs at the Premier healthcare alliance, said the final rule brings “sunlight to an area where consumer confidence has been undermined by conflicts of interest. With these new requirements, patients will have the information so they can feel more confident that the treatments they receive are based on evidence-based care and their physicians' best judgment, rather than inappropriately influenced by financial relationships. We know that even small gifts can be associated with physicians' positive attitudes toward sales representatives, and can increase their rate of administering particular drugs or devices.”
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