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On May 4, 2012, the Centers for Medicare and Medicaid Services
("CMS") announced that it will not require applicable
manufacturers and group purchasing organizations ("GPOs")
to begin collecting data on relevant payments under the Physician
Payment Sunshine Act ("Act" or "Sunshine Act")
until January 1, 2013. Under the Sunshine Act, data
collection was set to begin January 1, 2012.
The Sunshine Act
The Sunshine Act is a provision of the 2010 Patient Protection
and Affordable Care Act that requires drug, medical device,
biological and medical supply manufacturers to track and report
payments made to physicians and teaching hospitals. The Act also
requires those manufacturers and GPOs to disclose any financial or
ownership interests that physicians or their immediate family
members have in with those entities.
In December 2011, CMS published proposed regulations under the
Sunshine Act for comment. During the 60-day comment period,
which ended this past February, CMS received over 300 comments and
recommendations from virtually all sectors of the healthcare
industry, including associations representing universities and
teaching hospitals, physicians, pharmaceutical and biotechnology
manufacturers, and companies involved in medical education.
National consumer advocacy, labor, senior and women's
organizations provided input as well.
Those commenting voiced concern that ambiguities in the proposed
regulations need to be clarified in order to serve the Act's
salutary goals and avoid undue administrative burdens.
Commenters also urged CMS to more clearly identify which
manufacturers were covered by the Act, provide greater guidance on
the reporting responsibilities of entities under common or joint
ownership and clarify the disclosure requirements for payments
covered by the Act. A controversial issue concerns the
reporting of payments made to physicians through third
parties. Some have urged CMS to implement a broad requirement
to report such payments while others have expressed concern that
the proposed rule should not require reporting payments where
manufacturers have no control over who receives them. Many
also stressed that the reporting requirements should avoid
deterring legitimate and valuable physician collaboration with
applicable manufacturers.
Delay in Data Collection and its Impact
In its recent announcement, CMS indicated that in order for it
to appropriately address the input received during the comment
period and to allow affected organizations sufficient time to
prepare for their reporting obligations, data collection for
applicable manufacturers and GPOs will not be required before
January 1, 2013. While it was expected that CMS would delay
data collection until mid- or late 2012 at the earliest, the
announcement of the 2013 date indicates that CMS recognizes the
complexity of this rulemaking. CMS also announced that that
it intends to release the final rule later this year.
CMS's delay in requiring data collection is a welcome
announcement to those affected by the Sunshine Act. Given the
impending disclosure requirements, affected companies should
continue to reevaluate internal corporate guidelines for the types
of payments or benefits that will soon be publicly reported.
In addition, companies should make sure they have in place
internal reporting systems that will capture all payments covered
by the Act. Failure to comply with the Act carries a
penalties ranging from $1,000 to $100,000 for each violation, up to
a maximum annual fine of $1 million for companies that knowingly
fail to comply.
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