CMS recently issued an FAQ clarifying one of the most puzzling questions regarding implementation of the Sunshine Act reporting requirements: whether manufacturers must report transfers of value ("TOVs") to non-physician employees of teaching hospitals. CMS's answer is that "[n]on-physician employees of a teaching hospital and non-physician employees of a physician-owned practice or other physician-owned entity are not covered recipients for the purposes of [the Sunshine Act regulations]. Accordingly, payments or other transfers of value made to these non-physician employees generally do not need to be reported." However, CMS added, the TOV would be reportable if the employer requested that the manufacturer make the TOV to the employee, or if the manufacturer designated that the TOV was made on behalf of the employer. In addition, CMS added that if the manufacturer makes a TOV to a non-physician employee, requiring, instructing or directing that it be passed on to the employer, then there would be a reportable indirect transfer of value.
The CMS FAQ is consistent with a May 14, 2013 email that I received in response to a question that I submitted at openpayments.com. CMS's email to me stated in relevant part:
A payment or other transfer of value provided by an applicable manufacturer to a third party, either an entity or individual, must be reported in the name of the covered recipient if the covered recipient requested that the payment or transfer of value be provided to the third party or if the payment or transfer of value was provided to the third party on the covered recipient's behalf. Therefore, if a teaching hospital or physician requested or designated that a payment or other transfer of value from an applicable manufacturer be provided to a non-physician employee, then the payment or other transfer of value must be reported in the name of the teaching hospital or physician. Conversely, if an applicable manufacturer provides a payment to a non-physician employee of a teaching hospital or physician practice without being asked to do so by a covered recipient and without designating it on behalf of a covered recipient, then such payment would not have to be reported. Note that a payment or transfer of value to a third party would need to be reported if the applicable manufacturer provided it to the third party to pass along as an indirect payment to a covered recipient (and the applicable manufacturer was aware of the identity of the covered recipient).
This guidance clarifies significantly the scope of the Sunshine Act regulations. Many manufacturers had been concerned that all TOVs to teaching hospital employees were reportable. The CMS guidance clarifies that only such TOVs are reportable only if they were made at the request of the teaching hospital itself, or made on behalf of the teaching hospital, or made with the intent that the TOV be passed along to the teaching hospital.
Entities that are subject to Sunshine Act reporting requirements should familiarize themselves with the CMS FAQs, which address many practical implementation issues raised by the final regulations. This FAQ, for instance, may substantially affect a company's data collection and reporting activities.
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