United States: US Department Of Health And Human Services Issues Final "Sunshine" Rule Imposing Reporting Requirements On Payments To Physicians And Teaching Hospitals

Keywords: Sunshine rule, reporting requirements, payments, teaching hospitals, group purchasing organizations, GPOs

The Centers for Medicare & Medicaid Services (CMS) has announced a final rule that will implement section 1128G of the Social Security Act, as added by section 6002 of the Affordable Care Act. The new rule will impose reporting requirements on manufacturers of drugs, devices, and biological or medical supplies, as well as on group purchasing organizations (GPOs) concerning certain financial dealings with physicians and teaching hospitals. Organizations must begin collecting data for the new reports on August 1, 2013.

Two Forms of Annual Reporting

Under the new rule, applicable manufacturers must report annually to the Health and Human Services (HHS) Secretary all payments or other transfers of value given to physicians or teaching hospitals. In addition, applicable manufacturers and applicable GPOs must report ownership and investment interests held by physicians or their immediate family members.

Only Manufacturers and GPOs Must Report; Physicians and Teaching Hospitals Should Monitor Submissions

The new rule will apply to manufacturers of drugs, devices and biological and medical supplies that are covered by Medicare, Medicaid, or CHIP. The requirements apply only to manufacturers operating in the United States: that have a physical location in the United States (including territories, possessions, or commonwealths) or that otherwise conduct activities within the United States, either directly or through an agent.

Distributors and wholesalers are excluded from the requirement, so long as they do not hold title to any covered drug, device, or biological or medical supply. However, an entity that is under common ownership with an applicable manufacturer, and that provides services relating to the covered items, will be required to make reports.

Similarly, GPOs are subject to the rule if they operate in the United States and purchase or otherwise arrange for or negotiate the purchase of a covered drug, device, or biological or medical supply for a group of individuals or entities. If the purchase is solely for use by the entity, the reporting requirement is not triggered.

Physicians and teaching hospitals are not required to make the reports, but they should remain attentive to the new process in order to ensure the accuracy of any reports relating to them. Physicians and hospitals should consider registering with CMS in order to receive notification when new reports are available for review.

Form of Reports

Manufacturers will be required to report all payments or other transfers of value that they give to physicians or teaching hospitals, including consulting fees, compensations for services other than consulting, honoraria, gifts, entertainment, food and beverage, travel and lodging, education, research, charitable contributions, royalties or licenses, current or prospective investment or ownership interests, faculty or speaker compensation, grants, and space rentals. Third-party payments must be included in the reports as well. For example, a manufacturer must report a payment by a third party to a physician if that payment was made at the manufacturer's behest. Similarly, manufacturers must report a payment that was made to a third-party recipient at the request of, or on behalf of, a physician.

Payments under $10 are excluded from reporting, unless the aggregate transfer to a given recipient exceeds $100 in a calendar year. (This de minimus exclusion will increase with inflation in future years.) The rule also excludes a variety of other defined transfers, including samples and demonstratives intended for patient use only, in-kind items used for the provision of charity care, payments to employees and their families for healthcare expenses, and dividends or profits from ownership interests. Along with identifying information such as the date and recipient, the report must include the amount, form, and nature of the payment or transfer and must identify the covered drug, device or biological or medical supply to which it relates, if applicable. In addition, CMS' final rule accedes to public comment that had requested that manufacturers and GPOs be allowed to submit brief explanations of the context of the physician and hospital payments. In many cases, it may be to a manufacturer's benefit to include this additional information. These context explanations will be included in the public posting.

The ownership and investment interests reports will provide identifying information concerning the physician or family member, as well as the dollar amounts invested and the value and terms of the ownership or investment interests. "Ownership or investment interests" encompasses both direct and indirect interests, including stock and stock options, partnership shares, limited liability company membership, and loans, bonds, or other secured financial instruments. Interests in a publicly traded security or mutual fund are excluded, as are certain other defined interests, including those interests about which the manufacturer or GPO did not know.

Each report must be accompanied by an attestation from the Chief Executive Officer, Chief Financial Officer, Chief Compliance Officer, or other officer that the information reported is timely, accurate, and complete to the best of his or her knowledge or belief. An organization may also submit an "assumptions" document, explaining the reasonable assumptions made and methodologies used when creating the report. Assumptions documents will not be made public, but may be used by CMS to refine the reporting system.

Information Will Be Publicly Posted

The data collected from manufacturers and GPOs will be shared with the public via website posting in a format designed to facilitate aggregation, downloading, and searching. The rule allows for delayed posting of certain payments made in connection with research and development activities—including clinical trials—that may warrant confidential treatment. Before the information is released to the public, physicians, hospitals, manufacturers, and GPOs will be afforded at least 45 days to dispute and correct the reported information. CMS will make online postings when the information is available for review. Physicians and teaching hospitals may also register with CMS to receive notification about the review process.

Data Collection Commences August 1, 2013; Reports Follow on March 31, 2014

Covered manufacturers and GPOs must begin collecting data relating to their physician payments and physician ownership/investment interests on August 1, 2013. The data for the initial August-December 2013 time period must be reported to HHS by March 31, 2014. CMS intends to release this first data set by September 30, 2014.

Thereafter, reporting will continue on an annual basis. Entities must register with CMS and make their reports within 90 days of the end of the calendar year for which the report is required.

Audit Authority and Penalties For Failure To Report

Pursuant to the Affordable Care Act, companies that fail to report under these new requirements will be subject to civil fines of between $1,000 and $10,000 for each payment, transfer of value, or ownership or investment interest not timely and accurately reported, with the annual total penalty capped at $150,000 for each manufacturer or GPO. For knowing failure to report, the penalty increases to $10,000-$100,000 per instance, capped at $1 million annually.

Applicable manufacturers and GPOs are subject to audit or inspection by the HHS Office of Inspector General and the CMS. To facilitate the inspections, manufacturers and GPOs will now be required to maintain relevant records and documents for at least five years.

State Law Preempted

Pursuant to the Affordable Care Act, no state or local government may require separate reporting of the information required by the new rule, unless the information is being collected by a governmental agency for public health surveillance, investigation, or other public health or oversight purposes.

Originally published on February 13, 2013

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2013. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.