The deadline is looming for the first reporting period under the Sunshine Act. Beginning on August 1, 2013, pharmaceutical, biologic and medical device manufacturers must collect data relating to physician ownership interests in the manufacturer and all “transfers of value” made to physicians and teaching hospitals.

Background

The Sunshine Act, part of the Affordable Care Act, requires certain manufacturers to disclose payments and other “transfers of value” made to physicians and teaching hospitals and certain ownership and investment interests held in the manufacturer by physicians. “Transfer of value” is defined broadly and includes cash or cash equivalents, in-kind items or services, stock ownership, returns on investment, consulting fees, royalty or license payments, charitable contributions, gifts, certain payments related to research, and reimbursement of certain expenses. A wide variety of arrangements are covered including research sponsorship, continuing medical education seminars, compensation arrangements, education materials, and manufacturer-sponsored social events.

Initial Reports

Manufacturers must submit the first reports, covering the period between August 1, 2013 and December 31, 2103, to the Centers for Medicare & Medicaid Services (CMS) by March 31, 2014. The reports will be made public on a CMS website on September 30, 2014. As a result, descriptions of many of the relationships that physicians and teaching hospitals have with manufacturers will be publicly available at the end of next year—both to patients and to government enforcement agencies, including the Office of Inspector General.

What Should Physicians and Teaching Hospitals Be Doing Now?

Physicians and teaching hospitals will have a chance to review and dispute the information provided by the manufacturers to CMS but the window for review before the information is made public is short. What should you be doing now?

  • Physicians and teaching hospitals should identify the arrangements they have with manufacturers and be prepared to dispute any inaccurate reports.
  • Physicians and teaching hospitals should also evaluate their financial arrangements with manufacturers. Some arrangements may require modification or even termination because they do not comply with anti-kickback or other health care laws.
  • Teaching hospitals and practices that employ physicians should review their policies regarding conflicts of interest and employee receipt of compensation from outside activities. Some of the manufacturer-physician financial arrangements reported on the CMS website may violate the employer’s policies. Now is a good time for employers to plan their response.

CMS has issued regulations under the Sunshine Act and published FAQs addressing specific fact situations; however, there are a number of gaps in the rules and concerns about the accuracy of the data. It is important that physicians and teaching hospitals independently review the relationships they have with manufacturers to assess the implications of the information being made public, not only from a compliance standpoint but also for any impact on research activities conducted by the provider.