OMB posts receipt of CMS proposed physician “sunshine” rule

On November 17, 2011, the White House Office of Management and Budget (the OMB) posted receipt of a CMS proposed rule titled “Transparency Reports and Reporting of Physician Ownership of Investment Interests (CMS-5060-P).”  This is believed to be the so-called physician “sunshine” regulation required by Section 6002 of the Patient Protection and Affordable Care Act (PPACA).  Under section 6002, CMS was required to establish by October 1, 2011 procedures regarding how manufacturers of Medicare covered pharmaceuticals, biologics and medical devices and group purchasing organizations will submit to the Department of Health and Human Services for public display information on such manufacturers’ payments or other transfers of value to physicians and teaching hospitals and on physician ownership, and how such information will be made available to the public.

As part of its review, OMB must consider the proposal’s likely economic impact on industry and the government.  Upon OMB approval, the proposed regulation would return to CMS for final approvals and publication in the Federal Register.  Until that time, the proposed regulation may be amended or withdrawn at any time.  Thus, although the fact that OMB has received the proposed rule is a meaningful development, it does not indicate that a proposed regulation is imminently forthcoming.  Rather, because the rule is in proposed form, it is likely that the regulation is moving through the full proposed rulemaking process, in which case, it is unlikely that any final regulations would be released before Summer 2012.  Additionally, the fact that OMB has confirmed that the rulemaking is “economically significant,” likely indicates that there will be further back and forth between CMS and OMB on the projected economic impact of the regulations, which could lead to further delays.

Section 6002 mandates that manufacturers and group purchasing organizations begin collecting the required information on January 1, 2012, and begin reporting the information on March 31, 2013.  Despite the lack of regulations or other procedures required by section 6002 of PPACA, the January 1, 2012 implementation date has not yet been delayed.  A delay of the implementation date would require either legislative action to amend the statute or some formal announcement by CMS that it is delaying implementation and enforcement pending the publication of a final regulation.  Leading industry trade associations, PhRMA and AdvaMed, have requested an implementation delay until at least 90 days following the publication of final regulations, but there has not yet been an official response.  Unless and until there is either formal legislative or agency action, the January 1, 2012 implementation date remains in effect.