On July 29, 2019, the Centers for Medicare and Medicaid Services (CMS) released the Medicare CY 2020 Physician Fee Schedule proposed rule (the Proposed Rule), including proposed changes to regulations implementing the Physician Payments Sunshine Act (also called the Open Payments Law), which was enacted as part of the Affordable Care Act.

If finalized as drafted, the Proposed Rule will: (i) expand the categories of professionals who qualify as covered recipients under the Open Payments Law; (ii) consolidate reporting for continuing medical education (CME) payments into one category; (iii) create specific categories for reporting of debt forgiveness, long-term product evaluations/loans and acquisition-related payments; and (iv) require medical device manufacturers to include, if applicable, the “device identifier” portion of the “unique device identifier” in each disclosure for devices relating to payments or transfers of value.

The Proposed Rule also clarifies that National Drug Codes (NDC) must be reported for drugs and biologics relating to payments or transfers of value, regardless of whether such payments or transfers are made in the context of research.

1. Expanding the Definition of “Covered Recipient” to Align With the SUPPORT Act

Section 6111 of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (the SUPPORT Act) expanded the definition of a “covered recipient” under the Open Payments Law to include a number of non-physician healthcare professionals for the purposes of reporting payments or other transfers of value required to be submitted on or after Jan. 1, 2022 (i.e., for payments and transfers of value made on or after Jan. 1, 2021). See Pub. L. No. 115-271, § 6111(a)(1), (b); 42 U.S.C. § 1320a–7h(e)(6).

Under the Proposed Rule, manufacturers and group purchasing organizations must track and report payments or transfers of value to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and certified nurse midwives in addition to payments or transfers of value to covered physicians and teaching hospitals.

2. Combining Existing Continuing Medical Education Reporting Categories

The Open Payments Law requires each report disclosing a payment or transfer of value to categorize the nature of the payment or transfer of value. See 42 U.S.C. § 1320a-7h(a)(1)(A)(vi); 42 C.F.R. § 403.904(e). In the Proposed Rule, CMS consolidated the two reporting categories for “accredited/certified continuing education programs” and “unaccredited/non-certified continuing education programs” into a single reporting category.

3. Adopting New Payment Reporting Categories

In the Proposed Rule, CMS adopted the following new reporting categories:

Debt forgiveness. This new category would cover transfers of value related to forgiving a debt owed by a covered recipient, a physician owner of such a recipient or the immediate family of such a physician. CMS already requires disclosing entities to disclose debt forgiveness, but did not previously establish a specific category for debt forgiveness. See CMS Open Payments Frequently Asked Questions, FAQ #8962.

Long-Term Medical Supply or Device Loan. This new category would cover the loan of a covered device or the provision of a limited quantity of medical supplies for longer than 90 days. Under the Open Payments Law, applicable manufacturers are not required to report the loan of a covered device for a short-term trial period, not to exceed 90 days, or the provision of a limited quantity of medical supplies, not to exceed 90 days of average daily use, to permit evaluation of the device or supply by the covered recipient. See 42 U.S.C. § 1320a-7h(e)(10)(B)(iv); 42 C.F.R. § 403.904(h)(5).

Acquisitions. This new category would cover payments to a covered recipient in exchange for an ownership interest in a company owned by the covered recipient.

4. Required Reporting of Device Identifiers and Clarification on Reporting National Drug Codes

If a payment or transfer of value relates to a medical device, the Proposed Rule requires the related report to include the device identifier portion of the device’s unique device identifier, if any.

The implementing regulations to the Open Payments Law currently require reporting entities, when reporting research-related payments, to report the NDC for drugs or biologics relating to the payment or transfer of value. See 42 C.F.R. § 403.904(f)(1)(iv). The Proposed Rule clarifies that NDCs are required for all payments or transfers of value that relate to drugs and biologics, not just research-related payments, as the CY 2015 Physician Fee Schedule Final Rule erroneously deleted this requirement.

Important Dates

If CMS finalizes the Proposed Rule as written, it will be effective for transfers made on or after Jan. 1, 2021. The Proposed Rule also clarifies that the obligation to include NDCs for both research- and non-research-related payments and transfers of value will take effect 60 days after publication of the final rule.