Know, Prepare and Comply with the Sunshine Act Phase 2. John A. Murphy, III, Assistant General Counsel PhRMA August 26, 2014
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1 Know, Prepare and Comply with the Sunshine Act Phase 2 John A. Murphy, III, Assistant General Counsel PhRMA August 26, 2014
2 Sponsored by: HCIdea provides the most accurate Physician data (NPIs and State Licenses) to manufactures and GPOs to assist them in staying compliant with the Sunshine Act Learn more at hcidea.ncpdp.org RxReconn allows you to stay up-to-date on State and Federal legislation and regulation activity, such as the Sunshine Act, that impacts your organization Learn more at
3 Sunshine Act Background
4 Background Physician Payments Sunshine Act ( Sunshine Act ) enacted as part of Patient Protection and Affordable Care Act of 2010 Reflects ever-increasing trend toward requirements of greater transparency in industry-physician interactions Objective to provide public and government enforcement officials with more information regarding potential conflicts of interest that could affect treatment decisions
5 Sunshine Act Overview Applicable manufacturers and group purchasing organizations (GPOs) must report any payments or transfers of value made to covered recipients (i.e., physicians and teaching hospitals) CMS is responsible for implementation and administration of the National Physician Payment Transparency Program ( Open Payments Program ) Publication of first set of data expected in September 2014 APPLICABLE MANUFACTURER PAYMENTS MADE TO MUST BE REPORTED TO COVERED RECIPIENTS
6 What will be reported? Payments or transfers of value must be reported as falling into one of the following categories: Consulting fees Compensation for services other than consulting, including serving as faculty or speaker at event other than continuing education program Honoraria Gifts Entertainment Food and beverages Travel and lodging Education Research Charitable contributions Royalties or licenses Current or prospective ownership or investment interests Compensation for serving as faculty or as a speaker for an unaccredited and non-certified continuing education program Compensation for serving as faculty or as a speaker for an accredited or certified continuing education program Grants Space rental or facility fees (teaching hospital only)
7 What is exempt? The following categories of payments or transfers of value do NOT need to be reported: Any payment/transfer of value less than $10, BUT if cumulative greater than $100/year then reportable Accredited CME ACCME, AOA, AMA, AAFP or ADA CERP Product samples Educational materials for patients Buffet meals in conference setting Discounts (including rebates) In-kind items used for charity care Payments for employees in self-insured plan Payments/transfers of value to non-physicians (e.g., nurse) Transfer of anything of value to patients
8 Reporting Requirements for Accredited and Industry- Sponsored Continuing Medical Education Payments or transfers of value related to CME are not required to be reported if CME program: Is accredited i.e., meets accreditation or certificated requirements of ACCME, AOA, AMA, AAFP, or ADA CERP Applicable manufacturer does not select covered recipient speaker or does not provide third party vendor with distinct, identifiable set of individuals to be considered as speakers, and Applicable manufacturer does not directly pay covered recipient Payments or transfers of value related to CME are reportable if: Program is non-accredited Applicable manufacturer either selects covered recipient speaker or provides third party vendor with a distinct, identifiable set of individuals to be considered as speakers, or Applicable manufacturer directly pays the covered recipient speaker *Note: CMS has indicated that if applicable manufacturer that provides funding for CME even suggests speakers, this may constitute directing or targeting funding to those speakers
9 Reporting of Indirect Payments Indirect payments are payments or other transfers of value made by applicable manufacturer... to covered recipient... through third party, where applicable manufacturer... requires, instructs or directs, or otherwise causes third party to provide payment or transfer of value, in whole or in part, to covered recipient (42 C.F.R ) Reporting not required when (1) payment qualifies as indirect payment, and(2) applicable manufacturer is unaware of identity of covered recipient Manufacturer must have no actual knowledge of recipient s identity Manufacturer cannot act in deliberate ignorance or reckless disregard of recipient s identity Six months into next reporting year, manufacturer no longer has duty to identify potential covered recipients
10 Updates
11 Status of Sunshine Act Reporting for 2013 Data scheduled to made public on September 30 th Applicable manufacturers were required to submit detailed ( Phase Two ) data by June 30 th Due to technical glitches with the registration and data submission websites, deadline was effectively extended to July 7 th Time period for physician registration, review, and dispute resolution currently underway Manufacturers will have an additional 15 days for dispute resolution and re-submission of data to CMS Disputed data which is not resolved by the end of the 15-day period will be published on September 30 th, but marked as disputed
12 CMS Proposed Revision to CME Exemption CMS proposes to remove regulatory provision that provides CME exemption CMS rationales for change are: (i) exemption is redundant of separate provision that excludes reporting of indirect payments, and (ii) exemption for five accredited organizations amounted to endorsement of them, without regard to whether other organizations use same or similar accreditation standards PhRMA is evaluating proposed rule and potential comments
13 Letter to CMS Regarding Outstanding Issues PhRMA hosted roundtable with medical societies and others on June 3 rd to discuss issues of common concern related to Sunshine Act implementation Outcome was mutual interest in joint letter to CMS regarding three outstanding issues: Provision of educational context upon publication of Sunshine Act data Importance of continued outreach by CMS to physician community regarding nature of Sunshine Act reporting Undue burden of registration in CMS enterprise portal 26 Physician/Patient Groups Joined the Letter Goal is to send to CMS by week s end and raise public awareness of these issues in the coming weeks
14 Significant Reporting Changes On August 15 th CMS announced that roughly 1/3 of all reported data was being removed from the site CMS indicated this was due to reporting errors by manufacturers It remains unclear how this will impact the September 30 th report It remains equally unclear how this will impact physicians and other healthcare professionals
15 Questions?
16 Resources CMS website: Guidance/Legislation/National-Physician-Payment- Transparency-Program/index.html Partners for Healthy Dialogues: PhRMA Principles and Guidelines: If you have additional questions, please contact John Murphy at
17 Who will report data? Applicable manufacturers that operate in U.S. (physical location or conduct activities in U.S.) and either: (1) produce, prepare, propagate, compound, or convert at least one covered product, or (2) operate under common ownership with applicable manufacturer and provide assistance or support to applicable manufacturer in manufacturing, marketing, promotion, sale or distribution of covered product Covered Product includes any drug, device, biological or medical supply that is eligible for payment by Medicare, Medicaid, or CHIP either individually or as part of bundled payment and requires prescription to be dispensed (drugs and biologics) or requires premarket approval by, or premarket notification to FDA (devices)
18 Audits and Penalties RECORDS AND AUDITS Applicable manufacturers advised to keep all records of payments/transfers of value for at least five years following publication on Open Payments website Applicable manufacturer may be audited for compliance with requirement to submit timely, accurate and complete data PENALTIES Civil monetary penalties (CMPs) may be imposed for failure to report information in timely, accurate or complete matter Failure to report each payment or other transfer of value, or ownership/investment interest in timely, accurate and complete manner may result in CMPs of at least $1,000, but no more than $10,000, with an annual max of $150,000 Knowing failure to report each payment or other transfer of value/ownership/investment interest may result in CMPs of at least $10,000 but no more than $100,000 with annual maximum of $1 million Total combined maximum annual penalty per reporting entity: $1.15 million Additional penalties potentially applicable under other laws
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