The Physician Payments Sunshine Act

Will this legislation impede collaboration between physicians and industry?
With William L. Rich III, MD

 

In December 2011, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule implementing the Physician Payments Sunshine Act, a provision (Section 6002) of the Patient Protection and Affordable Care Act. Authored by Senators Charles Grassley (R-IA) and Herb Kohl (D-WI), this legislation mandates that any drug, device, biologic, or medical equipment manufacturer operating in the United States must report annually certain payments or other transfers of value to physicians and teaching hospitals.

The Physician Payments Sunshine Act requires disclosure of payments for consulting fees, compensation for services other than consulting, honoraria, gifts, entertainment, food and beverage, travel, education, research, charitable contribution, royalties or licenses, faculty or speaking fees, and grants. Medical companies and group purchasing organizations will also be required to report stock ownership and investments held by doctors. Small payments, which the statute defines as values under $10, do not have to be reported unless the total annual amount of payments or other transfers of value provided to a physician exceeds $100.

Manufacturers will be required to submit their physician payment reports to the US Department of Health and Human Services, which will make them publicly available on a searchable database. Although collaboration among physicians and industry manufacturers is essential to medical advancement, there have been situations in the past in which clinical decision-making and patient care was compromised by these relationships. Thus, as noted in the proposed rule, the intent of the Physician Payments Sunshine Act is to make these financial relationships transparent in an effort to prevent such abuses from occurring.

“We recognize that disclosure alone is not sufficient to differentiate beneficial, legitimate financial relationships from those that create conflict of interests or are otherwise improper,” the proposed rule states. “Moreover, financial ties alone do not signify an inappropriate relationship. However, transparency can shed light on the nature and extent of relationships, and may dissuade inappropriate conflicts of interest from developing.”

The penalties for noncompliance are severe. Companies that violate the reporting requirement could potentially be fined up to $150 000 for failing to report money and gifts given to physicians and up to $1 million for deliberately failing to report transfers of value.

Initially, CMS was due to start collecting data from industry on January 1, 2012. However, on May 3, 2012, CMS announced on its blog1 that the implementation of this provision would be delayed until 2013. According to CMS, the additional time will allow the organization to address operational and implementation issues and ensure the accuracy of the data collected.

“CMS is committed to addressing the valuable input received during the comment period and to ensuring the accuracy of the data collected,” the blog said. “In order to provide time for organizations to prepare for data submission and to sufficiently address the important input we received during the rulemaking process, CMS will not require data collection by applicable manufacturers and applicable group purchasing organizations before January 1, 2013.” According to the blog, CMS intends to release the final rule later this year.

To better understand this new legislation, Retina Today spoke with William L. Rich III, MD, the Medical Director of Health Policy for the American Academy of Ophthalmology, who described its goals, its practicality, and its potential effect on physician-industry relationships.

Retina Today: What is the primary goal of the Physician Payments Sunshine Act?

William L. Rich III, MD: The main goal of this legislation is apparent: to make the relationships among physicians and other providers of care and industry transparent to the public. That is the intent. By “sunshine,” CMS means “Let’s shed light on the nature of these relationships and ensure that when a physician delivers a talk or makes a recommendation, the public truly understands his or her relationship with the subject.”

In the past, abuses have occurred in which physicians’ judgments were unduly affected by their commercial interests. There have been scandals involving physicians performing joint replacements, cardiac catheterizations, etc., where there was no transparency. If the public knew that a surgeon or a cardiologist was using a device only because he or she had received a big consulting contract, that might influence a patient’s choice of physician. The intent of the Physician Payments Sunshine Act is quite laudable, and I do not think the vast majority of physicians have any objections to its goal. Although transparency is an overused term, it is applicable to the objective of this regulation.

RT: Will this legislation affect physician-industry relationships, and if so, could future innovation be hindered?

Dr. Rich: I do not believe the Physician Payments Sunshine Act will harm the relationships among industry and physicians. As a physician, I see no problem with members of the industry, by law, having to report anything of value that they have provided to me that could influence my choice of drug or device; in general, I do not think most physicians object to that being public knowledge. Perhaps some physicians who are consultants may not enjoy disclosing the fact that if they use a particular device or drug they receive a hefty consulting agreement for talking about the drug in meetings, but it is not necessarily bad that these individuals may get upset. If physicians are doing real work and are doing something worthwhile, no one is going to be ashamed of having that publicly known. This law should not negatively affect the relationships of people who are trying to do the right thing. If a physician does not want people to know of his or her relationship with the manufacturer of a drug of device he or she routinely uses, well, that is what the law is intended to make public.

Will this law have an effect on innovation? No. Why should it? The health care industry in the United States represents 16% of the country’s gross domestic product. Health care manufacturers are not going to suddenly start making hula-hoops rather than drugs and devices simply as a result of this legislation.

RT: Will the law’s effect on ophthalmology differ from its effect on other specialties?

Dr. Rich: The principles of the legislation are the same whether you are an ophthalmologist, an orthopedic surgeon, a cardiologist, a family doctor, or a psychiatrist. Our specialty is no different from any other as far as the effect of the Physician Payments Sunshine Act.

RT: The act applies to physicians and teaching hospitals but not to nurses, physician assistants, or other medical professionals. Is that a loophole in the legislation?

Dr. Rich: Physician assistants can be paid directly by Medicare, so I have some concerns with this aspect of the Physician Payments Sunshine Act. For this law, I believe that the definition of physician should include any individual who provides a service that has a financial relationship. At face value, the exclusion of nurses and physician assistants does not seem logical, although this legislation is incredibly complex.

RT: What can physicians expect once the final rule is published?

Dr. Rich: The final rule has been delayed until 2013 because this law is very complicated. Some congressmen and senators are frustrated by the delay, and some members of industry are frustrated as well, as they have already begun collecting this data and now CMS is not yet accepting their work. Because the Physician Payments Sunshine Act is such a complex rule, however, it is likely that CMS needs the additional time to make the rule clearer.

Once the law is enacted, physicians can expect to see some data published that may surprise them. There may be money spent on them that they are not even aware of: say, for lunches. Physicians may not consider a meal an inducement or something bad, and they may be upset when that it is publicly available on a website, and patients can look at it see that they received $2000 from industry for meals. I think that societies are going to try to educate their physicians on what is going to be included in this regulation, and, frankly, it may cause them to rethink some of their actions. Even before this rule was proposed, my group did not accept any industry-sponsored meals because we recognized that would be added up. In turn, the act may change physicians’ behavior, and it may alter some of their relations with industry, but I do not think that is going to be to the detriment to either party. Industry will save some money in marketing budgets. Overall, this is a very complex rule, and, although the intent is good, the complexity and questions raised have led to its delay.

William L. Rich III, MD is the Medical Director of Health Policy for the American Academy Ophthalmology. He is the Senior Partner at Northern Virginia Ophthalmology Associates in Falls Church, VA. He can be reached via email at hyasxa@gmail.com.

  1. Information on implementation of the Physician Payments Sunshine Act. The CMS Blog. May 3, 2012. http:// blog.cms.gov/2012/05/03/information-on-implementation-of-the-physician-payments-sunshine-act/. Accessed June 6, 2012.
 

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About Retina Today

Retina Today is a publication that delivers the latest research and clinical developments from areas such as medical retina, retinal surgery, vitreous, diabetes, retinal imaging, posterior segment oncology and ocular trauma. Each issue provides insight from well-respected specialists on cutting-edge therapies and surgical techniques that are currently in use and on the horizon.