Sunshine Act breaks through in final rule

The final rule for the Physician Payments Sunshine Act emerged on Feb. 1 after a lengthy delay.

Guidance on the Sunshine Act – an Affordable Care Act regulation requiring drug, device and biological companies, medical supply manufacturers and group purchasing organizations to publicly disclose their financial relationships with doctors and teaching hospitals – was originally supposed to be released in the fall of 2011 but it wasn’t released until December of 2011.

Last spring, the Centers for Medicare & Medicaid Services (CMS) delayed implementation of the act so it could fine-tune the final rule and give organizations more time to get ready for implementation.

In a statement released Feb. 1 announcing the final rule, CMS said that the increased transparency offered by the rule “is intended to help reduce the potential for conflicts of interest that physicians or teaching hospitals could face as a result of their relationships with manufacturers.”

CMS said that manufacturers and group purchasing organizations would have a chance to review and correct reported information prior to publication. Organizations must begin collecting the required data by Aug. 1 of this year and begin reporting it to CMS by March 31, 2014.

While the industries impacted most by the rule are still digesting it, early response has been cautiously positive.

There may be some grumbling about the cumbersome reporting requirements, said Lee Lasris, a health law attorney and founding partner of the Florida Health Law Center, but “[f]or the most part, people are okay with the rule such as it is.”

However, healthcare lawyers like Lasris recognize the final rule has some soft spots.

Lasris said he wasn’t convinced the civil money penalties will be enough of a disincentive to discourage circumventing the rules, and he doesn’t think CMS drilled down far enough.

“It doesn’t require the manufacturer to make inquiry of the representatives as to whether or not they have a financial relationship with the physicians,” he said. “With that, the manufacturer is allowed to simply not ask the question.”

Further, there are certain distributors along the chain of sale of a product who could have relationships with physicians but are excluded from disclosure if they don’t have title to the product. Lasris commented, “There’s a big loophole that you can drive a Mack truck through.”

While CMS fielded a lot of criticism and comments from the industry during the comment period, the department by and large “stuck to its guns” in the final rule said Thomas Crane, an attorney with Mintz Levin, who advises healthcare providers and manufacturers. However, the department did a lot of work to provide more clarity in the final rule, though it is still a lot for providers and manufacturers to digest.

CMS is giving the industry six months to put infrastructure in place and train people before they must begin collecting the required data, Crane said, but the 287-page rule has a lot of little things that people need to pay attention to and understand.

“People are going to make a lot of mistakes and along the way are going to have a lot of questions,” he said. “I would expect the first year is going to be a lot of learning.”

The Sunshine Act may be designed for the benefit of the patients, but the impacted businesses can derive business benefit from it, too, noted Randy Vogenberg, PhD, RPh, co-founder of healthcare market intelligence and strategy firm Bentelligence.

Companies can use their transparency as a marketing tool to differentiate themselves, he said, and as long as their products have demonstrated clinical and economic value in the marketplace, they shouldn’t suffer lost sales as a result of the rule.

Photo attributed to David R. Tribble via Creative Commons license.