Reed Smith Client Alert

On February 1, 2013, the Centers for Medicare & Medicaid Services (CMS) of the Department of Health and Human Services (HHS) released the long-awaited Final Rule (Rule) to implement the “Sunshine” provisions of the Affordable Care Act of 2010 (ACA). These require that certain manufacturers of drugs, devices, biologicals, and medical supplies covered by Medicare, Medicaid and CHIP report annually to HHS identified payments or transfers of value they have made to physicians and teaching hospitals. In addition, the Sunshine provisions require manufacturers and certain group purchasing organizations (GPOs) to report to HHS information on physician ownership and investment interests.

The underlying purpose of the Sunshine provisions is to provide increased transparency on the scope and nature of financial and other relationships among manufacturers, physicians, and teaching hospitals, on the theory that such transparency will enable patients to make more informed treatment decisions – and assess possible conflicts of interest. In its 2011 proposed rule, CMS had requested comment on almost every aspect of the new requirements, and the Final Rule is lengthy and complex. It provides needed clarity on some troubling aspects of the proposal, but it leaves a number of questions unanswered. Whether the transparency reports that CMS eventually publishes on a publicly available website will prove enlightening or merely confusing – and potentially susceptible to inaccuracy and misinterpretation – remains to be seen. Of more concern is whether the new reporting mandates will have a chilling effect on the desire of physicians and teaching hospitals to continue to engage in research, educational efforts, and the like.

The Client Alert below will provide an overview and summary of the Rule, including the important issues below:

  1. When manufacturers need to begin collecting and reporting information to HHS;
  2. Which types of "applicable manufacturers" will have to file reports;
  3. How manufacturers are to identify the physicians and teaching hospitals (known as "covered recipients") that receive the reportable payments;
  4. Which general types/categories of payments and transfers of value to physicians and teaching hospitals will need to be reported, and which can be excluded;
  5. Special rules for research-related payments;
  6. When reporting can be delayed for payments involving confidential and proprietary research or product development;
  7. Which entities will need to report physician ownership and investment interests;
  8. How manufacturers, GPOs, physicians, teaching hospitals, and physician owners and investors should handle disputed information; and
  9. Penalties for nonreporting and inaccurate reporting.

Download the .PDF below to learn more!