What Rheumatologists Need to Know About the Physician Payment Sunshine Act

Steven M. Harris, Esq.

In February 2013, the Centers for Medicare and Medicaid Services (CMS) issued the long-awaited Physician Payment Sunshine Act (PPSA) final rule. The PPSA, which was passed as part of the Affordable Care Act in 2010, mandates transparency within physician–industry relationships—namely, the disclosure of physician ownership and investments in healthcare manufacturers and group purchasing organizations (GPOs). Applicable industry manufacturers and GPOs are required to report certain financial relationships with physicians, their immediate family members, and teaching hospitals. These reports are required to be submitted electronically to CMS on an annual basis, with the first report due on March 31, 2014. CMS will post the reported information on a searchable webpage, which will be publicly available.

Who Needs to Report?

Physicians are not required to report their relationships with industry. However, “applicable manufacturers” and “applicable group practice organizations” are required to report financial relationships with physicians and their family members and teaching hospitals. In general, any entity that operates in the United States that is engaged in the production, preparation, compounding, propagation, or conversion of a drug, device, biological, or medical supply available under Medicare or Medicaid has a reporting requirement. Entities under common ownership (direct or indirect ownership of at least 5% by the same person or entity) with a manufacturer and providing “necessary or integral” assistance or support to the manufacturer relating to the product are also covered as manufacturers and have a reporting requirement. The GPO reporting requirements apply to any entity that operates in the United States that purchases, arranges for, or negotiates the purchase of a covered drug, device, biologic, or medical supply for a group of parties, and not solely for itself.

A covered drug, device, biologic, or medical supply is one that requires a prescription to be dispensed or for which the Food and Drug Administration requires premarket approval or notification, and is eligible for payment by Medicare, Medicaid, or Children’s Health Insurance Program.

What Is Reported?

Manufacturers will be required to annually report direct and indirect payments or other transfers of value to physicians (other than the manufacturer’s bona fide employees) and teaching hospitals. Manufacturers will also need to report any payments or transfers that are made to third parties at the request of or on behalf of a physician or teaching hospital.

In addition, manufacturers and GPOs must report all ownership and investment interests held by physicians or immediate family members of physicians. Required information includes investment amounts, the value and terms of each ownership or investment interest, payments to each physician, and background information regarding each physician investor or owner.