Government News
 DOI: 10.1176/appi.pn.2013.7b25
Manufacturers to Begin Tracking Payments to Physicians for Sunshine Law
Psychiatric News
Volume 48 Number 14 page 1-1


Physicians will have 45 days to review manufacturer reports and an additional 15 days to dispute reports that they believe are erroneous.

Abstract Teaser

Important dates and deadlines are fast approaching for implementation of the Physician Payment Sunshine Act (PPSA).

The law, passed by Congress as part of the Affordable Care Act, is landmark legislation that seeks to enhance transparency of financial interactions between certain manufacturers and physicians and teaching hospitals.

The law requires applicable manufacturers of drugs, devices, biologicals, or medical supplies covered under Medicare, Medicaid, or the Children’s Health Insurance Programs (CHIP)—as well as applicable group purchasing organizations (GPOs)—to report annually to the secretary of the Department of Health and Human Services certain payments or other transfers of value made to physicians and teaching hospitals.

Applicable manufacturers and GPOs are subject to civil monetary penalties ranging from $1,000 to $1 million if they fail to comply with the reporting requirements of the statute.

Beginning August 1 and continuing for the rest of the year, manufacturers will be required to collect and track transfers of payment and ownership information. On March 31, 2014, manufacturers and GPOs must report the data to the Centers for Medicare and Medicaid Services (CMS) for 2013.

Beginning in August 2014, CMS must provide physicians with consolidated reports of all manufacturers’ and GPOs’ reports for the prior calendar year in which they are named. Physicians may access these reports through a Web site portal maintained by CMS and will have 45 days to review the report and, if necessary, initiate disputes with the applicable manufacturer or GPO.

If a challenged payment is not resolved within 15 days of initiating a dispute, CMS will publish the payment, flagging it as “disputed.” Failure to challenge an alleged mistaken payment within this time frame will result in CMS’s acceptance of the payment as accurate.

Beginning September 30, 2014, CMS will publish the reported data on its public Open Payments Web site at go.cms.gov/openpayments.


Here are some answers to important questions about the PPSA:

Who must submit reports?
Manufacturers of drugs, devices, biologicals, and other medical supplies covered under Medicare, Medicaid, or CHIP that operate in the United States. Manufacturers and GPOs must report ownership interests held by physicians and their close family members.

Who gets reported on?
“Covered recipients,” which CMS defines as physicians and teaching hospitals.

What payments or transfers of value trigger reporting?

  • Any direct payments or transfers of value to physicians and/or teaching hospitals of $10 or more.

  • Indirect payments or transfers of value that a third party indicates are intended to be passed through to a physician.

  • Indirect payments or transfers of value when manufacturers make a payment to a third party, such as a physician organization, and then require, instruct, or direct the payment or transfer of value to be a provided to a specific physician or intended generally for physicians (in the latter case without regard as to whether specific physicians are identified in advance).

What information must be reported?

  • For each payment or transfer of value, applicable manufacturers and/or applicable GPOs must report the covered recipient’s name and address; the covered recipient’s specialty, NPI, and state license and number; amount of payment; date of payment; form of payment; nature of payment; name of the drug, device, biological, or medical supply associated with payment; national drug code, if possible; as well as the context of each transaction.

  • For each ownership and investment interest, applicable manufacturers and/or applicable GPOs must report the covered recipient’s name, address, specialty, NPI, and state license and number; dollar amount, value, and terms of ownership or investment interest; whether payment is held by an immediate family member of the physician; any payments or other transfers of value made to the physician owner or investor.

  • For each payment related to research, applicable manufacturers and/or applicable GPOs must report the name of the institution receiving the payments and the principal investigators.

What is excluded from reporting?

  • Certified and accredited CME.

  • Buffet meals, snacks, soft drinks, or coffee generally available to all participants of large-scale events.

  • Product samples that are not intended for sale and are intended for patient use.

  • Educational materials that directly benefit patients or are intended for patient use (excludes textbooks).

  • In-kind items used for the provision of charity care.

  • A dividend or other profit distribution from, or ownership or investment interest in, a publicly traded security and mutual fund.

  • Discounts (including rebates).

  • A transfer of anything of value to a physician when the physician is a patient and not acting in his/her professional capacity as a physician.

  • The loan of a medical device for a short-term trial period, which does not exceed 90 days, to permit the evaluation of the covered device by the covered recipient.

  • Items or services provided under a contractual warranty, including the replacement of a covered device, where the terms of the warranty are set forth in the purchase or lease agreement for the covered device.

  • In the case of an applicable manufacturer who offers a self-insured plan, payments for the provision of health care to employees under the plan.

  • In the case of a physician who is a licensed nonmedical professional, a transfer of anything of value to the physician if the transfer is payment solely for the nonmedical professional services of such licensed nonmedical professional (for instance, payments to a physician who is licensed to practice law and is retained by the manufacturer to provide legal advice).

  • In the case of a covered recipient who is a physician, the transfer of anything of value to the covered recipient if the transfer is payment solely for the services of the physician with respect to a civil or criminal action or an administrative proceeding.

  • A transfer of anything for which the value is less than $10, unless the aggregate amount transferred to, requested by, or designated on behalf of the covered recipient by the manufacturer during the calendar year exceeds $100 (subject to increase each year using the consumer price index). ■

More information about the PPSA’s reporting requirements is posted on APA’s Web site at http://www.psychiatry.org/sunshineact. APA will continue to update this site as more information about complying with the PPSA becomes available. Also, APA will hold a webinar on this subject in the fall, with an opportunity to get your PPSA questions answered by APA’s deputy director for regulatory affairs and its general counsel. The date and time will be sent to APA members in the Psychiatric News Update. If you are not a subscriber, please send your name and e-mail address to cbrown@psych.org.

Avoid the Sunshine Act’s ‘Reportable Traps' 

Physicians need to be alert to scenarios that could trigger being mentioned in a manufacturer’s report when the Physician Payment Sunshine Act (PPSA) requires pharmaceutical and medical device manufacturers to report transfers of value or payments to physicians beginning August 1. Those reports will be submitted to the federal Centers for Medicare and Medicaid Services (CMS) and published on a public Web site. Here are some scenarios that may involve “reportable traps” for which physicians should be on the lookout.

  • Manufacturer advertising at state psychiatric or medical society meetings. Physicians should be wary of having their name on contracts with pharmaceutical or medical device manufacturers that advertise at their state psychiatric society or medical society. By signing such a contract after August 1, the physician risks having the transfer of value or payment made from the pharmaceutical company to the state society attributed to him or her.

  • Medical conferences outside U.S. territory. Physicians should not think they can evade being captured in pharmaceutical or medical device manufacturers’ reports by attending medical conferences held outside of U.S. territory. The PPSA requires reporting by manufacturers who are in “common ownership” with manufacturers who sell or distribute drugs or medical devices within the United States and its territories. So a subsidiary drug company operating in France and giving physicians transfers of value or payments at an international medical conference held in France could find their transfers to be “reportable” under the PPSA.

  • Nonaccredited or noncertified CME events. Physicians should be circumspect about attending nonaccredited or noncertified continuing medical education events. Any transfers of value or payments made by a pharmaceutical or medical device manufacturer to physicians at these events (including in the form of food or beverage) which exceeds $10 in value must be reported. (CMS did create an exemption for accredited and certified CME events, but it is not a blanket exemption. Even at such accredited and certified CME events, transfers of value or payments may be reportable if the CME fails to satisfy a three-prong “independence” test certifying that the manufacturer did not directly select or pay the accredited or certified CME speaker.)

  • “Readily identifiable” physicians. The PPSA includes a reporting exception for manufacturers that will allow them to provide conference recipients with buffet meals, coffee, or snacks at “large-scale events,” which are defined as events in which the attendees are not “readily identifiable” to the manufacturers. However, if a physician at a small conference in which he or she is identifiable accepts a drug manufacturer’s $25 buffet meal, the physician can expect to find his name listed in a report submitted to CMS detailing taking part in the manufacturer’s buffet meal. Moreover, CMS has not provided a threshold for determining whether an event is large or small. A rule of thumb is that if a physician is being asked to swipe a card at a conference to have access to a manufacturer’s meals, snacks, or trinkets, the manufacturer has probably decided it will be reporting this transfer of value to CMS.

  • Watch out for textbooks. Physicians should think twice before accepting a textbook from a manufacturer of pharmaceuticals or devices. While the PPSA allows manufacturers to share educational materials with physicians if such materials are provided for the benefit of the patient, the rule specifically excludes textbooks. In other words, any transfers of textbooks to physicians who are acting in their capacity as physicians, even if on behalf of the physician’s patients, must be reported by the drug or device manufacturer to CMS.

  • Grants or awards to psychiatric societies. If APA members or state district branch executives run a psychiatric society and receive grants or awards from pharmaceutical or device manufacturers, such grants will trigger reporting if the payments or transfers, whether direct or indirect to the physician recipients, are made at the direction, instruction, or requirement of the manufacturer.

  • Disclosure documents and identification numbers. As physicians prepare for the launch of PPSA reporting on August 1, they are cautioned to check any conflict-of-interest documents or disclosure documents they have signed. The content of these documents needs to be continuously monitored and kept consistent with what appears in manufacturers’ reports upon their initial submission to CMS in March 2014. Additionally, physicians should ensure CMS has a correct identification number on file, including their NPI and any numbers indicating their specialty. Manufacturers required to report under PPSA will be making use of these numbers as a means of identifying physicians who have received transfers of value or payments from them.

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