CMS proposes sunshine rules on industry payments, gifts to doctors

Drug companies and medical equipment manufacturers would be required to detail their financial relationships with physicians starting in 2013.

By Charles Fiegl — Posted Dec. 26, 2011

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Drug and device manufacturers would be required to disclose payments and gifts they give to physicians beginning in 2013, according to proposed federal rules released Dec. 14.

The Centers for Medicare & Medicaid Services published draft regulations outlining how companies would disclose financial relationships with physicians. The so-called sunshine rules, called for by the health system reform law, would ensure the transparency of transfers of money and gifts to physicians and discourage potential outside influence on clinical decision-making, said Peter Budetti, MD, CMS deputy administrator for program integrity.

"When people are faced with the difficult task of choosing the right doctor, they need all the information they can gather," Dr. Budetti said.

The proposed rule would require pharmaceutical, medical device and biologic industries to publicize these relationships online. CMS anticipates that data collection would begin in 2012, with partial reports becoming available in September 2013.

CMS officials expect the rule will be finalized next year. Comments on the proposals will be accepted until Feb. 17.

The American Medical Association supports financial disclosure registries that provide accurate, transparent information, said AMA President Peter W. Carmel, MD. "To meet the expectation that patients will receive only accurate information, the final regulation must include an adequate process for physicians to review, challenge and appeal incorrect reporting prior to public disclosure."

The proposed rule states that CMS would notify physicians and teaching hospitals that a review, appeal and correction process exists. However, the Medicare agency would leave the resolution of an appeal to the drug company or manufacturer during a process that will span 45 days. Unresolved disputes would be noted next to the public disclosure, and the information would include both the disputed amount of financial support and the amount that the physician claims is accurate, CMS said.

Small payments or gifts of $10 or less would not need to be reported unless the total annual amount exceeds $100, according to the proposed rule. For instance, if a manufacturer takes a physician out for a $9 lunch four times during a year, the total would not need to be reported, CMS said.

However, if the manufacturer also pays the doctor a speaker fee of $150 and gives pens worth $5, the speaker fee would be reported as "direct compensation for serving as faculty or as a speaker for a medical education" program, and the value of the food and pens also would be detailed.

Gifts to immediate family members also would need to be disclosed.

The Health and Human Services Office of Inspector General and CMS would audit public disclosures periodically. The proposed rule would require entities to keep records of financial arrangements for five years after the publication of the data.

CMS expects that 150 drug and biologic companies, 1,000 device and medical supply manufacturers, and 420 group purchasing organizations would be required to submit information to the agency annually.

The Healthcare Supply Chain Assn. welcomed the release of the proposed rule. "Transparency and openness throughout the health care supply chain help give hospitals and patients confidence that decisions about patient care are based on science and evidence-based sourcing, and that physicians have not been unduly influenced by medical device and pharmaceutical manufacturer marketing, financial incentives or other potential conflicts of interest," said Curtis Rooney, the association's president.

Models of financial disclosure websites already exist. The investigative news organization ProPublica, for instance, has a searchable database showing companies' payments to physicians and other health professionals. The "Dollars for Docs" site contains information from 12 companies.

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Drug and device makers face big fines for nondisclosure

The Centers for Medicare & Medicaid Services would penalize drug and device manufacturers if they failed to disclose financial relationships they have with physicians. According to a CMS proposed "sunshine" rule, these penalties would be:

  • At least $1,000, but no more than $10,000, for each unwitting failure to submit required information. These penalties are capped at $150,000.
  • From $10,000 to $100,000 for a "knowing" failure to submit required information. These penalties are capped at $1 million.

Source: CMS proposals to implement certain disclosure provisions of the Affordable Care Act, Centers for Medicare & Medicaid Services, Dec. 14 (link)

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External links

ProPublica on how industry money reaches physicians (link)

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