CMS Issues Rules On Physician Payments Sunshine Act


sunshinePeople like to think they have it the hardest in life.  I call it the competition among victims.   If you are in the healthcare industry and fall under the Physician Payments regulations, then I think you are on your way to premier victim status.

Last month, the Centers for Medicare and Medicaid Services (“CMS”) released the regulations implementing the federal Physician Payments Sunshine Act (the Sunshine Act). These regulations require manufacturers (and their affiliated distributors) of Medicare or Medicaid covered pharmaceuticals, biologics and medical devices to annually report to CMS their payments and other transfers of value to physicians and teaching hospitals.

The purpose of the law is to deter kickbacks and other improper financial relationships between physicians and health care providers.  By shining light on these financial relationships, the government is hoping to unearth improper payments and deter manufacturers and doctors.

The initial reporting period will be for August 1, 2013 to December 31, 2013, and then yearly after that.

The law is aimed at direct or indirect payments or other transfers of anything of value to physicians.imagesCA1YFH0V

The disclosure requirement applies to any manufacturer having a presence in the United States through manufacturing, distribution (even through contracted agents) which is engaged in “production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply.”

A covered product is defined under a two-part test: first, drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program (“CHIP”); and second, drugs and biologics are only included if they require a prescription to be dispensed, and medical devices are only included if they require premarket approval by, or premarket notification to, the FDA.

imagesCA2YEG5HThe payment reports which must be submitted require extensive detail on the payment, including the name of the recipient, address of the recipient, practice specialty, amount of the payment, date of the payment, form of the payment, nature of the payment (e.g. gift, entertainment, royalty, consulting fee). 

CMS is required to make reported information available for review on a public website.

A manufacturer or GPO that fails to submit required information is subject to a civil penalties of at least $1,000, but no more than $10,000, for each payment or other transfer of value, or ownership or investment interest, not reported as required, up to a maximum total for each annual submission of $150,000. Knowing failures to timely submit required information subject a manufacturer or GPO to much higher additional CMPs of at least $10,000, but no more than $100,000, for each payment or other transfer of value, or ownership or investment interest not reported as required, subject to a maximum total CMP with respect to each annual submission of $1,000,000.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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