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How the Physician Payment Sunshine Act Could Affect Practice Revenue

Greg Freeman, October 10, 2013
  • Applicable GPOs are defined as those GPOs that operate in the United States and purchase, arrange for purchase, or negotiate the purchase of a covered drug, device, biological, or medical supply for a group of individuals or organizations that are not solely using the covered supply.
  • Covered products are defined as:
  • Any drug or biological for which payment is available under Medicare, Medicaid, or the Children's Health Insurance Program (CHIP), either separately or as part of a bundled payment, and requires a prescription to be dispensed
  • Any device or medical supply for which payment is available under Medicare, Medicaid, or CHIP, either separately or as part of a bundled payment, and requires premarket approval by, or premarket notification to, the FDA
  • Teaching hospitals are defined as hospitals that receive payment for Medicare direct graduate medical education, inpatient prospective payment system indirect medical education (IME), or psychiatric hospital IME programs.

Data collection and reporting requirements
Under the OPP, the primary responsibility of applicable manufacturers and applicable GPOs is to comply with the following reporting requirements on an annual basis:
Applicable manufacturers of covered products must report payments or other transfers of value they make to physicians and teaching hospitals to CMS.

  • Applicable manufacturers and applicable GPOs must report to CMS ownership or investment interests held by physicians or their immediate family members. Payments and other transfers of value to these physicians must also be reported.
  • In particular, applicable GPOs must report to CMS payments or other transfers of value made to physician owners or investors if they held ownership or an investment interest at any point during the reporting year.
  • For purposes of the OPP, reportable payments or other transfers of value include, but are not limited to, such things as consulting fees, honoraria, gifts, entertainment, food and beverages, travel and lodging, and research payments. Research payments or other transfers of value, however, may be delayed from publication on the website until the date of FDA approval or up to four years from the date of report (whichever is first), when made under a product research or development agreement in connection with:
    • Research on, or development of, a new drug, device, biological, or medical supply, or a new application of an existing drug, device, biological, or medical supply; or
    • Clinical investigations regarding a new drug, device, biological, or medical supply.

Penalties
Under the Affordable Care Act, applicable manufacturers and applicable GPOs may be subject to civil monetary penalties, capped annually at $150,000 for failure to report and $1,000,000 for known failure to report.

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