The Centers for Medicare & Medicaid Services late Wednesday released its 121-page proposed rule designed to reveal potential conflicts of interest between drug, biological and medical device companies and the physicians and teaching hospitals that prescribe and use them.
The proposed rule, also called the Physician Payment Sunshine Act, which was required by Section 6002 in the Affordable Care Act, would mean about 150 manufacturers of drugs, or biologics, 1,000 makers of medical devices or medical supplies, and 420 group purchasing organizations will be required to report payments, to physicians and teaching hospitals. Such payments are defined to include gifts, fees, meals and travel expenses.
"When people are faced with the difficult task of choosing the right doctor, they need all the information they can gather," CMS deputy administrator for Program Integrity Peter Budetti, MD, said in a statement. "If your doctor is taking money from manufacturers of prescription drugs, suppliers of wheelchairs or other devices, you deserve to know about it.
"Disclosure of these relationships will discourage the inappropriate influence on clinical decision-making that sometimes occurs while still allowing legitimate partnerships," Budetti said.
The ACA specified that details of these transactions should be made publicly available and searchable on a federal website.
CMS missed its deadline by about 10 weeks. The proposed rule delays the start time from Jan. 1, as set forth in the Affordable Care Act, to after the final rule is published next year.
It defines eligible transfers of value as amounts of $10 or more. Covered teaching hospitals are defined as those that receive graduate medical education payments.
The proposed rule would also require the disclosure of physician's, or immediate family members of a physician, ownership or investment interests in applicable manufacturers and group purchasing organizations.
Drugs and biologicals are defined as those which require prescriptions and which are covered by Medicare, Medicaid or the Children's Health Insurance Program, but not over-the-counter products.
"Collaboration among physicians, teaching hospitals, and industry manufacturers may contribute to the design and delivery of life-saving drugs and devices," the proposed rule begins.
"However, while some collaboration is beneficial to the continued innovation and improvement of our health care system, payments from manufacturers to physicians and teaching hospitals can also introduce conflicts of interests that may influence research education, and clinical decision-making in ways that compromise clinical integrity and patient care, and may lead to increased health care costs."
The Affordable Care Act provides that violators of the reporting requirements will be subject to civil monetary penalties (CMPs), capped at $150,000 annually for failing to report, and $1,000,000 for knowingly failing to report.
The proposed rule goes into detail about how a manufacturing company of a medical product determines whether it will have to report a financial interaction with a particular doctor.
"For example, if once during the calendar year, a sales representative from an applicable manufacturer brings $25 worth of bagels and coffee to a solo physician's office for a morning meeting, regardless of the number of individuals who partake (such as non-covered recipient staff members), the per covered recipient cost is $25. Since this falls above the $10 minimum threshold for reporting a payment or other transfer of value ... this meal must be reported.
"However, if the practice group includes five physicians, then the per-covered recipient cost is $5 (regardless of whether all five physicians actually consumed any of the food provided), so the payment would not need to be reported."
Group purchasing organizations covered by the proposed rule are broadly defined as any entity that purchases and arranges for, or negotiates the purchase of covered drugs, devices, biologicals or medical supplies in the U.S. whether they purchase them directly or for resale or distribution.
The reporting requirements also are proposed to exclude:
- Transfers of value less than $10, unless the aggregate amount transferred to, requested by, or designated on behalf of the covered recipient exceeds $100 in a calendar year.
- Product samples that are not intended to be sold and are intended for patient use.
- Educational materials that directly benefit patients or are intended for patient use.
- The loan of a covered device for a short-term trial period, not to exceed 90 days, to permit 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.
- A transfer of anything of value to a covered recipient when the covered recipient is a patient and not acting in the professional capacity of a covered recipient.
- Discounts, including rebates.
CMS says it will accept comments on the proposed rule until Feb. 17.