The Physician Payment Sunshine Act Explained

Attention pharmaceutical, biotechnology, medical device and medical supply companies! Are you ready to report physician payments to the Federal Government?

The Physician Payment Sunshine Act is a component of the Health Care Reform Bill that became law last March. The Sunshine Act will affect most pharmaceutical, biotechnology, medical device and medical supply companies in the United States starting on January 1, 2012.

You will be required to report to the federal government every payment of any kind (over $10) that you make to physicians. “Payment” in this case is defined as any “transfer of value” including all consulting fees, compensation, entertainment, food, travel, and more. All of these instances must be aggregated into an electronic form, along with the physicians’ National Provider Identifier (NPI) and submitted to the federal government annually.

There are hefty penalties for non-compliance. If a manufacturer unknowingly fails to report a single instance, there will be a $1000 to $10,000 fine that is limited to $100,000 annually. However, if a manufacturer knowingly fails to report a transfer of value, there will be a $10,000 to $100,000 fine that is limited to $1,000,000 annually and an investigation will be opened by the federal government.

The intentions of this new mandate are to increase federal transparency for the benefit of patients and the burden of even more reporting is simply an unfortunate side effect of this benefit. For manufacturers who interact with thousands of physicians on a daily basis this task of reporting every spend instance can be time consuming and arduous. However, recent technology developments called aggregate spend solutions have made this process bearable. There are various forms of these federal reporting solutions and some are better suited to the unique needs of individual companies.

This new federal requirement has been in development since 2007 when Senator Chuck Grassley of Iowa introduced the Sunshine Act independently. Now that the law has been passed, the Department of Health and Human Services is in charge of collecting the aggregated physician data. Starting in January of 2012 companies will have to start aggregating data about their physicians.

In addition to the federal laws, individual states have adopted their own tracking and reporting requirements. The federal government included a clause in the Sunshine Act to indicate that federal laws preempt individual state laws to the extent that they require the reporting of the same information. Unfortunately, current state laws require the reporting of different items on a broader audience and therefore escape federal preemption.

Manufacturers, keep your eyes open for more updates.

Medispend Marketing

Posted on Apr 6, 2011 8:09:24 AM

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