The US House of Representatives released their latest version of the “Affordable Health Care for America Act,” which contains new language regarding the Physician Payments Sunshine Provision. The final bill language in the house version (starting on page 889 of 1990 pages) is summarized below.
The bill establishes a new section regarding “Financial Reports on Physicians Financial Relationships with Manufacturers and Distributors of Covered Drugs, Devices, Biologicals, or Medical Supplies Under Medicare, Medicaid, or CHIP and with Entities that Bill for Services Under Medicare.”
Differences between this bill and previous version introduced in July include:
The House moved the start date for this provision from 2011, to begin reporting of all information and payments made in 2010 and reporting on April 1, 2011 (but throughout the Bill there are different non corresponding dates) which would be an impossible task by any measure.
Added to the preemption criteria should not pre-empt state laws that require the disclosure of any type of information by any person or entity other than an applicable manufacture.
Added a GAO report to review the extent of reporting, and under reporting, the impact of federal pre-emption, changes to the patterns of payments as an effort to evade reporting, description of financial relationships subject to delayed reporting, and improvement in collection, and analysis.
Added Inclusion Criteria:
o Payments associated with medical supplies to be reported.
o Reporting of donations by manufactures and suppliers to self insured health plans.
o Physician ownership interest by physicians or immediate family members in a manufacturer, group purchasing organization or distributor.
o Broadly defining group practices to include group practices and hospitals.
o ”Any organization that purchases, arranges for or negotiates the purchase of a covered drug device biological or medical supply.
o Establishes a study, to be conducted by the Comptroller General of the United States, to evaluate the extent of use of physician self-referral arrangements and the effects of such arrangements on the cost of providing advanced diagnostic imaging and radiation oncology services to Medicare beneficiaries. This report will be submitted to Congress no later than July 1, 2011
o Any entity under common ownership which sells medical products or provides assistance and support to a manufacture or GPO, with respect to the production, preparation, propagation, compounding, conversion, processing, marketing or distribution of a covered drug device or medical supply.
§ This would mean that even the microscope manufactures, the advertising agencies, the realtor who sold the building to create the product and on and on, the manufacture would be liable if they failed to report if they bought lunch for the lab techs.
§ If a CME provider is owned by an advertising agency or connected with an organization involved in promotion would have to report any payments over five dollars to a physician or other healthcare provider.
§ Hospitals, and other health care entities (group practices), privately held manufactures, distributors, and group purchasing organizations are required to report physician ownership
Added Exclusion Criteria:
· Exempted retail pharmacies from reporting payments to physicians for prescribing generic drugs
· Exempted wholesale pharmacies from reporting
· Exclusion from reporting of payments made to a physician or hospital by a health plan for medical services provided to employees and family members of manufactures
· Exclusion for all indirect payments that is made to a covered recipient , where the manufacture is unaware of the identity of recipient and not used to market product
· Exempted self insured health plans for employees of manufactures
A summary of the provisions is as follows:
Accordingly, manufacturers or distributors must provide in electronic form, all payments or transfers of value to a covered recipient, or to an entity or individual, no later than March 31, 2011, with the following information:
- The recipient’s name, business address, physician specialty, and national provider identifier;
- The value of the payment or transfer of value (other than a drug sample);
- The date when the payment or transfer was made;
- The name of the related drug, device, or supply, if available, to the level of specificity available;
- A description of its form, indicated (as appropriate for all that apply) as— (I) cash or a cash equivalent; (II) in-kind items or services; and (III) stock, a stock option, or any other ownership interest, dividend, profit, or other return on investment; and
- With respect to a drug sample, the name, number, date, and dosage units of the sample.
The term ‘payment or other transfer of value’ as defined by the bill means a transfer of anything of value for or of any of the following:
(i) Gift, food, or entertainment
(ii) Travel or trip
(iv) Research funding or grant
(v) Education or conference funding
(vi) Consulting fees
(vii) Ownership or investment interest and royalties or license fee
Included under this definition are speaking fees, dividends, profit distribution, stock or stock option grant, or any ownership or investment interest held by a physician in a manufacturer (excluding a dividend or other profit distribution from, or ownership or investment interest in, a publicly traded security or mutual fund).
The above information must be complied by the manufacturer or distributor to include the aggregate amount of all payments or other transfers of value provided by the manufacturer or distributor to covered recipients, and to entities or individuals during the year involved. This includes all payments and transfers of value regardless of whether such payments or transfers of value were individually disclosed.
Recipients to Report Payments to Include:
- Physician Group Practices
- Any other prescriber of a covered drug, device, biological or medical supply (adds nurses, nurse practitioners, lab techs, physician assistants, nurse midwifes and anyone ordering drug or supplies)
- Pharmacies and Pharmacists
- Health Insurance, group health plan including employees of health plans
- Pharmacy Benefit Managers and employees of PBM’s
- Medical Schools
- Sponsors of Continuing Medical Education
- Patient Advocacy or Disease Specific Groups
- Organizations of Health Professionals (Medical Specialty Societies)
- Biomedical Researchers
- Group Purchasing Organizations
Exclusions: Manufacturers and distributors are not required to report:
- Any payments under $5;
- 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;
- In-kind items used for the provision of charity care;
- A dividend or other profit distribution from, or ownership or investment interest in, a publicly traded security and mutual fund;
- Compensation paid by an applicable manufacturer or distributor to a covered recipient who is directly employed by and works solely for such manufacturer or distributor;
- Payments made to a covered recipient by an applicable manufacturer or by a health plan affiliated with an applicable manufacturer for medical care provided to employees of such manufacturer or their dependents;
- Any discount (including a rebate);
- Any payment or other transfer of value (I) in which the applicable manufacturer is unaware of the identity of the covered recipient and is not using such activity or service to market its product to the covered recipient; and (II) that is not designed to market or promote the product to the covered recipient;
The bill also establishes that payments under a product development agreement must be reported for services furnished in connection with the development of a new drug, device, biological, or medical supply, and must also be reported with the following information:
- The date of the approval or clearance of the covered drug, device, biological, or medical supply by the Food and Drug Administration; and
- Payments made two calendar years after this date
Payments by the manufacturer or distributor must be reported in connection with a clinical investigation regarding a new drug, device, biological, or medical supply with the following information:
- The date that the clinical investigation is registered on the website maintained by the National Institutes of Health pursuant to section 671 of the Food and Drug Administration Amendments Act of 2007; and
- Payments made two calendar years after this date
Product development and clinical investigation payments will be confidential, and will not be subject to disclosure, and will not be made available until or after the date, in which the information is made public.
The bill does not require the disclosure of a payment or other transfer of value to a physician by a self-insured health plan.
Hospitals and other health care entities that bill under Part A or Part B of Medicare for services must also report on the ownership shares of each physician who, directly or indirectly, owns an interest in the entity.
Manufacturers and distributors must also report any investment or ownership interest (other than an ownership or investment interest in a publicly traded security and mutual fund) by a physician (or an immediate family member of such physician) during the preceding year with the following information:
- The value and terms of each such ownership or investment interest.
- The dollar amount invested by each physician holding such an ownership or investment interest.
Information regarding the use of free drug samples will not be made public but may be made available outside the Department of Health and Human Services by the Secretary for research or legitimate business purposes pursuant to data use agreements.
Any reporting entity that fails to submit the payment information outline above in a timely manner will be subject to a civil money penalty of not less than $1,000, but not more than $10,000, for each payment or other transfer of value or ownership or investment interest not reported. The total amount of civil money penalties will not exceed $150,000. Knowingly failing to submit payment information will result in a civil money penalty of not less than $10,000, but not more than $100,000, for each payment. The penalty will not exceed $1,000,000, or, if greater, 0.1 percentage of the total annual revenues of the reporting entity.
Overall this is a punitive provision which will require an army of employees and contractors to collect data at every level. Of which most of this data will be of little use to anyone. It is designed to shut down commerce between manufactures, physicians and group purchasing organizations.
The physician ownership provision is especially punitive in requiring disclosure of ownership in everything a physician may be involved in.
For CME it will require reporting of payments to CME providers, by manufactures and health plans, and may limit ownership by advertising agencies and health plans in continuing medical education companies.
In the end, I am not sure what “problem” they are attempting to resolve and with all the additional reporting by everyone, it does not sound like much in the area of drug development will be accomplished. Before congress takes such drastic steps they should step back and consider the damage this could do to the entire healthcare industry.
Given that the healthcare reform bill has grown from 1,000 pages to 2,000 pages, expansion of government control of the economy and limiting choices appears to be the theme of the day. The Sunshine Provisions are just one more example of that.
US House of Representatives
Sunshine Provisions House Bill
Policy and Medicine