Life Science Compliance Update

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June 09, 2014

Physician Payments Sunshine Act: Comments Regarding Dispute Resolution Process

Last month, the Centers for Medicare and Medicaid Services (CMS) issued a call for comments on the Dispute Resolution process for Open Payments, the program to implement the Physician Payments Sunshine Act. CMS received 38 responses, many of which revealed the tension inherent in the Act between doctors and pharmaceutical and device manufacturers. 

Healthcare professionals believe the Dispute Resolution window is too short, given the delays associated with the roll out of Open Payments. Many physician groups also believe the process unfairly gives manufacturers the ability to "unilaterally" dismiss disputes. Pharmaceutical manufacturer respondents, however, are worried about bad faith disputes and the tremendous amount of resources they will need to spend continuously arguing over what could be an $11 lunch. Furthermore, since CMS will "monitor the disputes and resolutions to inform the auditing process," baseless disputes could unjustly lead to CMS choosing to audit a manufacturer.


The Sunshine Act requires pharmaceutical and device manufacturers to report to CMS almost any transfer of value they make to a healthcare professional. CMS is tasked with creating a searchable database of all this payment data by September 30, 2014. Before the public can see the data, however, the law requires a "Dispute Resolution" period for physicians and teaching hospitals to contest any payments attributed to them. This is an important process—no physician wants incorrect gifts or other transfers of value attributed to his or her name in a public database.

The problem has been that CMS' timeline for physicians to actually review and potentially dispute their information remains unclear. Physicians can finally register in the Open Payments System, but we don't yet know when they will be able to access the database. This is clearly frustrating for manufacturers as well, who must implement an effective process for handling disputes. Firms are unsure how many physicians will actually review their data, but must set aside resources in anticipation of the process. CMS has made clear they will not "mediate any dispute," so it is up to industry and physicians to work it out. Meanwhile the window of time is shrinking before the public release of potentially inaccurate data.

Medical Associations and Societies

A wide variety of physician groups commented on the Dispute Resolution process. The American Medical Association (AMA) has been discussing with CMS to reform this particular aspect of the Sunshine Act for a long time now, and many physician associations agreed with their points.

  • 60 day Dispute Resolution period is too short

Medical groups unanimously agreed that the current 60 day dispute resolution period is too short. They argue that even if physicians submit a dispute to CMS promptly whenever the review period opens, no one knows how quickly CMS will send the information to the manufacturer, or how quickly the manufacturer will be able to act to resolve the dispute. Multiple communications may be required in order to resolve a dispute.

Furthermore, for large institutions like teaching hospitals, it could take a long time to complete the initial internal review of the payment data necessary to identify issues on the front end. Regarding the exemptions for accredited continuing medical education (CME), including a lack of certainty around the treatment of meals, some disputes could also take a significant time to resolve. This is especially true if third-party CME providers are asked to provide documentation around particular events or programs.

The Massachusetts Medical Society, as one of many examples, noted the short window "undermines the importance of publishing accurate and verified data with a seeming disregard for the potential reputational and economic harm that can result to physicians from false or misleading information."

  • CMS should delay publication of the payments information

The CME Coalition states: "given the fact that a doctor's reputation is easy to impugn but incredibly difficult to resuscitate, we encourage CMS to err on the side of allowing physicians ample opportunity to correct the record on their reported payments before they are made public, rather than run the risk of unwarranted reputational damage that has the potential to harm careers." Thus, they strongly encourage CMS delay for six months, until March 31, 2015, the publication of information. Other physician groups stressed this delay as well.

Beyond reputational damage, the implication for those covered recipients could include anti-fraud, anti-kickback and Stark law investigations, the provision of inaccurate evidence for a tax audit, and potential violations of private employment contracts.

  • CMS should not allow manufacturers/GPOs the ability to "unilaterally" dismiss disputes

CMS has stated that if manufacturers or GPOs "determine that no change is required to the data, [they] may dismiss the dispute or request that physician or teaching hospital who initiated the dispute to withdraw it."

Medical associations and societies believe that both physicians and industry should be required to agree that a dispute has been resolved before the information is posted. They argue it is essential that the public be able to see if manufacturers and recipients continue to disagree about the information.

Many physician groups take issue with the fact that the Sunshine Act places the onus on busy doctors to continue to dispute their information after a manufacturer unilaterally dismisses it. Doctors must continuously check the reports and refile disputes within the system. The burden of "serial filing disputes" that a manufacturer can unilaterally dismiss adds an unnecessary layer of duplicative paperwork to already overtaxed physicians.

"Requiring physicians and their staff to re-direct scarce time and resources away from providing direct patient care in order to keep flagging disputed data is patently unreasonable and contrary to this Administration's stated goal of minimizing administrative burdens on the regulated and small businesses," AMA notes in their comment.

The American Urological Association (AUA) believes that CMS should be actively engaged in mediating dispute resolutions. They argue it is unreasonable to require physicians and their staff to continuously initiate disputes and revive disputes that remain unresolved. AUA recommends that CMS withhold publishing data if it has been contested, rather than posting the information and flagging it as disputed while waiting for manufacturers or GPOs to correct any inadvertent errors or omissions.

  • Physician Context Boxes

Many groups argued for physicians to be able to enter their "side of the story" for disputed payments. One commenter is concerned that companies do not have the resources to respond to disputes in "even 1% of the reported transactions." They also reported hearing company representatives speculate that, except for their "favorite" physicians, they may simply decline to seriously entertain disputes. They strongly believe that lack of time or "playing it safe" on the reporting entity's part should not result in the physicians' perspectives being ignored or simply marked as disputed with an asterisk. Thus, they recommended a 500 character text field that would allow physicians to document their specific disagreement with the reported entry.

  • Physician "Agents" In Charge of Dispute Process

A number of commenters suggested that physicians should be able to designate agents—third parties to act on their behalf to review collected data about them and to work on their behalf with companies to resolve disputes. They note that the process of resolving disputes with companies is likely to be time-consuming, and conversations during standard business hours would normally be very inconvenient for physicians who are occupied with treating patients. An agent who has the physician's legal and accounting records would likely be able to resolve issues in a more timely and productive manner.

  • Clinical Research Payments

The Academy of Physicians in Clinical Research (APCR) emphasized the "logistical difficulty" of reporting clinical research payments in a manner that provides meaningful context. Payments for research typically involve large sums which covers compensation for research team members, equipment costs, and many other expenses. "Any given study can result in many payments per year and physicians who dedicate an extensive amount of time conducting research may easily generate dozens or even hundreds of payments to their institutions which do not enrich them directly at all." In APCR's view, spending uncompensated time and resources adjudicating disputes represents time away from patients. Thus, they make a unique recommendation: "that clinical research physicians flag any inaccurate listing as "inaccurate" or "disputed" and leave it at that."

Pharmaceutical Industry Associations

The Pharmaceutical Research and Manufacturers of America (PhRMA) and other industry groups noted that CMS was correct in giving manufactures the ability to determine which disputes would not be investigated or resolved. Such flexibility is vital, they note, given the volume of individual payments or transfers of value that will be reported, the uncertainty regarding the number of such transactions that will be disputed, and the magnitude of resources that will be required to investigate and resolve disputes.

Pfizer recommends that a resolved dispute should be defined to include transactions that an applicable manufacturer investigates and verifies were accurately reported. In Pfizer's experience, presumably through their Corporate Integrity Agreement, disputes with healthcare professionals may persist in a dispute even though a company's investigation and documentation confirm that the transaction was accurately reported. If such situations arise in the context of Sunshine, manufacturers will be at risk of an audit, "with no comparable burden on those lodging disputes."

Pfizer also mentioned several safeguards for industry going forward into the unknown dispute process:

  1. CMS should establish penalties to deter bad faith disputes and thresholds for monitoring unresolved disputes. "Currently, covered recipients may dispute a transaction with impunity," Pfizer notes, "regardless of its bona fides or value."
  2. The public needs a meaningful context for disputed transactions. Industry-physician relationships support important research and drug development. Without context, the Sunshine Act looks to be condemning even very beneficial collaborations.
  3. CMS should immediately notify an applicable manufacturer's registered contact by email when a covered recipient disputes a transaction.
  4. Covered recipients should be required to support their disputes, including (1) what data are allegedly incorrect, (2) why those data are incorrect, (3) what data would be correct, and (4) evidence corroborating the claim (if any). Those requirements, Pfizer argues, would "help forestall frivolous disputes, assist in the efficient resolution of disputes, and promote the public's confidence in the reported data."

A number of companies have noted that physicians will dispute a certain payment simply because they disagree with the Sunshine Act itself. If physicians are unable to provide proper context to their disputes, they could raise unfair red flags about the quality of manufacturer's data. Similarly, a physician may dispute simply because he or she does not agree with the methodologies a company has decided upon to determine the reported amount.

In either case, "the result may be that the parties may be at an impasse," despite the fact that the manufacturer has reported the transfer of value consistent with the Open Payment regulations or its own established methodology. Only the manufacturer is required to attest to the accuracy and completeness of the data and subject to penalties if the reports are not accurate and complete. Industry argues that CMS should acknowledge in some cases resolution may not be possible, even after reasonable diligence, and manufacturers should not be penalized for the same.

Furthermore, some companies pointed out a potential problem area for company executives. What happens for C-level officers who are required to attest to the accuracy of the data after a physician has disputed it? Upsher-Smith Laboratories recommended CMS change the attestation process to except disputed transactions in the report.

PEW Charitable Trust and Academic Responses

The Pew Charitable Trust and commentators outside industry/covered recipients noted that providing doctors with an opportunity to review and dispute payments reported to them by industry is an important step, but that the physician dispute resolution process should not interfere with or delay the timely release of physician payments data to the public on September 30, 2014.

The past president of the Association for Medical Ethics was harsher: "to argue that doctors will require more than 45 days to respond to published information or to delay implementation of the CMS website at this time sends the wrong message." The commenter noted: "There are many physicians, including myself, who are fed up with this 'business as usual' reflecting fraud, abuse, and even criminal activity being perpetrated on patients on an ongoing basis."

Pew recommends that CMS perform quarterly data updates to their data, especially during the first year of Open Payments. Pew also notes that based on the experiences of a number of states with disclosure laws (Vermont, Massachusetts), they believe that the number of disputes will be small for the Federal system as well.


Reading through all 38 comments reveals how unworkable this part of the law might be. On the one side, there is so much at stake for physicians to ensure their data is correct—both from a reputational and potentially legal standpoint. Doctors must be concerned about how the Sunshine data could be used for fraud investigations, anti-kickback statutes, evidence for a tax audit, potential violations of private employment contracts, and more.

On the other hand, the Sunshine Act requires pharmaceutical and device manufacturers to collect and submit a tremendous amount of data. Unintentional mistakes are almost a certainty, despite companies' best intentions. Plus, even if information is correct, physicians have a boundless incentive to argue over transfers of value attributed to them. Smaller companies may be unable to handle the volume of inquiries. Bigger companies may have larger resources, but they also have larger volumes of transactions to account for.

We will follow CMS' responses to the Dispute Resolution comments to see which side of the spectrum they come out on. The next couple of months will reveal just how burdensome the Sunshine Act is for both physicians and industry.

Listing of Organization Comments

Academy of Physicians in Clinical Research

AdvaMed Advanced Medical Technology Association

Aggregate Spend Alliance

American Academy of Dermatology

American Academy of Physical Medicine and Rehabilitation

American Association of Clinical Endocrinologists

American Association of Medical Colleges

American Association of Neurological Surgeons and the Congress of Neurological Surgeons

American Association of Orthopedic Surgeons

American College of Cardiology

American College of Emergency Physicians

American College of Physicians

American Medical Association

American Optometric Association

American Osteopathic Association

American Podiatric Medical Association

American Urological Association

Association of Medical Ethics

CME Coalition

Johns Hopkins University and Health System

Kyruus (Hospital Software)

Massachusetts Medical Society

MedChi (Maryland State Medical Society)

Medical Group Management Association

Medical Society of New Jersey

Pew Charitable Trust


PhRMA Pharmaceutical Research and Manufacturers Association


Usher Smith Pharmaceuticals


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