Yesterday, the Centers for Medicare and Medicaid Services (CMS) issued three FAQs and an example grid to supplement their recent revision to the Physician Payments Sunshine Act continuing medical education (CME) exemption. Instead of clarifying the new Rule, however, this latest round of sub-regulatory guidance—which was not subject to notice or comment—actually confuses and in some cases over-expands upon the plain language of the Final Rule.
As a background, if an applicable manufacturer “provides funding to support a continuing education event but does not require, instruct, direct, or otherwise cause the continuing education event provider to provide the payment or other transfer of value in whole or in part to a covered recipient,” the manufacturers are not responsible for reporting on values that end up going to CME speakers. This is true “regardless if the applicable manufacturer or applicable GPO learns the identity of the covered recipient during the reporting year or by the end of the second quarter of the following reporting year because the payment or other transfer of value did not meet the definition of an indirect payment.” (view CMS’s document here at p. 67660).
CMS’s latest sub-regulatory guidance often misses some essential steps in their analysis of the indirect payment issue—one that industry and CME providers have been interpreting for a long time.
For example, CMS poses the following example:
Hypo: “An applicable manufacturer provides a payment to a continuing education organization for a continuing education event for physicians, and the manufacturer knows the identity of the physicians (e.g., physician attendees/speakers) during the reporting year or by the end of the second quarter of the following reporting year.”
Answer: “The payment is reportable because it meets the definition of an indirect payment at 42 C.F.R. §403.902. The manufacturer required, instructed, directed, or otherwise caused the payment to be made to a physician by providing the payment for the purposes of conducting a continuing education event.”
The example skips over the question that must be asked in every CME payment scenario—was this an indirect payment? As stated above, per CMS’s own Final Rule, if an applicable manufacturer “provides funding to support a continuing education event but does not require, instruct, direct, or otherwise cause the continuing education event provider to provide the payment or other transfer of value in whole or in part to a covered recipient,” the manufacturers are not responsible for reporting. This is true regardless if the manufacturer learns the identity of the covered recipient during the reporting year or by the end of the second quarter of the following reporting year.
Thus, only once it is determined that the manufacturer has indeed “required,” for example, the payment to go to a covered recipient, must manufacturers then worry about potentially finding out a CME speaker’s identity. CMS does not address the initial indirect payment question in their interpretation a number of times in their examples and FAQs.
Accredited CME is “accredited” because of the firewalls and complete separation between a manufacturer and a physician. The CME provider separates the two entities—they possess full discretion over physician faculty, speakers, and attendees, and control where educational funding ends up. Thus, almost by definition, accredited manufacturers do not “require, instruct, direct, or otherwise cause” CME providers to provide the “transfer of value in whole or in part to a covered recipient.” The Sunshine Act is meant to capture payments from manufacturers to physicians. It is odd that CMS would single out payments to third party education providers, when their over-broad interpretation could implicate many other third parties that also have full discretion over all payments that eventually go to physicians.
Another issue inherent in the FAQs and question grid is the fact that CMS uses examples that are not necessarily applicable to continuing education. For example, their references to an “unrestricted donation,” are not entirely clear.
In one example, they state:
Hypo: An applicable manufacturer provides an unrestricted donation to a continuing education organization to use at the organization’s discretion, and the organization chose to use the donation to provide a continuing education event for physicians.
Answer: The payment is not reportable because it did not meet the definition of an indirect payment at 42 C.F.R. §403.902. The manufacturer provided the payment to the organization to use at the organization’s own discretion. The organization may opt to provide a continuing education event or may opt to use the payment for another purpose.
It is significant to note that CMS’s examples are just that—examples of certain payments that they consider to be un-reportable. However, it would have been helpful for the FAQs to provide a variety of examples rather than just one, repeated a number of times, as the resources do here with reference to a donation.
Importantly, these rules do not come into effect until 2016, with the first year of reporting all the way out in 2017. This gives CMS time to offer certain clarifications that may help manufacturers down the road when they need to interpret this rule.