Sunshine act reporting dates

The Centers for Medicare & Medicaid Services (CMS) released its proposed 2022 Physician Fee Schedule rule (Proposed Rule) on July 13, 2021. Included in the rule are several proposed updates to the CMS Open Payments Program, which implements the U.S. Physician Payments Sunshine Act. [1] The proposed rule is available here. A few key highlights:

The proposed definition of “POD”, which CMS includes only in the regulatory language at the end of the Proposed Rule, broadly covers applicable medical device manufacturers (i) with 5% physician ownership or (ii) that compensate a physician owner with “a commission, return on investment, profit sharing, profit distribution, or other remuneration directly or indirectly derived from the sale or distribution of devices by the manufacturer.” [3] The agency does not indicate what constitutes “other remuneration directly or indirectly derived from the sale or distribution of devices.” If an entity qualifies as a POD, the Proposed Rule would require it to self-identify in any Open Payments reporting as such.

We summarize the Open Payments-related provisions of the Proposed Rule in the chart below. Comments on the proposed Open Payments updates are due to CMS by 5 pm EST on Monday, September 13, 2021. If you have any questions or would like to submit comments, please reach out to Matt Wetzel (mwetzel@goodwinlaw.com) or Heath Ingram (hingram@goodwinlaw.com).

Physician-Owned
Distributors (PODs)

First, CMS’s proposed new definition of POD

An entity that meets the definition of “applicable manufacturer” or “applicable GPO”;

Has a minimum of 5% direct or indirect ownership or investment interests held by a physician

This latter part of the definition, if read broadly, could implicate some privately-held medical device manufacturers[5]and may require self-identification as a POD “whether or not the physician has a controlling interest in the reporting entity.” For instance, CMS continues, this could be “a silent partner whose only role is to provide capital and is not involved in the company’s operations would still meet requirements for reporting.” See 86 Fed. Reg. at 39335-36.

CMS proposes to add a mandatory “context field” for teaching hospital-related disclosures, requiring disclosure of additional information to better identify the payment, such as check or electronic wire numbers and hospital department.[6]

CMS notes that teaching hospitals have complained that the Open Payments disclosures do not contain sufficient information to identify and verify the reported payments or transfers of value. Teaching hospitals indicated that they must dispute the payment in order to obtain sufficient additional documentation to verify the payment. Accordingly, CMS is requiring the addition of contextual information for each teaching hospital-related disclosure.

CMS proposes to eliminate the ability for applicable manufacturers and GPOs to delay payments disclosed as “General Payments.”[7]

CMS noted that many research-related payments are being disclosed as “General” and then flagged for delayed publication. But, CMS cannot identify the related research program or clinical study, because this information is not required for the General Payment report. CMS proposes, therefore, to eliminate the ability to delay General Payments from publication and only permit publication delay of payments disclosed as “Research Payments.”

CMS takes care to note that reporting entities may be hesitant to include payments in connection with a specific research study, because these payments may not be outlined in the research agreement. CMS cites the example of paying for an airline ticket for a physician to conduct research. The agency clarifies that current requirements would require that these types of payments — even if not directly outlined in the research agreement – are disclosed as research payments.

CMS proposes clearer limits on reporting of short-term equipment loans.[8]

CMS proposes to remove the “Ownership” nature of payment category.[9]

No Report Deletions: CMS proposes to limit entities’ ability to delete previously disclosed payments. [10]

CMS notes a lack of existing controls around entities’ ability to delete previously disclosed payment records in the Open Payments system. Accordingly, CMS proposes to prohibit entities from removing, deleting, or otherwise altering records in the Open Payments system unless (a) an error in the information is discovered or (b) the record is otherwise believed to meet existing exceptions for reporting that were previously unknown.

Annual Recertification: CMS proposes to allow non-reporting entities to submit annual recertifications. [11]

CMS notes that many non-reporting entities want to be able to recertify regularly to the agency that they do not have any payments or transfers of value to report. But, recertification was previously only available to entities with reportable payments. Accordingly, CMS proposes to allow non-reporting entities to recertify annually on a voluntary basis.

Updated Contact Information: CMS proposes to require companies that have not had reportable payments within the past two years to keep contact information updated in Open Payments. [12]

[1] See 86 Fed. Reg. 39104, 39333-37 (July 23, 2021).
[2] See 78 Fed. Reg. 9458 at 9493, 9512, and 9519 (Feb. 8, 2013). The original rule defines GPOs as selling to a “group of individuals or entities.” See 42 C.F.R. § 403.902. Many PODs, however, only sell to one entity. This creates the so-called “GPO Loophole” that may explain many years of PODs’ absence from the Sunshine Act disclosures.
[3] See 86 Fed. Reg. at 39568 (proposed 42 C.F.R. § 403.902) (emphasis added).
[4] See id..
[5] CMS clarifies that “Ownership or Investment Interest” already excludes publicly traded securities. The agency also proposes two new exclusions: (i) mere titular ownership and (ii) employee stock ownership programs that are qualified under IRS regulations. CMS states that, to be considered a physician owner, the owner must hold at least one active professional license in a U.S. state or territory.
[6] See 86 Fed. Reg. at 39568 (proposed 42 C.F.R. § 403.902). While CMS’s intention is clear, the agency’s proposed definition could be read broadly to include any privately-held medical device manufacturer that offers any type of remuneration to a physician owner.
[7] Id. at 39335.
[8] Id.
[9] Id.
[10] 86 Fed. Reg. at 39335.
[11] Id. at 39336.
[12] Id. at 39335.
[13] Id. at 39336-37.