Starting January 1, 2012, certain pharmaceutical, medical device, biological and medical supply manufacturers will have to begin collecting and reporting data on "transfers of value" that they provide to doctors and teaching hospitals. Manufacturers and group purchasing organizations will also have to publicly report all ownership or investment interests held by physicians or members of their families. Violations of the disclosure requirements can result in civil monetary penalties ranging from $1,000 to $100,000. Although the detailed provisions of the "Sunshine Act" – passed as part of federal health reform – have been on the books for more than a year, the provisions are not self-implementing. The 2010 Patient Protection and Affordable Care Act ("PPACA") set a deadline of October 1, 2011 for the Secretary of the Department of Health and Human Services ("HHS") to issue implementing regulations; we understand that HHS has delegated this task to the Centers for Medicare & Medicaid Services ("CMS").
Those entities planning to collect and report data – as well as physicians and teaching hospitals whose identifying information will be included in the Sunshine Act reports – are eagerly awaiting the regulations, which are expected to clarify certain definitions and provide detailed instructions on how these reports are to be compiled and submitted. The first Monday after PPACA's deadline, October 3, came and went and the regulations went unissued. Later in the day on October 3, two US legislators who played key roles in drafting the Sunshine Act – U.S. Senators Chuck Grassley (R-Iowa) and Herb Kohl (D-Wis.) – issued a letter to CMS Administrator Donald Berwick pressing Mr. Berwick for details on why CMS missed the statutory deadline and when the agency intends to issue the regulations. The Senators questioned CMS's ability to timely issue adequate industry guidance and implementing regulations at this late hour, noting that the deadline for data collection is drawing near and "there has not been, to our knowledge, adequate consultation with either industry representatives or consumer advocates." Sens. Grassley and Kohl stressed the need for prompt federal action, expressing fear that CMS's failure to issue guidance, standards, and definitions within a reasonable amount of time before the January 1, 2012 data-collection start date "will create confusion among both manufacturers and consumers."
Grassley and Kohl noted in their letter that, according to CMS, the Office of Management and Budget ("OMB") may already have – and be reviewing – the draft rules. While OMB review can take 30 days or more, no one appears to know when CMS actually sent the rules to OMB. The Senators put it to CMS directly to respond to their offices with specific information about expected implementation timelines. Neither CMS nor Administrator Berwick are commenting publicly on Sens. Grassley's and Kohl's letter.
Fulbright & Jaworski L.L.P. is monitoring the situation and will publish an update if CMS responds to the letter. Fulbright will also issue a client alert summary of the regulations shortly after they are released, and will be hosting a web seminar on the regulations in follow-up to the client alert summary. Based on the anticipated content of the regulations, the web seminar will address practical topics of client interest: clarified definitions; explanations of how to create and submit reports; preemption of state-reporting laws; indirect payments; loans of medical devices; and penalties. For more information on the Sunshine Act, see Fulbright's March 31, 2010 Briefing here. Click here to read the letter sent by Senators Grassley and Kohl to CMS.
This article was prepared by R. Jeffrey Layne (firstname.lastname@example.org or 512 536 4593), Benjamin Koplin (email@example.com or 512 536 2439) and Selina Spinos (firstname.lastname@example.org or 202 662 4536) from Fulbright's Health Care Practice Group.