What Does the Sunshine Act Mean by “Compensation”?

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SUN-thumb3With the Physician Payment Sunshine Act causing ripples throughout the healthcare industry with its demands for greater disclosure and transparency, it helps to understand what the law means by “compensation,” at least the type of compensation the federal government wants disclosed.

According to Greg Freeman at HealthLeaders Media, “It includes cash, cash equivalent, in-kind items or services, stock, stock options, dividend interest, or any other kind of ownership interest or other kinds of payment. Included are consulting fees, honoraria, gifts, entertainment, education, research, royalties, license fees, speaking fees, and grants.”

David Schweighoefer, JD, a partner with Cleveland law firm Walter Haverfield, said the net has been “thrown fairly widely to capture almost everything that would be a transfer of value. Nearly any way you can be compensated by a company is going to be included. That’s not to say it’s illegal.”

Educational materials, rebates, and discounts aren’t included in this disclosure, but “any transfer of monetary value to a physician’s family member does count. Don’t think you can get around the reporting requirement by having the company provide the compensation to your child, sister, or parent.”

Physicians will also have to carefully monitor the social functions they attend, Robert Hitchcock, MD, FACEP, vice president and chief medical informatics officer with T-System in Dallas, told Freeman, especially since “breakfasts and social hours often are sponsored by drug companies.”

Hitchcock predicts, “I think once physicians see this happening, it’s going to have a really chilling effect on their relationships with the healthcare industry. A lot of what is going to be disclosed is just a normal part of doing business, but I’m not sure I want my ownership value in a GPO, for instance, to be put out there for public consumption. It’s like putting my taxes out there for anyone who wants to see.”

He advises physicians to “watch for the line between an informative interaction and the exchange of something that has monetary value.” Better yet, “try to avoid, at all costs, accepting anything of monetary value. That will keep your name off the lists.”

Freeman also provides a thorough list of legal definitions and technicalities at the end of his article. We strongly recommend going over this portion for the benefit of your own knowledge.

As healthcare executives, what concerns do you have regarding the Sunshine Act? How will it affect your ability to have productive relationships with GPOs and drug companies?

by Pete Fernbaugh

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