What You Need to Know about the Sunshine Act and Physician Transparency

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SAC-thumb1A frequent topic of discussion in our conversations with healthcare executives involves their efforts at becoming more transparent and accountable not just to the government, but also to their local community.

Of course, the Affordable Care Act has made accountability and transparency a priority for hospitals and physician practices. In fact, the intention of ACA section 6002, the Physician Payment Sunshine Act (or the National Physician Payment Transparency Program or the Open Payments Program), is to make physician compensation more transparent.

As Greg Freeman reports over at HealthLeaders Media, “The final regulations attempt to close practically every viable loophole that may have existed in prior versions of the Sunshine Act by requiring certain disclosures by manufacturers of drugs, devices, and biological or medical supplies who participate in any federally funded healthcare program… Certain activities are exempted, such as taking samples from a drug company to distribute to patients. But most compensation or goods worth $10 or $100 aggregate in a year must be reported.”

These disclosures also extend to most group purchasing organizations, Freeman adds, and the deadline for reporting this data to the government is March 31, 2014, with collection of the data having begun on Aug. 1, 2013.

Should a healthcare organization be found in violation of the Sunshine Act, penalties will be applied, although no “new penalties for financial interaction with drug or device companies, or any other organization” was created by the Act, since “the Stark Law and anti-kickback laws still apply in those areas,” Freeman writes.

Santa Monica, Calif. attorney Craig B. Garner, JD, predicts that this law not only imposes more pressure on physicians, but could also embarrass them “if, for instance, they’ve been prescribing this medicine pretty heavily and it turns out they’ve been paid by the manufacturer. If that’s the case, you have to clean up your act and comply with this act.”

As part of the increased transparency, companies and GPOs will also release the names of physicians with whom they have business arrangements.

According to Garner, “That means physicians must determine whether they are comfortable having their names listed as receiving money from the company, or whether they can give up that revenue for the sake of appearances,” especially if there is “nothing improper and the relationship is entirely legitimate, yet it can give the appearance of some type of undue influence on your practice of medicine. Those cases will require you to assess how much that income means to you. There’s not always something wrong with doing work for these companies, but there is such a stigma these days that any nexus can be negative.”

It’s important to note that physicians have no control over this disclosure beyond ending business relations with the company. Robert Hitchcock, MD, FACEP, vice president and chief medical informatics officer with T-System in Dallas, told Freeman, “Even if the physician disagrees with the company’s intention to disclose a relationship, the company must go ahead with disclosure if no agreement has been reached in 60 days.”

He predicted all physicians will feel the impact of this legislation, especially those who earn a hefty income from their relationships with drug and device companies and specialists who devote much of their time to research.

Physicians, Hitchcock said, “will seriously rethink any collaboration they might have with drug companies. As a practicing physician, I really don’t want my name on a list for having been to this CME and gotten this amount of money from Pfizer and this amount from Schering-Plough. I know that I personally will no longer be attending CME that is sponsored like that.”

As healthcare executives, how is the Sunshine Act affecting your organization? In the practices that you have either purchased or with whom you have partnered, what impact is complying with the law having on their relationships with you, with GPOs, and with drug companies?

-by Pete Fernbaugh

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