Section 6002 of the Affordable Care Act (ACA) of 2010 – also known as the Physician Payments Sunshine Act (PPSA) – requires all manufacturers of drugs, medical devices and biologicals that participate in US federal healthcare programs to disclose any and all payments or other transfers of value made to physicians or teaching hospitals. It also requires disclosure of any physician ownership or investment interests in manufacturers or group purchasing organizations.
Disclosure is made to the Centers for Medicare and Medicaid Services (CMS) who were chartered to publish the data annually through its Open Payments Program with the first data collection period to begin in August 2013 with subsequent submission to CMS in March 2014. After aggregation, the data was to be made available for review and correction by September 2014, but the CMS announced in August 2014 that much of that data was going to be withheld pending further verification.
Senators Chuck Grassley and Herb Kohl first proposed the PPSA in 2007 in response to growing concerns over physician conflicts of interest and calls for greater transparency around physician-industry relationships. The legislation failed to pass, but the issue gained momentum with concurrent reports published in 2008 by the Medicare Payment Advisory Commission and in 2009 by the Institute of Medicine on the issue of conflicts of interest.
The PPSA is concerned with three broad categories of payments or “transfers of value”:
- General Payments– cash or cash equivalents such as consulting/speaking fees, travel and entertainment expenses, charitable contributions, and grants.
- Ownership or Investment Interests– including stocks, royalties, and licenses.
- Research Payments– including clinical investigations.
Industry pushback on the requirements of the PPSA has been significant. The administrative requirement of reporting data to the CMS’ Open Payments Program and then having to verify and correct the aggregated data has been raised as an unnecessary burden, and the clarity as to how the availability of all of this data will change industry-wide conduct is also being disputed. The CMS has estimated that overall reporting costs for the PPSA will be $269 million in the first year, with an additional $180 million every year thereafter, with the majority of those costs being borne by the manufacturers.
While some may complain that greater transparency appears to come at a very high price, the price for non-compliance to the PPSA can be even higher. Failure to report payments or “transfers of value” can incur fines of between $1,000 and $10,000 per unreported payment up to an annual maximum of $150,000. Evidence of deliberate intent to disguise or hide such payments can raise those penalties to $10,000 to $100,000 per event, up to a maximum penalty of $1 million.
With a baseline threshold of any payment over $10, compliance to the PPSA clearly represents a logistical challenge in tracking, storing, and reporting such information for every physician in a hospital or practice. However, “too much of a challenge” is not going to be an acceptable line of defense in response to a CMS audit. Without a comprehensive software solution that clearly delineates the respective accountability and authority of all interested parties in such a complex data-tracking project, the logistical challenge could quickly become a logistical nightmare.