Medicare’s Sunshine Act changes could hit device makers in the pocketbook

Sunshine: CMS outlines 4 changes to physician payment transparency rules

Medicare regulators are looking for feedback on proposed changes to the laws governing transparency in financial relationships between doctors and healthcare companies, warning that the changes may represent a hefty new cost for medical device makers in particular.

The Centers for Medicare & Medicaid Services asked healthcare industry stakeholders to offer comments on 4 proposed modifications to the Physician Payment Sunshine Act, half of which are expected to have little to no practical impact, where the other half may mean a substantial upgrade to existing compliance programs.

"The most significant operational impact of the proposed changes would likely be on companies that manufacture, market, and/or distribute medical devices or medical supplies," according to an alert issued by law firm King & Spalding’s FDA & Life Sciences Practice Group. "This could require significant and expensive upgrades to tracking systems to enable such detailed reporting, and could be especially problematic for companies that manufacture, market, or distribute a large portfolio of devices or medical supplies."

The biggest changes are ones that require companies to provide more detail on the transactions between industry and physicians. One proposal would require that companies include the marketed name for medical devices and supplies associated with a payment, rather than giving companies the option of either providing the marketed name, the therapeutic area or the product category. Companies that make drugs and biologics are already required to provide marketed names.

"CMS states that the rationale for the change is to again correct an unintended consequence and to make the reporting requirements consistent," K&S said.

The other big change is a proposal to draw distinctions between types of value provided to physicians. Manufacturers can currently select "stock, stock options, or any other ownership interest" as a general category of value, but CMS would like to see that broken up into 3 separate categories for more detailed reporting.

The lower-impact proposals include removing the definition of "covered device" and removing exclusions for payments made to physicians speaking at certain accredited continuing education programs, both of which CMS said were redundant rules.

The proposals are open for comment until Sept. 2, 2014, and the rules would take affect January 1, 2015, if implemented.

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