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Industry Groups Call for Final Sunshine Act Rule

On August 14, 2012, four industry groups sent a letter to Marilyn Tavenner, the Acting Administrator of the Centers for Medicare & Medicaid Services (CMS), asking CMS to publish the final rule implementing the Physician Payments Sunshine Act (Sunshine Act).  Pharmaceutical and medical device manufacturers (Manufacturers) and group purchasing organizations (GPO) covered by the Sunshine Act must begin collecting information regarding payments or other transfers of value to physicians and teaching hospitals on January 1, 2013.  The letter asks that “CMS grant our companies sufficient preparation time to implement the final rule.”  The Advanced Medical Technology Association (AdvaMed), the Biotechnology Industry Organization (BIO), the Medical Imaging & Technology Alliance (MITA), and the Pharmaceutical Research and Manufacturers of America (PhRMA) all signed on to the letter.

CMS issued a proposed rule on December 19, 2011 (my colleagues Tom Crane, Karen Lovitch, and I discussed the proposed rule in BNA's Health Care Fraud Report), and, among other things, postponed collection of the required data from January 1, 2012 until January 1, 2013.  In response to the proposed rule, CMS received over 300 comments.  CMS has cited the volume of comments as a reason for its delay in publishing the final rule.  On May 3, 2012, CMS posted on The CMS Blog “Information on Implementation” of the Sunshine Act, and stated that “CMS intends to release the final rule later this year.  This timing will provide CMS with additional time to address operational and implementation issues in a thoughtful manner, and the ability to ensure the accuracy of the data that is collected.”

Among the comments on the proposed rule submitted to CMS, industry groups “asked that CMS provide applicable manufacturers 180 days after publication of the final rule before requiring data collection.”  January 1, 2013 is less than 180 days from now, so manufacturers will not have the preparation time that they sought.  The August 14th letter emphasizes the importance of giving Manufacturers the appropriate time to implement the final rule, “to properly implement the data collection and reporting required by the Sunshine provisions, our companies will need this time for system development, implementation, testing, and training.”

The Sunshine Act's administrative burden on Manufacturers will be significant as they will be required to track and collect information from many parts of the organization.  So sufficient lead time to review the final rule, and to operationalize its requirements, is significant because Manufacturers can be subject to substantial penalties if they fail to comply with the Sunshine Act.  We will continue to monitor any developments in this area and will provide further updates.

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Brian P. Dunphy is a member of the Health Care Enforcement & Investigations Group at Mintz. He defends clients facing government investigations and whistleblower complaints regarding alleged violations of the federal False Claims Act. Brian also handles commercial health care litigation.