Physician Sunshine Act Brings More Transparency

Do you ever wonder what motivates your physician to order certain drugs or use certain devices? The government constantly evaluates what influences drug and device orders as it attempts to reduce the costs to the Medicare and Medicaid Program. One area of focus has always been and will continue to be physician financial relationships with the drug and device manufacturers. In furtherance of this scrutiny and in conformance with the Healthcare Reform Act requirements, on February 8, 2013, the Physician Payment Sunshine Act (“Sunshine Act”) was finalized and published. The Sunshine Act will provide public awareness of physicians’ financial relationships with manufacturers and drug companies.

The Sunshine Act specifically requires manufacturers of certain drugs, devices, as well as biological and medical suppliers to provide an annual report of any direct or indirect payments to physicians. A payment means, a payment that may be in excess of $10.00 and it could include charitable contributions made on behalf of the individual physician in lieu of consulting or other professional fees. It also requires for a group purchasing organization and manufacturers to report any ownership or investment interest held by physicians. The manufacturer of the drugs and devices, including the pharmaceutical companies, would report these payments to the Centers for Medicare and Medicaid Services. The physicians and manufacturers would have forty-five (45) days to correct any inaccuracies in the report and ultimately the reports will be published. The manufacturer reports are due March 31, 2014. These reports can be utilized by hospitals, physicians and patients to evaluate whether or not there is a potential influence on the purchase of service.

The reason for this additional transparency is that the government has steadfastly held that when there is a financial relationship between a physician and an entity that provides medical supplies, the physician may be influenced to over utilize the service and order more medical supplies or drugs as a result of his or her financial relationship. However, it is a common practice for physicians to serve as medical directors for manufacturers and pharmaceutical companies. The physician’s expertise is a valued asset. Specifically, physicians consult with the manufacturers and pharmaceutical companies on devices and drugs based upon the physician’s use and experience when providing care to patients in real facilities instead of a virtual laboratory. Physician input is used to support research and development efforts that ultimately improve the overall quality of care delivered through these devices and drugs.

Physicians also often provide input to hospitals and facilities on the products and services that they believe have the best quality factors for their patients. If you are a hospital that purchases surgical supplies or implants and members of the medical staff participate in purchasing decisions, this new public report may assist to address potential conflicts of interest. There are some hospitals which have gone a step further to state that, the hospital will not purchase from those manufacturers, if a member of the medical staff has an ownership interest in a medical device manufacturer or drug manufacturer. While this is not required by law, it is becoming an increasingly common theme as hospitals try to avoid the conflicts of interest and to reduce the cost of surgical supplies.

The goal of the Sunshine Act is to increase knowledge, communication and transparency of financial relationships, so that all parties are aware of the potential influences on the purchase or order of drugs and devices. Although a physician may have a financial relationship, it may not be the influential factor that causes him or her to order from the manufacturer. However, to ensure that all financial relationships are known, the government is now mandating for these financial relationships to be disclosed publically. Only time will tell as to whether or not this public reporting will actually influence or change referral patterns or the purchase patterns of hospitals and physicians.

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