CMS Issues Proposed Regulations on New Disclosure and Reporting Requirements Related to Manufacturers and GPOs

Introduction

On May 17, 2010, K&L Gates LLP issued a client alert on the new law “Transparency Reports and Reporting of Physician Ownership or Investment Interests” (the “Sunshine Act”) issued under the Patient Protection and Affordable Care Act of 2010 (“PPACA”). The Sunshine Act mandated the government to establish regulations and reporting procedures by October 1, 2011, but it missed the deadline. On December 19, 2011, the Centers for Medicare and Medicaid Services (“CMS”) issued proposed regulations which are the topic of this updated alert. CMS requests comments to be submitted by February 17, 2012.3 Given CMS’s broad interpretation of the Sunshine Act and the penalties associated with failure to comply, manufacturers and group purchasing organizations (“GPOs”) should strongly consider submitting comments on the proposed rule. CMS is specifically requesting input on its proposals as well as the challenges and burdens entities may encounter in collecting the data.

Delayed Reporting Effective Date

The Sunshine Act requires (1) applicable manufacturers to disclose payments and other transfers of value to teaching hospitals and physicians (“covered recipients”), and (2) both applicable manufacturers and applicable GPOs to disclose ownership or investment interests held by physicians or their immediate family members (“IMFs”) and any payments or other transfers of value to an owner/investor physician.