On November 13, 2014, CMS published the 2015 Medicare Physician Fee Schedule (“MPFS”) finalizing the following changes to the Sunshine Open Payments regulations.  The MPFS:

  1. Deleted  the provision exempting certain payments to CME providers from the reporting requirements;
  2. Added  three new forms of payment designations;
  3. Made  the reporting of the marketed name of a covered device no longer optional; and
  4. Deleted the definition of covered device.

These changes will be effective January 1, 2016, with reports to CMS in 2017.

(A summary of the final Open Payment regulations can be accessed here)

1. Changes to reporting requirements for certain CME payments

For several reasons CMS has decided to delete the provision exempting, from the reporting requirements, certain payments related to continuing medical education.  One reason is its belief that the provision was redundant with the existing indirect payments exemption.

Beginning with the collection period starting on January 1, 2016, payments made to continuing education providers will need to be reported unless the payment is:

  • an indirect payment meeting the requirements of the indirect payment exemption or
  • not a direct or indirect payment to a covered recipient.

The preamble makes it pretty clear that if the manufacturer directly pays a covered physician or conditions the sponsorship of a CME event on the participation of a specific physician the payment is reportable.  With respect to such reportable speaker fees, CMS notes that covered manufacturers are still able to distinguish whether the event was accredited or unaccredited, by reporting the payment in the appropriate nature of payment category (i.e., 42 CFR § 403.904(e)(2)(xiv) or (xv)). Additionally it appears clear that if an applicable manufacturer suggests a specific speaker or provides the CME provider with an identifiable set of suggested speakers, then any payment by the CME provider to a physician speaker will be considered an indirect payment and will need to be reported unless the applicable manufacturer does not know the identity of the covered recipient during the reporting year or by the end of the second quarter of the following reporting year.

At the other end of the spectrum, if a covered manufacturer provides a CME provider with an unrestricted grant and grants “full discretion” to the CME provider as to how the money is spent, then those payments would not be reportable because they would not meet the definition of indirect payments (i.e., the covered manufacturer did not “require[], instruct[], direct[], or otherwise cause[] the third party to provide the payment … to a covered recipient” 42 CFR § 403.900).  However, it is not entirely clear what CMS means by “full discretion.” With respect CME, the preamble states that an applicable manufacturer grants a CME provider “full discretion” so long as the applicable manufacturer does not suggest a specific physician, or provide an identifiable set of physicians to be considered as speakers for the program. However, CMS also analogized these payments to unrestricted grants to physician organizations that are subsequently used to provide grants to physicians.  This is where things begin to get murky because, with respect to grants to physician organizations, reportability does not turn on whether the applicable manufacturer suggested a physician recipient but on whether the money was provided for the purpose of funding a grant or award to physicians.

Hopefully CMS will clarify this when it provides the promised guidance regarding the scope of physician attendee subsidies that will not be reportable.

2. Additional forms of payment designations

Currently, transfers of value to a covered recipient in the form of stock, stock options or other ownership interest are reported into one broad form of payment category.  However, in an effort to collect more specific data, covered manufacturers will be required to report these transfers into one of three new distinct categories; stock, stock options, and other ownership interests respectively.

3. Changes to the requirements for reporting the marketed name of covered devices

Currently, it is optional for manufacturers to include the marketed name of a covered device when reporting. However, in an effort to align the requirements of reporting across products (i.e., drugs, devices and biologics) medical device and medical supply manufacturers will also be required to include the marked name of the product when reporting.  This change made the definition of covered-device unnecessary; therefore, CMS has deleted it.