Physicians’ financial relationships with industry to go public in 2014

Jim Leonardo
09/16/2013 at 4:00PM

A sea change to the relationship between industry and medicine began Aug. 1, the launch date of a reporting process that's part of section 6002 of the Patient Protection and Affordable Care Act (PPACA). Better known as the "Physician Payments Sunshine Act," section 6002 requires industry partners of medicine to submit reports on "payments or transfers of value" that have been accepted by, given to or otherwise transferred to individual physicians - whether or not these physicians are aware of the payment or transfer of value.

A listing of these payments or transfers of value in their entirety - accompanied by the names of the physicians who've received them, the items themselves and their respective value - will be posted on the Centers for Medicare and Medicaid Services (CMS) website in September 2014. The Act, which was instituted at the direction of the Department of Health and Human Services (HHS), calls for a review period within which physicians can contest listed items.

Plastic surgeons who receives anything that could be valued at $10 or more from a relationship with industry - virtually any good, service or payment - will find their names listed on the CMS website beginning next year. This information, however, will be collected, collated and submitted to CMS by the company only - ASPS members do not need to do anything. However, experts recommend that surgeons track their own information for comparison purposes or to use during the review period set aside to contest the posted data.

The scope and nuances of the Act may catch many plastic surgeons off guard, says ASPS/PSF Vice President of Health Policy & Advocacy Scot Glasberg, MD. "I'm not sure ASPS members are aware of how all-encompassing the reporting will be," he says. "It can involve speaker or faculty fees, meals, a pathologic specimen you sent for analysis back to the company that furnished you with the technology you're working with, a reprint of a manuscript or a pen - really, anything at all that you accept will be reported.

Considering the type of companies with which plastic surgeons forge most of these relationships, the Sunshine Act will generally be linked to device manufacturers and pharmaceutical companies. However, group purchasing organizations (GPOs) are also required to report "certain ownership and investment interests held by physicians and their immediate family members," according to the CMS website. However, in the case of Access Medical Purchasing (AMP), the GPO launched by the Society in 2011, the structure and mode of operation of AMP place it outside the scope of the Sunshine Act and, therefore, the specifics of its relationships with plastic surgeons can remain between the two entities, without penalty.

The Sunshine Act also requires that industry track and record payments or transfers of value to teaching institutions - defined as "hospitals that receive payment under a Medicare direct graduate medical education, inpatient hospital prospective payment system indirect medical education, or psychiatric hospital IME programs during the last calendar year for which such information is available." (For definitions of terms, see sidebar below.)

Disclosures: 'real meaning'
"The entire point of the Sunshine Act is to make certain relationships between industry and the medical profession transparent to the public," says Caitlin Podbielski, health care counsel with Vedder Price PC, the Society's legal consulting firm.

"What it means is that when physicians say 'I have nothing to disclose,' that declaration will have real meaning going forward," maintains Robert X. Murphy Jr., MD, ASPS president-elect. "The information to be disclosed will be more granular, detailed and transparent than anything heretofore in these relationships."

The Act provides an exemption of sorts for CME events: Generally physician speaker or faculty fees for events sanctioned by one or more of the five bodies recognized by HHS (these include the ACCME) will not fall under the reporting mechanism when "industry" supplies the funding for such fees to the CME vendor - as long as the physician was not selected by industry for the event (emphasis added). However, payments to physicians from industry-supplied funds for considerations other than speaker or faculty fees, or for subsidized attendee tuition - including a plated lunch served to attendees, an evening meal at a restaurant or a hotel room for the speaker/attendee - are required to be reported.

Sunshine Act payment information will be compiled and posted for public view whether or not physicians know, or are involved in or completely removed from, the acceptance of the goods or services that fall under the Act.

The CMS states that the intent of the Sunshine Act is to increase public awareness of financial relationships between drug and device manufacturers and certain health care providers, by creating "greater transparency around the financial relationships of manufacturers, physicians and teaching hospitals."

"We view this program as a national resource for beneficiaries, consumers and providers to know more about the
relationships among physicians, teaching hospitals and industry," according to the CMS Fact Sheet For Physicians, which can be found with additional resources at

The agency says it will provide further information on its Sunshine Act database prior to the end of the year.

Already, the companies required to record and report payments and transfers of value began their data collection Aug. 1.

"It's already happening," Dr. Glasberg notes.

"I don't want to seem alarmist about this, but ASPS members need to familiarize themselves with this rule right away - if for no other reason than to be aware of what's out there when their patients begin to access physician information.

"It's really important for them to be informed ahead of time, so that in September 2014 they aren't surprised when they see their names on a public website," Dr. Glasberg says.

"This isn't going away, so we need to quickly come to terms with this," he adds.

What may confuse
Sunshine Act questions were arising only days after the Aug. 1 start of data collection. According to Podbielski, reporting issues surrounding "third-party" relationships - also known as "indirect reporting" at accredited events - were already causing brows to furrow.

"The rule makes a distinction between events physicians attend that are accredited and/or meet the certification standards of the AMA, ACCME, AAFP, ADA and AOA, and those that are not accredited/certified events," she says "In the case of accredited/certified events, a special rule applies. What CMS said is: When physicians speak at these accredited events, that payment isn't going to be reported - because the standards for accreditation or certification already include safeguards to reduce industry influence over the event.

"This seems to be emerging as one of the more administratively confusing parts of the reporting requirement," she tells PSN.

For example, a physician invited to speak at an accredited event (i.e., a CME meeting offered for AMA PRA Category 1 CreditTM) that's put on by a third party - perhaps an association such as ASPS - will receive a check from that association for those speaking fees, not from the company that is actually supporting the event; this will not be reported.

"Let's take the same event, but this one isn't accredited," Podbielski says. "The speaker or faculty fee will be reported, even though the check still came from the association - not the company that supported the event.

"However, at either event, being taken out to dinner is a reportable 'transfer of value,' " she adds. "Now throw into the mix the exception for food and beverage at large-scale conferences or events, wherein CMS has recognized that it'll be very difficult to determine every person at the education event (accredited or not) who received what was offered - this is in reference to a buffet-style meeting, snacks and coffee. That won't be required to be reported. But a smaller sit-down meal that can be broken down into pro rata 'payments' will be, and that meal will show up on the physician's CMS report."

What is "large scale" is determined by the company supporting the event, Podbielski says. For some, 50 or more served physicians will be the cut-off; for others, the total is 100.

"In many of these examples," she adds, "physicians aren't interacting with the sponsor or manufacturer who's supporting the event; that's an indirect payment. This entire area will be among the most confusing aspects of the Act."

Perhaps the simplest way to determine whether the event, meal or other "payment or transfer of value" is reportable, is to ask.

"It wouldn't be inappropriate before taking or using something to say: 'I'd like to know the dollar amount that's recorded to me, so I can record it myself,'" Podbielski says. "That might feel awkward in the beginning, but with the Act in play now, it's likely that manufacturers will become accustomed to hearing that and will prepare accordingly, perhaps supplying such information in advance."

The other fail-safe to stay outside of reporting under the Sunshine Act is a simple refusal. "CMS has stated that a flat refusal to accept any payment or transfer of value from manufacturers is the only mechanism to 'opt out' of payments to the physician being publicly reported," she says.

On the other hand, "If the plastic surgeon doesn't care about this information being out there in the public domain, that's fine," Dr. Glasberg adds. "If they do, they need to be careful."

Nothing for granted
A small or seemingly insignificant payment, service or other consideration may still show up on the CMS reports website, or it simply may be the cause of additional paperwork that, at first blush, seems quite unnecessary. Therefore, plastic surgeons may best be served globally by considering anything and everything of value to be in the Sunshine Act bull's-eye.

"We had a family party recently and I invited someone from a company that's going to be affected by the Sunshine Act," Dr. Glasberg says. "He's a guy I've formed a friendship with over the years. But he's going to have to report that he attended our party - although there was no monetary value involved, and certainly there was no business done; we'll have to sign documents that it was all done on a personal basis. That's the extent to which CMS wants everyone to drill down."

"It could be a spa situation where massages are being offered. It might be a cup of coffee - some of the designer coffees can be over the $10 minimum," Podbielski says. "It could be a round of golf."

What if a plastic surgeon accidentally drops his or her sunglasses into the water at a blinding San Diego pier at the upcoming annual meeting - and an industry representative happens to be on hand with a spare pair? "Those glasses will appear on the CMS database next year," Dr. Glasberg says.

"Just think 'anything and everything,' and you have the complete understanding of what will be tracked and reported to the public," he adds.

Tracking and dispute resolution
The good news for plastic surgeons is that they aren't required to track payments and transfers or value, nor file any report or update to CMS. Their industry partners are required by the PPACA to do so - but this also means plastic surgeons may be unaware that this information is being reported.

Prior to publication, ASPS members will be given the opportunity to question those postings: The Act contains an annual 45-day review period to address disputes surrounding payments - and submit written challenges to payments in question. According to the CMS, the window allows physicians "to work with the applicable manufacturers... to correct the information. After those 45 days, (industry) will have an additional 15 days to submit corrections based on any disputes identified by physicians." This process begins 60 days prior to the information becoming public. Disputed information that's been resolved will be posted as corrected; that which can't be, will be posted as submitted by industry but marked as "disputed."

Podbielski recommends that ASPS members begin tracking their payments now, in anticipation of the dispute process.

"While plastic surgeons have no obligation to report anything under the Act, it might be advantageous for them to track payments or transfers of value on their own," she says. "By doing so, when plastic surgeons arrive at the start of 45-day review period, they've something to compare against the posted data."

Disengage - or stay the course?
Dr. Murphy says ASPS members may find themselves wrestling with a fundamental question that arises in any relationship when the terms of it change: stay, or break up? The public scrutiny that's likely to ensue through the CMS data may cause plastic surgeons to take a hard look at the cost-benefit ratio of their actions.

"Physicians will really need to evaluate their relationships with industry," he says. "If they choose to continue, plastic surgeons will come under demands to answer for their relationships when patients learn about them - as they will through online Sunshine Act data. There's no doubt they will, and it may not be a comfortable situation for our surgeons."

Medicis Executive Vice President Vince Ippolito reports that doctors are having second thoughts about their connections with industry. "We're seeing much trepidation among all physicians," he tells PSN. "Many physicians see the Act as an invasion of their privacy; there's a fear of backlash among their patients."

Dr. Glasberg has heard the same from ASPS members. "They feel that their industry relationships are private, and that the Act bores into areas that are off-limits," he says. "On principle, they just don't want their names listed in that database.

"Personally, I don't mind that a patient knows I make 'x' dollars from a company for my consulting arrangement with them," he adds. "My take is that transparency and exposure is necessary. I want my patients to know what I'm doing."

"Physicians will need to have answers to these questions," he adds. "Nothing seems more disingenuous than a plastic surgeon doing the 'lateral dance' when hit with a tough question. But if they're convinced in their heart that keeping company with industry is the best way forward for them, then they should have no problem speaking about it openly and freely."

Trust in compliance
Ippolito says the wide net used to capture payments has turned relationships between manufacturers and plastic surgeons into questions of process and trust. "We see that plastic surgeons will be touched by several areas of the Act, so for those involved with industry, keeping these relationships alive may revolve around the answer to an important question: Is the company they're doing business with committed to compliance and to keeping that plastic surgeon and their company safe? If they can answer 'yes' to those questions, there's no reason not to continue with that relationship."

Ippolito says the questions surrounding the value of relationship with industry are fair to ask, but plastic surgeons should ask another question, as well: What's the cost-benefit equation involved in relationships that are properly aligned with the Act? "Each physician should take a look at his or her entire practice and business, and everyone related to that practice and business, to ensure that everyone's aligned with the surgeon's belief system as it relates to compliance," he says.

"If the surgeons are comfortable with the practice's philosophy and direction, and they're confident that their industry partner is following the Act's mandates, there's no reason why they shouldn't continue on," Ippolito adds. "The benefits for the public and patients of doing so outweigh any gain that might be realized by shutting down such partnerships."

To stay or go is a matter both personal as well as professional, with plastic surgeons needing to choose between a continuation of a relationship that, while it may yield some financial return for the plastic surgeon, also drives forward the research and technology that leads to true innovation - and devices and drugs that can have profound effects upon patient populations.

Andrew Van Haute, JD, the general counsel for AdvaMed, an association that advocates on legal, regulatory and economic issues for medical device manufacturers, says the working relationship between physicians and medical manufacturers is essential to the unique innovation model for developing new, safe and effective medical technologies  - with the overriding and most crucial benefit going to the patients, who after all are the intended "end point" of medical innovation.

"Similar to ASPS members, the members of AdvaMed realize these collaborations and interactions are vitally important to advance innovation and create new devices and therapies," Van Haute says. "In addition, these collaborations directly lead to the development of plastic surgeons who are well-trained and well-educated on the devices they will be offering their patients.

"Particularly in the device arena, the success of a medical device is just as dependent upon the skill and training of the plastic surgeon as on the design of the device itself," he adds. "For these reasons, we believe it's important that the public and any other group that sees the coming CMS data understand the purpose and context of these interactions and payments."

"Like anything else, data isn't black-and-white," Dr. Murphy says. "A professional's moral compass has got to be what keeps him or her on the right side of the moral and ethical ledger."

Sunshine Act key terms and definitions

CMS has published "Fact Sheet: Open Payments (Physician Payments Sunshine Act)" to help educate medical professionals on the requirements, intents and definitions included in the Act. (Go to, and enter "Open Payments" into the search field at the top of the page.) The following have been chosen for print due to their relevance to plastic surgeons. 

Payments and transfers of value
Plastic surgeons who accept any of the following payments or transfers of value from a "reporting entity" - for the specialty, mainly medical device manufacturers and pharmaceutical companies - will become part of the Sunshine Act registry pool.

These payments and transfers are:
■    Charitable contributions
■    Consulting fees
■    Compensation for services other than consulting (i.e., faculty or speaker other than at CME event)
■    Compensation for serving as faculty or speaker (at accredited CME event or unaccredited and non-CME event)
■    Current or prospective ownership or investment interest
■    Education
■    Entertainment
■    Food and beverage
■    Gifts
■    Grants
■    Honoraria
■    Research
■    Royalty or license
■    Space rental or facility fees (teaching hospital only)
■    Travel and lodging

Covered recipients
Under CMS definitions, "Covered Recipients" refers to physicians and includes doctors of medicine, osteopathy, dentistry, dental surgery, podiatry, optometry and chiropractic medicine.

Covered products
Generally speaking, only the companies that produce "Covered Products" are required to follow the terms of the Act. The CMS has defined these products as follows: "A covered product is any drug, device, geological or medical supply that's eligible for payment by Medicare, Medicaid or the Children's Health Insurance Program, either individually or as a part of a bundled payment (such as the inpatient prospective payment system), and requires a prescription to be dispensed (for drugs and biologicals) or required premarket approval by or premarket notification to the FDA (for devices, including medical supplies that are devices)."