Still No “Sunshine” – in the Name of Lighter Regulatory Burdens

Centers for Medicare and Medicaid Services (CMS) Administrator Don Berwick said on October 31 that the agency would delay further rules implementing a provision in the health reform law that requires drugmakers and device companies to report all payments and gifts to physicians.

The Physician Payment Sunshine Act was included in the health care reform law enacted last year (Patient Protection and Affordable Care Act, P.L. 111-148), as a way to reduce healthcare costs through greater transparency. PPACA requires pharmaceutical, medical device, biological, and medical supply manufacturers to track and report to the CMS all payments to doctors above $10. Non-compliance may result in fines of up to $10,000 for inadvertent non-compliance and up to $100,000 for knowing non-compliance. The first reports will be due March 31, 2013 for the calendar year 2012 reporting period which begins in three short months.

The effort is meant to “shine light” on the industry’s gifts to physicians, which critics maintain can improperly influence patient care and treatment decisions, as explained here.

CMS missed the statutory October 1 deadline for publishing the regulations that would clarify certain definitions and provide detailed instructions on how these reports are to be compiled and submitted, but not because the rules are controversial – which they are – but because the agency is trying to lighten the burden of red tape.

In an October 28, 2011 letter to Senators Herb Kohl (D-WI) and Charles Grassley (R-IO), Berwick cited a presidential order from last January that calls on federal agencies to minimize regulatory burdens. “I believe we can implement the statutory goals of (the Sunshine Act) while minimizing burden on the regulated parties. In that vein, CMS is carefully reviewing this statutory requirement and working hard to ensure we meet these goals.”

[Earlier this year, President Obama instructed federal healthcare agencies to streamline regulations that impede flexibility, unnecessarily burden resources, reduce efficiency, increase costs and decrease quality of care. In that vein, CMS recently released three new rules intended to remove or revise outdated, duplicative, overly burdensome and unnecessary regulations, thereby saving the healthcare system an expected $1.1 billion per year and more than $5 billion over five years. Whether the expected savings and efficiencies called for by the Obama administration will actually be achieved through these new rules remains to be seen.]

In his letter to Senators Kohl and Grassley on the Sunshine Act rules, Berwick gives no explanation for the delay and no indication of when CMS may actually issue the guidelines. The irony, of course, is that this is the same administration that wanted to enact the Sunshine provision in the first place.

On November 1, Senator Grassley responded in a statement, “The administrator’s response doesn’t tell us anything new. There’s no explanation for the delay and no indication of when to expect completion. It’s an inadequate response any way you look at it.”

The Pharmaceutical Research and Manufacturers of America (PhRMA) and other groups have advanced a proposal that the initial reporting period, scheduled to begin January 1, 2012, should be delayed for the same amount of time that the rule is; e.g., if the rule is 6 months late, the first reporting period would not be January 1- December 31, 2012 but July 1- December 31, 2012; they would leave in place the requirement that the first actual report from pharma and device companies to HHS would be due the 1st quarter of 2013, but would shorten the time period to be covered in that first report. CMS has not commented on the PhRMA request.

The PhRMA proposal sounds only fair. After all, the longer CMS waits to publish the rules, the more time companies will need to comply, i.e., “minimizing [the] burden.”