The Physician Payments Sunshine Act (“PPSA”) requires medical product manufacturers of drugs, devices, biologics, and medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program to annually disclose to the Centers for Medicare and Medicaid Services (“CMS”) any payments or transfers of value made to physicians or teaching hospitals. The PPSA is designed to increase transparency around the financial relationships between physicians and manufacturers by requiring manufacturers to report to CMS in three broad categories of payments or transfers of value:
(A) payments for meals, travel reimbursement, and consulting fees
(B) ownership and investment interests in manufacturers held by physicians and their immediate family members
(C) research payments, including any payment made for participation in preclinical research, clinical trials, or other product development activities
While these categories cover a wide range of relationships, certain transactions and transfers are exempt from disclosure. Manufacturers are not required to report on any payments under $10 (unless those individual payments total more than $100 annually), on educational materials intended solely for patients, or on product samples. After undergoing a verification process, any data reported under the three categories listed above, will be published annually in a publicly searchable database.
These reports inform patients of any incentive their physician may have for recommending a certain medical device or drug and allows them to make an informed decision on whether to follow the physician’s recommendation or not.
In addition, the PPSA imposes penalties for failure to comply with these reporting requirements. For each payment that a manufacturer or GPO fails to report, a penalty of $1,000 to $10,000 may be applied. The maximum annual penalty for failure to report is $150,000. However, the penalties are more severe in cases where the manufacturer or GPO knowingly fails to report, in which case the penalties range from $10,000-$100,000 per payment, up to a maximum penalty of $1 million. Individual physicians are not required to report, but physicians are encouraged to monitor the manufacturers’ reports for inaccuracies.
The PPSA is not the only federal statute that governs financial relationships between physicians and medical product manufacturers but it is unique in that it creates a report of such relationships.
In order to determine if a payment made by a manufacturer to a physician needs to be reported in compliance with the PPSA, please consult a healthcare attorney.
Author Scott Chase is a health law and corporate attorney at Farrow-Gillespie Heath Witter LLP. Scott has been named to the lists of Best Lawyers in America, Texas Super Lawyers, and Best Lawyers in Dallas in every year for more than a decade.
Tahlia Clement is a clerk at FGHW. Ms. Clement is a 2019 candidate for a Juris Doctor at SMU Dedman School of Law, where she is the Editor-in-Chief for SMU’s Science and Technology Law Review. She holds a B.A. in journalism and mass communications from Arizona State University.