CMS Issues Proposed Rule on Physician Financial Relationships

The Centers for Medicare and Medicaid Services (CMS) published a proposed rule in the December 12th issue of the Federal Register, which is intended to create more transparency about financial relationships between doctors and drug makers, device manufacturers and other private interests.

Under the proposed rule, mandated by the Affordable Care Act (ACA), manufacturers covered by Medicare, Medicaid, or the Children's Health Insurance Program will have to report payments or transfers of other items of value to physicians and teaching hospitals. The rule covers all payments to physicians of $10 or more or any combination of payments that total more than $100.

Payments include gifts, consulting fees, speaking fees, food and beverages, travel, and research payments. In addition, group purchasing organizations and manufacturers would have to report if they are owned in whole or in part by physicians, or if physicians have investments in them. Violators would face civil monetary penalties, capped at $150,000 annually, for failing to report and $1 million for knowingly failing to report.

At the same time, CMS explicitly admitted that it has no empirical basis for estimating the frequency of such problems (inappropriate use), the likelihood that transparent reporting will reduce them, or the likely resulting effects on reducing the costs of medical care.

According to analysis, the proposed rule would require additional reporting from organizations, including but not limited to continuing education providers, professional medical associations, patient advocacy groups, and other non-profit organizations.

For example, in the definition for direct compensation for serving as a faculty or as a speaker for a medical education program, CMS has put both accredited and non-accredited CME into that definition. Regarding the identification of recipients, the proposal calls for CME providers to report payments to teaching hospitals and physicians. This is being applied to all payments and transfers of value.

The American Osteopathic Association will submit comments by the February 17th deadline.