A provision of the Affordable Care Act addresses the financial relationships between physicians, pharmaceutical companies, and medical product manufacturers. Through these relationships, patients reap the benefit of having access to new, improved medical products and drugs. However, the incentives received by physicians for promoting such products open the door for potential conflicts of interest that could affect a physician’s decision-making inpatient care.
Section 6002 of the Affordable Care Act requires the reporting of transfers of payments and or value between manufacturers and providers. The objective of the Act is to increase the transparency of financial conflicts of interest in inpatient care. This provision is entitled the Transparency Reports and Reporting of Physician Ownership or Investment Interest, commonly referred to as the “Sunshine Act.” Federal Register, 78 Fed. Reg. 27 requires “applicable manufactures of drugs, devices, biologicals, or medical supplies covered by Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP) to report annually to the Secretary certain payments or transfers of value provided to physicians and teaching hospitals.” This information is available on a public website.
The Association of American Medical Colleges (AAMC) addressed the context of applicable manufactures in a letter of support for the proposed regulation. The AAMC requested the exclusion of academic centers and teaching hospitals in the definition of manufactures when such institutions manufacture or produce a drug, device, biological or medical supply for diagnostic, training, or research. The AAMC suggested including academic centers and teaching hospitals within the definition of applicable manufactures would be counterintuitive to the intent of the proposed regulation.
The reporting requirements identified three types of payments that should be disclosed. These payments include general payments, research payments, and ownership or investment interest. Comments from stakeholders in the health care industry raised concerns about whether the name of the individual, or the entity that received payments should be disclosed. CMS deemed it sufficient to exclude the identities only for privacy concerns. CMS also deems it not necessary to report payments of $10 or less. However, if such payments amount to an aggregate of $100 for the year, they are required to be disclosed.
As a matter of law, there is an administrative process in adopting a final regulation such as the final regulations of the Sunshine Act. Congress delegates its power to federal agencies to draft regulations so to ensure efficacy in law-making. In drafting regulations, each agency relies upon the expertise of its employees to work out the details for implementation. Some regulations are initiated by the filing of a public petition. The agency has broad power to deny any petition filed for rulemaking; however, the standard of review for such an action is measured by whether the agency’s decision was arbitrary and capricious, whereby whether the decision was based on facts and made upon reasonable grounds. If the proposed rule is the direct result of a statute, then the agency has discretion in drafting the regulations; however, this process is influenced by the political presence and public comment. Feedback is given on the proposed regulations during a comment period and, then a final rule is issued. If judicial review is necessary, courts will intervene to determine if the regulations comply with constitutional and statutory standards.
The release of the regulations implementing the provision of the Sunshine Act was a direct result of the Affordable Care Act at the direction of the Centers of Medicare & Medicaid Services (CMS) of the Department of Health and Human Services. CMS proposed regulations in December 2011, and they became final in 2013. During this period, CMS received several hundred comments from various stakeholders within the health care industry that ultimately shaped the final regulations adopted by the agency.
The Sunshine Act addresses an aspect of patient care. The regulations implemented according to the provision are not the final fix to such a complex problem of identifying financial conflicts of interest in inpatient care but are expected to curtail the appearance of impropriety in accepting payments, as well as putting the patient in a better position to question such transfers of payments.
