Reform Recap covering the latest proposal to expand medicare for all
Reform Recap covering the latest proposal to expand medicare for all

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Government expands enforcement of the Sunshine Act

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The federal government is stepping up enforcement of the Physician Payments Sunshine Act, a law that requires manufacturers of drugs and medical devices to report payments made to physicians. The Sunshine Act, also known as the Open Payment Program, was enacted as part of the Affordable Care Act of 2010.

The law is designed to reduce inappropriate incentives to physicians to prescribe particular drugs or use devices, resulting in added costs for health care and sometimes unnecessary treatment for patients.

Neurosurgeon settles lawsuit

A South Dakota neurosurgeon, Wilson Asfora, M.D., and two companies he owned settled a lawsuit with the federal government for $4.4 million.

The suit was originally brought by two fellow physicians as a qui tam action. (Qui tam are the first two words of a Latin phrase that refers to legal actions brought by private individuals on behalf of the king or the government. When such actions are successful, the people who brought the suit often share in the financial recovery.)

The suit alleged that Asfora developed bullet cages for use in spinal fusion surgeries and distributed the devices through companies he owned. It was alleged that Asfora used more devices than needed, performed unnecessary surgeries, and charged excessively for the devices, compared to comparable products.

In addition to the financial settlement, Asfora and his companies agreed to be barred from participating in Medicare and Medicaid for six years.

$20 million settlement by health care system

The case was expensive for others involved. Sanford Health, a health care system with 46 hospitals headquartered in Sioux Falls, S.D., which employed Asfora, paid a settlement of $20 million for its involvement in the alleged kickback scheme. 

In a statement to its employees, Sanford denied any wrongdoing, and said: “We view this as an opportunity to make our compliance program even stronger.” Asfora also denied wrongdoing.

Medtronic, a medical device manufacturer with more than $30 billion in sales, also was involved in the lawsuit, which made charges under the federal False Claims Act and the Open Payments Program.

The government alleged that Medtronic paid for social events, including “scores of expensive meals” to induce Asfora to use Medtronic’s infusions pumps.

The sale of spinal devices were part of another federal enforcement action. Medicrea International, a French medical device manufacturer, and its U.S. affiliate agreed to pay $2 million in connection with a conference it held in 2013. Medicrea allegedly paid travel, meal and entertainment expenses for physicians who were encouraged to use its devices.

Reports required for more recipients of payments

Effective 2021, the Sunshine Act requires manufacturers of drugs and devices to report payments to more categories of “covered recipients.” In addition to reporting payments to physicians, regulations issued under the act now require reports of payments to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and certified nurse midwives.

The Centers for Medicare & Medicaid Services (CMS) explained that reports must be made for “payments or other transfers of value.” The payments can take many forms: gifts, honoraria, travel expenses, consulting fees and payments for research.

The dollar amount of payments that must be reported is updated each year. In 2021, the threshold per individual payment was $11.05, with an annual aggregate of $110.40. Open buffet meals at large-scale conferences do not need to be reported.

In addition to payments, manufacturers must disclose if covered recipients or their immediate family members have an ownership or investment interest in the manufacturer. The disclosure requirement does not apply to publicly traded securities or mutual funds.

Prudent to check accuracy of reports

The obligation under the federal program to report payments is on the manufacturers—not physicians or other recipients. Nonetheless, it is prudent for the recipients to check that the data reported about them is accurate, since large payments may prompt a federal investigation.

Under rules of the Open Payment Program, manufacturers (and group purchasing organizations) submit reports each year between February 1 and March 31 with data from the preceding year.

The recipients then have 45 days (between April 1 and May 15) to review the data and dispute the data if they wish. The disputes are supposed to be resolved between May 16 and May 30. If the dispute is not resolved, the data still will be published, but the fact that there is a dispute will be noted in the published report.

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Jeff Atkinson

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