In July 2014, the Centers for Medicare and Medicaid Services (CMS) published proposed amendments to its rules implementing the Sunshine Act. Among other things, CMS proposed to remove section 403.904(g)(1), which previously stated that applicable manufacturers were not required to report payments or other transfers of value provided as compensation for speaking at a continuing education program, so long as the following conditions were met:
- The event at which the covered recipient was speaking met the accreditation or certification requirements and standards for continuing education for the Accreditation Council for Continuing Medical Education, the American Academy of Family Physicians, the American Dental Association’s Continuing Education Recognition Program, the American Medical Association, or the American Osteopathic Association;
- The applicable manufacturer did not pay the covered recipient speaker directly; and
- The applicable manufacturer did not select the covered recipient speaker or provide the third party (such as a continuing education vendor) with a distinct, identifiable set of individuals to be considered as speakers for the continuing education program.
In proposing this amendment, CMS reasoned that section 403.904(g) is duplicative of the "indirect payments" provision set forth in section 403.904(i)(1). "Indirect payments" are defined as "payments or other transfers of value made by an applicable manufacturer (or by an applicable [GPO]) to a covered recipient . . . through a third party, where the applicable manufacturer (or applicable [GPO]) requires, instructs, directs, or otherwise causes the third party to provide the payment or transfer of value, in whole or in part, to a covered recipient(s). . ." Section 403.904(i)(1) specifically excludes from the reporting requirements indirect payments or other transfers of value where the reporting entity is unaware of and does not know the identity of the covered recipient during the reporting year or by the end of the second quarter of the proceeding reporting year.
On Friday, October 31, 2014, CMS announced that it had published a final rule in the Federal Register, which deletes section 403.904(g)(1) (the CME Exclusion) in its entirety, as proposed. In response to several comments on the proposed rule, CMS acknowledges that an applicable manufacturer or GPO could easily determine the identities of the speakers and/or attendees at a particular CME event. Therefore, according to CMS, whether a CME payment made to an organizer of a CME event is reportable will depend on whether the applicable manufacturer or GPO required, instructed, directed or otherwise caused the payment to be provided to a covered recipient.
According to the reasoning in the preamble of the final rule, if the applicable manufacturer or GPO directs that its payment to a CME organizer (which is not itself a covered recipient) be applied to costs or fees related to a covered recipient (whether a speaker or an attendee) and the applicable manufacturer or GPO learns the covered recipient's identity within the applicable time period, then the payment will be considered an indirect payment to that covered recipient and, therefore, is reportable.
If, in contrast, the applicable manufacturer or GPO provides an unrestricted payment to the non-covered CME organizer to use as the CME organizer deems fit and does not require, instruct, direct or otherwise cause the applicable manufacturer's or GPO's payment to be provided (in whole or in part) in turn to a covered recipient, that payment will not be considered a direct or an indirect payment to that covered recipient and, therefore, need not be reported. CMS analogizes such CME funding to unrestricted donations to physicians' organizations that the organizations may use to fund a grant to a physician, which also would not constitute a reportable indirect payment. This explanatory language, however, appears only in the preamble and not in the final rule itself.
CMS has aslo indicated that it will provide "sub-regulatory guidance specifying [that] tuition fees provided to physician attendees that have been generally subsidized at continuing education events by manufacturers are not expected to be reported."
Although this rule change is effective as of October 31, 2014, it only applies to spend incurred in 2016 and later.