CMS announces delay on
Sunshine Act reporting

The Centers for Medicare and Medicaid Services (CMS) broke its silence yesterday with a blog post announcing some good news and some bad news about the implementation of the Physician Payments Sunshine Act.

First, the good news for pharmaceutical and medical device manufacturers: They will not have to report on any aggregate spend data in 2012. I think everyone could hear the collective sigh of relief. The reason cited for the delay is “to provide time for organizations to prepare for data submission and to sufficiently address the important input we [CMS] received during the rulemaking process.” The bad news? Reporting is not going away altogether, and CMS has promised to provide its final guidance later this year.

The good news takeaway
So what does it mean that data in 2012 does not have to be reported on? It means companies get more time, which means they should get moving. Here’s the equivalent. Two days before the final exam the professor decides to give you an extra week to study. The unprepared students ready to pull a couple of all-nighters will rejoice, but they’d better crack the books as well.

Pharmaceutical and medical device manufacturers, use the extra time wisely! Don’t procrastinate anymore. Now is the time for action. You don’t have to worry about any data for 2012. Instead focus on getting processes and systems in place for data collection in 2013. Companies that have put off action until now -- our recent survey indicated there are plenty in this category -- should begin gathering a cross-functional team to address internal, upstream, aggregate spend processes to assess their compliance needs and to start investigating solutions for full transparency.

The bad news takeaway
The Sunshine Act is not going away. Now that’s really only bad news if your organization has something to hide. We’ve all seen the consequences of underhanded activity among life sciences manufacturers. And we’ve seen again and again that transparency only benefits an organization.

The Sunshine Act provides an opportunity to gain greater insight into contracting processes and activities that might actually be hemorrhaging revenue. As a result, you can transform those processes and malignant activities into strategic opportunities for increased profitability. But whether you like it or not, CMS is planning to come out with its final guidance on the Sunshine Act within the year. So get ready.

What is really behind CMS’s further delay?
Why is CMS waiting to release its final rule on the Sunshine Act later this year when Senators Grassley and Kohl have been pressuring them to act this summer? I think it’s pretty simple. CMS is waiting for the presidential election results in November. This election year could potentially involve a change of parties in the White House and depending on the outcome of the Supreme Court’s ruling on the Affordable Care Act (likely at the end of June), the election results would determine whether the Sunshine Act is here to stay.

CMS is overwhelmed with other responsibilities and is under-equipped to address the Sunshine Act.   Rather than allocate resources to this issue now, it’s hedging its bets that it won’t have to at all come election time. This might prove a foolhardy gamble, but in the end, CMS will face no consequences either way.

Stay tuned to the Revitas blog for a full post later this month addressing the implications of the Supreme Court’s decision for the Sunshine Act. What is your take on this decision to delay data collection? Are you relieved? Motivated to act? Or are you just as confused as you were to begin with? We’d love to hear your perspective.