Physician Payment Sunshine Act: Achieving Compliance with eSignatures

THE PHYSICIAN PAYMENT SUNSHINE
ACT AND ESIGNATURES: ACHIEVING
SUSTAINABLE COMPLIANCE
EXECUTIVE SUMMARY
Applicable pharmaceutical and medical device manufacturers could face
fines up to $1.15 million annually for failing to correctly report payments
made to physicians, as mandated in the Transparency Reports and
Reporting of Physician Ownership or Investment Interests section of the
Patient Protection and Affordable Care Act, commonly referred to as
the “Physician Payment Sunshine Act.” Although the Act’s writers and
prominent figures within the healthcare industry have urged for swift
adoption, final approval was just released February 1, 2013 – one full
year after the public comment period closed. The industry has been
abuzz, trying to identify best practices in aiming their processes and
technologies for what is finally a confirmed, albeit ambiguous, target.
Pharmaceutical and medical device manufacturers recognize that
compliance with the Sunshine Act will require strict, granular accounting
of the payments and other transfers of value (TOV) to physicians and
teaching hospitals. As public companies scrambled to comply with
the Sarbanes-Oxley Act via electronic discovery in the early 2000s,
pharmaceutical companies and medical device manufacturers are
scrambling to find a solution that will not require undue burden or
expense.
This paper discusses the outstanding questions and possible solutions
for streamlining the transfer of value reporting while improving the
accounting and verification processes.
1
Ombud, Inc.
www.ombud.com
1877 Broadway, Boulder, CO 80302

INTRODUCTION TO THE SUNSHINE ACT
On February 1, 2013, the Centers for Medicare and Medicaid Services (CMS)
released the final rule implementing the Sunshine Act, mandating transparency
within physician-industry relationships. The long-awaited final rule gives
pharmaceutical and medical device manufacturers more clarity in the CMS’s plans
for the implementation.
Applicable manufacturers of pharmaceuticals, medical devices, biologicals or
medical supplies in addition to applicable group purchasing organizations (GPOs)
are required to report expenses or compensation made to physicians and teaching
hospitals (collectively referred to as covered recipients). They must also report
on physicians with ownerships and investment interests. The reports must be
submitted electronically to the Secretary of the Department of Health and Human
Services (HHS) on an annual basis.
According to Dan Carlat, psychiatrist and Prescription Project Director at The
Pew Charitable Trusts and an influential voice in urging for fast adoption of the
Sunshine Act, “The Sunshine Act doesn’t do anything with regard to regulation. It
simply will reveal the nature of what’s going on now.”
“At least some
[industry-
physician]
relationships
are associated
with new, more
expensive
drugs.”
-MedPAC
2
Ombud, Inc.
www.ombud.com
Pharmaceutical
& Medical Device
Manufacturers
Physicians &
Teaching Hospitals
Government Oversight
AFTER
Pharmaceutical
& Medical Device
Manufacturers
Physicians &
Teaching Hospitals
BEFORE

“Transparency will shed light on the nature and extent of relationships, and will
hopefully discourage the development of inappropriate relationships and help
prevent the increased and potentially unnecessary health care costs that can arise
from such conflicts,” according to the final rule.
Those costs refer to the initial recommendation of MedPAC in 2009 that influenced
this transparency initiative. The Medicare Payment Advisory Commission (MedPAC)
is an independent Congressional agency established by the Balanced Budget Act
of 1997 to advise the U.S. Congress on issues affecting the Medicare program.
According to MedPAC’s recommendation, “At least some [industry-physician
relationships] are associated with rapid prescribing of new, more expensive
drugs…. [and] concern that manufacturers’ influence over physicians’ education
may skew the information physicians receive.”
This contrasts the belief of some industry thought leaders that federally-
regulated transparency is unnecessary because behaviors and TOV are already
being successfully self-regulated. Industry ethical standards like PhRMA Code on
Interactions with Healthcare Professionals and AdvaMed Code of Ethics have been
encouraging ethical interactions and reasonable expenses between manufacturers
and HCPs since 2002 and 2004, respectively. While PhRMA Code and AdvaMed
Code of Ethics are within the spirit of the Sunshine Act, each serves a unique
purpose.
PENALTIES OF NON-COMPLIANCE
The penalty for not submitting the required information can be $1,000 – 10,000
for each payment not fully reported, with a fine cap of $150,000 a year. The
penalty for knowingly failing to submit these payments is ten-fold. These fines are
$10,000 - $100,000 for each payment, with fine cap of $1 million a year. Penalties
for knowing and unknowing failure to report will be aggregated separately, with a
combined maximum penalty of $1.15 million.
Although commenters generally supported higher penalties for knowing failures
to report and these penalties may not seem to be a significant deterrent for larger
pharmaceutical manufacturers with established and marketed products, think of
the resulting transparency as a house on fire situation.
CMS does not have the authority to impose fines for anything other than failure
“Transparency
will shed light
on the nature
and extent of
relationships.”
-CMS final rule
3
Ombud, Inc.
www.ombud.com

to report timely, accurate information. The reported data, however, will be public
record – aggregated, easily searchable public record. Additionally, CMS will be
required to submit annual reports to Congress and each state.
All the necessary financial evidence for any indication of wrongdoing will be
placed directly in the hands of those who can take action. Like a mob boss being
taken down for tax evasion, transparency could result in litigation and significant
fines from other areas of the government.
Further, consolidated reporting is now allowed for entities at the company or
operating division levels following comments that consumers might not know
names of small divisions of large corporations, rendering the publicly-available
information useless. This does, however, have financial implications as well. For
example, a large corporation submits a report for itself and two small divisions.
That large corporation will be held responsible for all three companies individually.
Instead of an annual maximum penalty of $1.15 million, that corporation now faces
a maximum penalty of $3.45 million annually.
Additionally, both large and small companies stand to risk their public image and
reputation with non-compliance.
PREPARING TO COMPLY WITH SUNSHINE ACT
For an entire year after CMS closed public comments on the Sunshine Act,
companies awaited guidance from CMS as to exactly what level of detail they will
have to collect and report TOV and by what deadline to avoid fines.
The day of release initiated the 180-day countdown applicable manufacturers
were given to prepare for compliance.
4
Ombud, Inc.
www.ombud.com
“You don’t
want to be in a
position where
a doctor reads a
transparency
report listing a
payment with
which they
disagree. This
is especially
important once
the payments
are placed on a
publicly available
website.”
-Dr. Dan Carlat
Initial Recording Period
Aug. 1, - Dec. 31, 2013
First Report Due by
March 31, 2014
45-Day Review & 15-Day
Corrections Periods
Dates: TBD
First Annual Report
Submitted from CMS to
Congress by
April 1, 2015
First Publication of Records &
First Annual Reports Submitted
from CMS to Each State by
Sept. 30, 2014

As of September 30, 2014, the public will be able to see the total TOV by recipient,
from each manufacturer. This aggregated data will be downloadable, searchable
and understandable. Additionally, information on any enforcement activities as a
result of failure of the manufacturer to report these expenses will also be published.
PHYSICIAN’S ROLE IN THE SUNSHINE ACT
Beyond the negative sentiment in the general public, non-compliance and
erroneous reporting can create frustration with those companies want to please
the most - the individual physicians. Physicians want to ensure their TOV is
reported accurately to the CMS and the public.
CMS will not monitor or require a pre-submission approval process. However,
signed attestation certifying the timeliness, accuracy and completeness of data
by the manufacturer’s CEO, CFO, CCO or other officer will be required at the time
of submission. Failure to attest will be considered failure to submit.
Third-party vendors are creating software solutions to help automate this
accounting process. Additionally, CMS will be providing an online portal to allow
companies and recipients to reconcile the reported TOV prior to publication.
These portals, according to Dr. Carlat, “are extremely important for maintaining
a good relationship between the pharmaceutical companies and the physicians
because you don’t want to be in a position where a doctor reads a transparency
report listing a payment with which they disagree.”
The seamless communication between companies and recipients is essential for
agreement and accuracy of the reported payments.
Applicable manufacturers, GPOs, covered recipients, and physician owners or
investors will be able to sign into a secure site to review the data for a 45-day
window prior to publication. As soon as a dispute is initiated, manufacturers can
begin resolving and correcting. They will have an additional 15 days to resolve
disputes, attest and submit updated data. Disputes not resolved by the end of that
60-day period will be published as originally attested and labeled “disputed” to
incent active, timely resolution. No extensions will be granted.
Only payments made related to the research of new products will be granted a
publication delayed to protect proprietary information.
5
Ombud, Inc.
www.ombud.com
Physician-
Industry
relationships
will become
transparent
upon
publication of
the data on
Sept. 30, 2014.

“This is especially important once the payments are placed on a publicly available
website,” according to Dr. Carlat. “Physicians are very sensitive to their reputations,
and they don’t want there to be payments that are inflated. They don’t want their
patients and others to get the idea that they’re being somehow bought out by the
pharmaceutical industry.”
PAPERLESS TECHNOLOGIES STREAMLINE
RECONCILIATION
To the great relief of the industry, the final rule has fundamentally removed reporting
of Continuing Medical Education (CME) events from the Sunshine Act. With
thousands of medical-sponsored education events throughout the year, the risk
of non-compliance and negative sentiment would be substantial. According to the
Accreditation Council for Continuing Medical Education (ACCME) Annual Report
Data 2011, there were more than 18,000 CME activities with commercial support
in 2011, servicing 2.3 million physicians and another 2 million non-physicians.
Companies contributed more than $736 million to these activities (excluding in-
kind support) and paid another $297 million for advertising and exhibits space.
Vendors were paralyzed with apprehension at the prospect of recording and
reporting the granular details required to determine TOV per physician and began
solving an extensive, ambiguous problem with several solutions. As of the final
rule, however, TOVs from accredited events do not have to be reported as long
as the sponsoring manufacturer has absolutely no influence in the speaker or
content, which is essentially the definition of a CME event anyway.
Manufacturers will still need technologies and processes implemented for non-
CME events. The non-CME events alone constitute hundreds of thousands of
healthcare industry events each year.
For example, Advanced Health Media supported 200,000 promotional and
speaker bureaus in 2011 alone, according to Nicole Davis, the company’s former
VP Operations and Service Delivery.
Advanced Health Media provides technology services designed to manage
physician-industry relationships. The events this one company supported for that
one year reached one million physician attendees. Those promotional and speaker
bureau transactions - plus millions of others - will need to be reported.
6
Ombud, Inc.
www.ombud.com
Continuing
Medical
Education
events have
been excused
from Sunshine
Act reporting.

A diligent HCP reimbursement process for any event can be cumbersome
depending on the manufacturer’s compliance regulations. It can involve several
forms, agreements, and attendance verification, resulting in lengthy reimbursement
times and administrative costs.
Per many manufacturers’ compliance regulations, when an HCP agrees to
participate in a pharmaceutical or medical device meeting, the HCP signs off on a
range of TOV.
During the event, diligent hosts confirm the HCPs filled their event obligations
by taking attendance, via HCP signatures, five times a day for each the morning
session, the afternoon session, breakfast, lunch, and dinner. Judith Benaroche
Johnson, President and CEO of RxWorldwide Meetings with experience in internal
reporting of event transactions, noted that her company collects approximately
1,200 physical signatures during conferences. (An average of 120 participants
sign in to five events a day, for two days per conference.)
After the event, manufacturers or their event planners conduct a reconciliation
process for expense reimbursement. This begins when the HCP submits a signed
expense report. These forms then need to be printed, signed and faxed to the
manufacturer. The meeting planner conducts cross-references and data cleaning
to be sure the expense accounting is correct. Once expenses are approved,
the meeting planner reimburses the HCP and bills the expenses back to the
manufacturer. The expense reconciliation process relies on hundreds of HCPs to
fill out reimbursement forms accurately and completely.
Changing from a wet signature form to an electronic signature form greatly
reduces the process time. The Social Security Administration adopted an
electronic signature process in April 2012 for form SSA-827, Authorization to
Disclose Information to the Social Security Administration (SSA). Tony Notaro,
Social Security’s Office of Health Information and Electronic Policy, stated that
beneficiaries who use the electronic signature process of the SSA-827 save up
to 9 days in processing time over those who use the exact same form in its wet
signature format.
7
Ombud, Inc.
www.ombud.com
Agreement
on
TOV Range
Event Occurs,
Take Regular
Attendance
HCPs Submit Expenses
Event Reconciliation
and
Reimbursement
Bill
the
Manufacturer
Manufacturer
Reports
to CMS
Changing
from a wet
signature
form to an
eSignature
form greatly
reduces the
process time.
Agree
on TOV
Range
Event Occurs,
Attendance
Taken Regularly
HCPs
Submit
Expenses
Reconciliation
and
Reimbursement
Bill
the
Manufacturer
Manufacturer
Manufacturer
Reports
To CMS

Electronic signature technologies allow manufacturers to acquire agreements
and forms from HCPs easily and enable manufacturers to quickly conduct simple
queries on the HCP obligations and payment seamlessly.
The best-of-breed electronic signature solutions like DocuSign provide a
template for the electronically-signed TOV agreements and expense reports, to
be customized for the manufacturer’s reimbursement process. These documents
can include form validation, ensuring the forms are submitted thoroughly and
completely. Once these forms are signed, the document becomes part of both the
HCP and manufacturer’s document library. This eliminates the need for the HCPs
to print, sign, and deliver the expense report to the manufacturer. Furthermore,
this data can be imported into the manufacturer’s systems without faxing and
data entry.
HCP attendance via electronic signature and mobile devices eliminates the need
for planners to fax Excel spreadsheets to the audit department at the final hour. It
also eliminates the hours of post-processing sign-in sheets and enables the audit
department to run queries on HCPs immediately.
Best-of-breed solutions add another level of security by providing the signer’s
profile with the signer’s name, authentication level, photograph and GPS location
at the time of signing.
For purposes of Sunshine Act audits, manufacturers will be required to maintain
all books, records, documents, etc. for a minimum of five years from the date
of publication. In the case of delayed publication for new research (four years),
this could mean records must be retained for nine years. ESignatures makes this
process less of a hassle, enabling doctors to sign off on all payments in a format
that manufacturers can keep digitally for this period of time, easily accessible for
audits and adding an additional level of accountability in this multi-million dollar
sector of the healthcare industry.
TACKLING AGGREGATE SPEND
RxWorldwide Meetings runs up to 150 health care meetings a year, with a TOV of
about $1,500 per health care professional. Some of their clients have Corporate
Integrity Agreements (CIA) with the government. These early adopters require
cost breakouts to a higher level of detail and perform internal audits to ensure that
Both internal
& external
audits are
necessary to
capture the
details.
8
Ombud, Inc.
www.ombud.com

physicians are booked in reasonable hotels and compensated for modest meals
and transportation. Dr. Carlat noted the intangible benefit of being an early
adopter, “Some companies such as Eli Lilly, which have been ahead of the game
with producing excellent transparency reports may very well have benefitted in
terms of their reputation for transparency because of those reports. An enhanced
sense of trust in a company is very hard to put a dollar figure on.”
Although these companies are ahead of the curve, Ms. Johnson expressed concern
about the lack of details CMS initially provided. “Nobody has figured out how to
do it, but yet it’s going forward,” she warned. Prior to release of the final rule and
some clarity into required reporting fields, Ms. Johnson’s team built the accounting
categories into their expense reconciliation platform as they interpreted them.
Additionally, MMIS, Inc. and other vendors went to market without knowing any
details of required reporting fields. MMIS offers MediSpend®, a SaaS solution for
aggregate spend tracking and reporting which includes a notification center for
the physician to review and confirm spend information before its reported.
Beyond aggregate spend, Lisa Keilty, Vice President at pmc2
and former Senior
Manager of Pfizer, explains that both internal and external audits need to show
a complete thread from the planning stages through engagement. Compliance
audits, for not only the Sunshine Act, but also other international, federal and state
health care regulations, want to know:
• Why was the program put together?
• What were the objectives?
• What happened (plans vs. actual proceedings, attendees, cost)?
• What were the outcomes?
• What are the next steps?
Ms. Keilty noted that many attendee management systems are challenged to
capture the granular information like no-shows and opt-outs. She envisions a tool
on the operations side of business that integrates attendee management systems
with front-end planning and budgeting. This tool would capture the granular detail
required by the Sunshine Act in addition to each physician’s acknowledgement of
the TOV. This information would then be reported back to the planner, manufacturer
and physician.
9
Ombud, Inc.
www.ombud.com
Vendors went
to market
without
knowing any
details of
required
reporting fields.

STILL WAITING FOR ANSWERS
Despite the release of the final rule on the Sunshine Act, manufacturers are still
waiting for clarity for its implementation. CMS does not consider the financial
burden of compliance to be substantial, however, their vague implementation
guidelines to allow for flexibility make it difficult to determine the actual cost
implications. Applicable manufacturers and GPOs will have to report TOVs from
the later half of 2013 by March 31, 2014, regardless of this uncertainty in the
technologies and procedures necessary to document specific TOVs per event
and deliver that value to CMS.
Direction has been provided for the following provisions, but the associated
procedures required for information collections remain unclear. There is no detail
in how companies will submit:
1. Records and Reports of Payments or Other TOVs, Physician
Ownership and Investment Interests
2. Registration of Applicable Manufacturers and GPOs with CMS
prior to the end of the reporting year
3. Attestation by the CEO, CFO, CCO or other Officer of the
applicable manufacturer or GPO that the information reported is
timely, accurate and complete
4. Voluntary supporting documentation providing an explanation of
reasonable assumptions and methodologies used in reporting
5. Updates to the Review and Corrections Period by Physicians and
Teaching Hospitals
6. Notifications of Resolved Disputes
7. Notifications of Errors and Omissions
It is also uncertain whether the systems manufacturers have already implemented
and will implement prior to the release of additional details will be compatible
with the data templates.
“When companies are in the dark about exactly what kinds of payments they
need to report, the risk is that they will overspend and overstaff themselves in
order to report transfers of value just in case those end up needing to be collected
and reported,” according to Dr. Carlat. “On the other hand, there’s also the risk
of companies not planning appropriately for comprehensive reporting, and that
then presents a risk of ending up being noncompliant with some transparency
10
Ombud, Inc.
www.ombud.com
Manufacturers
are still waiting
for clarity on
Sunshine Act
implementation.

reports and having to pay substantial fines if they are noncompliant.”
CMS has finally answered most questions about what needs to be reported,
leaving early adopters to determine whether they have in fact wasted resources.
They have, however, remained ambiguous about how that data needs to be
reported.
“We’re still in the dark on a lot of information,” according to Ms. Keilty. She would
have loved to see the reporting template or physician portal, even if only in draft
form. More standardization guidelines for information collection would also be
helpful, according to Ms. Keilty.
Big pharmaceutical companies have been very aware of regulations and
the Sunshine Act iterations. They have been spent 2-3 years, if not longer,
developing robust accounting systems. However, the early absence of federal
terms of reference and accounting rules has allowed each company to come up
with a philosophy and practice as to how they are going to determine a TOV per
physician.
Most likely, those early adopters will become the leaders of the implementation
process. Like Sarbanes-Oxley, the technology to support the act will develop
before all of the implementation questions are answered by CMS.
WhilestreamliningprocessesforcompliancewiththeSunshineAct,manufacturers
and physicians should keep in mind one return that cannot be limited to standard
ROI calculations - trust.
“I think the main benefit is going to be a renewed sense of trust, not only in
the companies,” according to Dr. Carlat. “The public believes that doctors are
still often being given large gifts, that they’re taken out to sporting events, that
they’re treated to Caribbean adventures on the drug company tab, and these
things are very rarely happening now. They used to happen, but these days they
happen very rarely, if at all. I think once transparency reports are published widely
the public will understand that the vast majority of physicians who are taking
payments are taking relatively small payments and that many of the payments
are for completely legitimate activities.”
Transparency, in the words of Ms. Keilty, “is just good business.” The expense
11
Ombud, Inc.
www.ombud.com
“We’re still in
the dark on a
lot of
information.”
-Lisa Keilty

details between manufacturers and physicians will soon be public knowledge.
Patients will be scrutinizing those dollar amounts and the availability of
information. Any lack of reporting will not only result in fines, but also patient
scrutiny. Not being transparent – via accurate accounting and verification systems
– is risky.
RESOURCES
1. Transparency Reports and Reporting of Physician Ownership or Investment
Interests: https://www.federalregister.gov/articles/2013/02/08/2013-02572/
medicare-medicaid-childrens-health-insurance-programs-transparency-
reports-and-reporting-of#t-1
2. Shining Light on the Sunshine Act http://www.cbinet.com/
shining-light-sunshine-act
3. ACCME Annual Report Data – 2011: http://www.accme.org/sites/default/
files/null/630_2011_Annual_Report_20120724.pdf
4. Legal Issues Presented by the Social Security Administration’s New
Electronic Signature Process for Authorizations to Disclose Information,
March 2012 http://www.americanbar.org/newsletter/publications/aba_
health_esource_home/aba_health_law_esource_0312_ssa.html
5. Physician Payment Sunshine: Final Rule Sent from CMS to OMB for Final
Review: http://www.policymed.com/2012/11/physician-payment-sunshine-
final-rule-sent-from-cms-to-obm-for-final-review.html
6. Electronic Discovery and the Challenge Posed by the Sarbanes-Oxley
Act: http://www.lawtechjournal.com/articles/2005/02_050530_garrie_
armstrong.pdf
12
Ombud, Inc.
www.ombud.com
Not being
transparent
means risking
fines and
patient
scrutiny.

Physician Payment Sunshine Act: Achieving Compliance with eSignatures

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