The Centers for Medicare and Medicaid Services recently issued a final rule, or the Rule, removing the Physician Payments Sunshine Act exemption for payments to speakers at certain accredited continuing medical education events funded by companies covered by the Act. 1 The agency concluded that the exemption was not necessary because such payments (if made under the conditions of the exemption) are not reportable under the Act or its implementing rules.2 The loss of the exemption could lead some companies to report CME payments that were not being reported previously. But, CMS included language in defense of its decision to remove the CME exemption that should help physicians and medical societies in their efforts to limit such overreporting.

The medical community opposed the removal of the CME exemption because doing so leaves more room for discretion by drug and device manufacturers in reporting speakers at industry-sponsored CME events. These companies have been erring on the side of over-reporting their payments to physicians and particularly payments that are made to medical societies and other third parties, and indirectly benefitted physicians.

Under the CME exemption (42CFR §403.904(g)(1)) payments or other transfers of value for physicians speaking at a CME program were not reportable if: 1) either the Accreditation Council for Continuing Medical Education (ACCME), the American Academy of Family Physicians (AAFP), the American Dental Association’s Continuing Education Recognition Program (ADACERP), the American Medical Association (AMA), or the American Osteopathic Association (AOA) properly accredited or certified the event; 2) the manufacturer did not directly pay the speaker; and 3) the manufacturer did not select the speaker, or provide a third party (e.g. a continuing education vendor) with a list of individuals to be considered as speakers for the CME event.

CMS cited two reasons for removing the exemption. First, it received a large number of requests from accrediting organizations not listed in the exemption to be included. The agency said it did not want to expand the list because doing so would create the perception that it was endorsing particular accrediting bodies. CMS also found that the exemption was redundant with the PPSA rules on indirect transfers of value), which require reporting of indirect payments or other transfers of value if the manufacturer requires, instructs, directs, or otherwise causes a third party to provide a payment or other transfer or value in whole or in part to a covered recipient (physician or teaching hospital) (42 CFR §§ 402 and 403.904(a)) unless the manufacturer has no knowledge of the covered recipient during either the reporting year or by the end of the following reporting year’s second quarter (42 CFR §403.904(i)(1). CMS explained that if the drug or device manufacturer met the conditions of the CME exemption, including that the manufacturer not be involved in the selection of the speaker, the payments would not be reportable under the indirect transfer rule or its knowledge exclusion.

The agency’s language in defending the removal of the exemption could actually aid physicians and their medical societies in limiting industry reporting of payments to third parties, such as medical societies, that may result in some benefit to physicians. Specifically: [P]ayments or other transfers of value, including payments made to physician covered recipients for purposes of attending or speaking at continuing education events, which do not meet the definition of an indirect payment, as defined at §403.902, are not reportable. For example, if an applicable manufacturer or applicable GPO provides funding to support a continuing education event but does not require, instruct, direct, or otherwise cause the continuing education event provider to provide the payment or other transfer or value in whole or in part to a covered recipient, the applicable manufacturer or applicable GPO is not required to report the payment or other transfer of value. The payment is not reportable regardless if the applicable manufacturer or applicable GPO learns the identity of the covered recipient during the reporting year or by the end of the second quarter of the following reporting year because the payment or other transfer of value did not meet the definition of an indirect payment. This approach is also consistent with our statement at (78 FR 9490), where we explained that “if an applicable manufacturer provided an unrestricted donation to a physician professional organization to use at the organization’s discretion, and the organization chose to use the donation to make grants to physicians, those grants would not constitute ‘indirect payments’ because the applicable manufacturer did not require, instruct, or direct the organization to use the donation for grants to physicians.” (Emphasis added.)

There is no doubt that the removal of the CME exemption could lead some manufacturers to report CME payments in circumstances that were previously covered by the exemption. However, medical societies that receive unrestricted grants or other payments from industry to support CME activities, and the physician speakers at those events, should be able to use the language quoted above to dissuade manufacturers from reporting such payments if the manufacturer is not involved in selecting the speakers for such events, even if the manufacturer eventually learns the identity of the speakers.

Please direct any questions you may have to Rob Portman at rob.portman@ppsv.com.