CMS: Indirect Payments

Question -

Are Indirect Payments Reportable to CMS?

Answer -

Yes, Indirect payments are reportable to CMS.  A payment is considered indirect if an applicable manufacturer requires, instructs, directs or otherwise causes the third party to provide the payment in whole or in part to a physician.

In order to instruct or direct an indirect payment, the manufacturer must be aware of the payment.  If a manufacturer is not aware under reasonable circumstances, the payment cannot be reported. 

To not be reported, an applicable manufacturer must be unaware of the identity of a covered recipient during the reporting year and the second quarter of the subsequent year following the transfer of the payment from the third party to the covered recipient.  Therefore, if an applicable manufacturer becomes aware of the identity of a covered recipient on or before June 30th of the year following the year in which the payment is made by the third party to the covered recipient, then the payment or other transfer of value must be reported. 

Generally, companies have included language in initial and renewal contracts with third parties requiring that any payments made to physicians on their behalf be reported to the company.  Additionally, reaching out to the third parties prior to reporting for confirmation is good policy.  I personally have seen communication via mailed letters as well as email-and would lean towards the communication generally used by the parties.  Records should be kept of these communications and the procedures be included in the company’s assumptions document.