Physician Payment Sunshine Act and Fair Market Value Compliance: Best Practices

The Physician Payment Sunshine Act puts pharmaceutical and medical device companies under intense scrutiny and exposure. Compensation paid to healthcare professionals (“HCP”) and healthcare institutions for various services, such as speaking, training, product development, R&D, advisory board service and consulting must be at fair market value (“FMV”) or risk being in violation of the Federal Anti-Kickback Statute.

It is paramount to know and remember that FMV compensation is for a specific service, not a specific professional. Therefore, it is essential to match the qualifications and experience of the HCP providing the service to the specific service/task itself.

Healthcare attorneys should encourage their clients to do following:

• Identify and document the specific areas/departments where HCPs are utilized. This may include:
  1. Speaking
  2. Teaching/Training
  3. Product Development and/or R&D
  4. Board Advisor
  5. Strategic consulting
• Define and document the specific duties, responsibilities and tasks for each area.
• Identify and document the specific requirements and qualifications for each position. (i.e. medical specialty, years of specific experience, credentials, etc.)

Healthcare companies can choose to develop FMV rates internally or they can hire an outside third-party consulting firm. The FMV rates can be based on an hourly rate or for a specific activity. It is important that the company follows a consistent approach and methodology for developing the FMV rate for specific services.

More importantly, when the above framework is in place, the FMV rate is much more supportable and defensible.