CMS wants to redefine 'physician-owned distributor'

CMS has proposed cementing a definition of "physician-owned distributor" and clarified that the Sunshine Act does apply to them.

In the 2022 physician fee schedule proposed rule, released July 13, CMS suggested defining a physician-owned distributor as a medical device manufacturer where physicians or a physician's family members have at least 5 percent ownership or a company that compensates physician owners with commissions, return on investment, profit-sharing, profit distribution or other compensation based on sales.

Physician-owned distributors are required to identify as such for open payments reporting to CMS, which collects and reports data on how much medical device companies pay physicians.

If finalized, the new definition of physician-owned distributor may include privately held medical device manufacturers compensating physician owners, according to JD Supra, a legal analysis publication. The number of companies falling under the new definition of physician-owned distributor would also increase.

CMS proposed the new definition just for open payments reporting, and it would not apply to the anti-kickback statute or its safe harbors.

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