SUNSHINE ACT: A LAW SEEKING PHYSICIAN FINANCIAL TRANSPARENCY AND REPORTS
The Physician Payments Sunshine Act, commonly known as the Sunshine Act or Open Payments, was enacted to increase the transparency and accountability of the relationships between pharmaceutical and device companies and physicians, certain non-physicians, and teaching hospitals.
The Physician Payments Sunshine Act requires applicable manufacturers of medical devices, drugs, biological material, or medical supplies to report payments or transfers of value provided to physicians or teaching hospitals. It also requires manufacturers and group purchasing organizations (GPO) to disclose physician ownership or investment interests. In 2010, the Physician Payments Sunshine Act became law as Section 6002 of the Patient Protection and Affordable Care Act. The Centers for Medicare & Medicaid Services (CMS) administers it and publishes the data annually on a searchable website, Open Payments.
Who Must Complete Sunshine Act Reporting
The Physician Payments Sunshine Act requires annual open payment reports from all drug, biologic, and medical device manufacturers with a physical location and activities within the United States, including any territory, possession, or commonwealth of the United States. To be an applicable manufacturer, you must:
- Produce at least one product reimbursed by Medicare, Medicaid, or Children’s Health Insurance Program (CHIP). The product must also be a drug or biological and require a prescription (or physician’s authorization) to administer or
- Manufacture a device or medical supply that requires premarket approval or notification by the Food and Drug Administration (FDA).
Applicable manufacturers and Group purchasing organizations (GPOs) with less than 10% of revenues from covered products do not need to report all payments or other transfers of value.
Group purchasing organizations (GPOs) and physician-owned distributors of medical devices must also report. An applicable group purchasing organization operates in the United States and purchases, arranges for, or negotiates the purchase of a covered drug, device, biological, or medical supply for a group of individuals or entities, but not solely for use by the entity itself.
What is the Open Payments™ Program?
According to the Centers for Medicare & Medicaid Services, the Open Payments program is a “national disclosure program that promotes a more transparent and accountable health care system.” It has a publicly accessible database of payments that reporting entities make to covered recipients. Before 2021, covered recipients only included physicians and teaching hospitals. Today, the program also includes nurse practitioners, physician assistants, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, and certified nurse midwives.
Anyone can search the database for healthcare providers and see the payments they received, when they received them, and the companies that made the payments.
How does the Open Payments Program work?
The Open Payments Program collects data annually from reporting entities about payments they make to covered recipients and makes it available to the public to shed light on payments and other transfers of value. Reporting entities are pharmaceutical companies, device manufacturers, and GPOs that operate in the United States and produce or distribute covered drugs, devices, and biological or medical supplies. Covered recipients include physicians, teaching hospitals, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, and certified nurse midwives.
The open payments program operates on a yearly cycle consisting of four key activities: data collection, data submission, review and dispute, and data publication.
Reporting entities are required to collect payment data on an ongoing basis. They submit the data they collected in the previous year from February 1st to March 31st; this includes detailed information about payments or transfers of value made to covered recipients in the previous calendar year. After the data submission period, there is a voluntary review and dispute period from April 1st to May 15th, when covered recipients can log into the open payment system to view the data attributed to them and dispute any inaccuracies; reporting entities must make any corrections to the data by May 30th. Reporting entities can make corrections as necessary.
The fourth and final step is the annual data publication. CMS publishes the data on its publicly available website by June 30th each year.
What Exactly Constitutes a Payment?
Three categories require reporting:
- General payments. There are several subcategories here known as natures of payment and include consulting fees, compensation for services other than consulting, including serving as faculty or as a speaker at an event other than a continuing education program, honoraria, gifts, entertainment, food and beverage, travel and lodging (including the specified destinations), education, charitable contribution, debt forgiveness, royalties or licenses, compensation for serving as faculty or as a speaker for a medical education program, long term medical supply or device loan, grant, space rental or facility fees (teaching hospital only), and acquisitions.
- Ownership or investment interests by physicians and their immediate family members, including stocks, royalties, and licenses, must also be reported.
- Research payments. Including direct compensation funding for research study coordination and implementation or payments to study participants.
You don’t need to report any payment of less than $10 (unless those payments total $100 over a year), product samples, discounts, rebates, in-kind items for charity care, educational materials intended for patients, devices loaned for clinical trials, warranty services, or shares in publicly traded mutual funds.
Open Payments and what it means to you
The federal Physician Payments Sunshine Act requires that detailed information about payment and other payments of value worth over $10 from manufacturers of drugs, medical devices, and biologics to physicians, some non-physicians, and teaching hospitals be made available to the public.
The Open Payments Program is a federal law that provides transparency into financial relationships between the two groups of participants in the program: reporting entities and covered recipients. Reporting entities include applicable manufacturers and group purchasing organizations or drug and medical device companies. Covered recipients include
- Any physicians (except medical residents) who are not employees of the reporting entity
- Certain non-physicians, including physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, and certified nurse midwives
- Teaching hospitals that receive payments for Medicare direct graduate medical education (GME), inpatient prospective payment system (IPPS) indirect medical education (IME), or psychiatric hospital IME programs
Each year reporting entities must enter detailed information about the payments or transfers of value across three categories: research payments, ownership and investment interests, and general payments.
It’s essential to remember that the policies governing Open Payments continue to evolve, and the government occasionally updates them through official rule-making.
CMS can impose fines of up to $1 million on reporting entities if they fail to report information promptly, accurately, or completely.
How to Comply with the Sunshine Act
Every year, drug, biologic, and medical device manufacturers who have any products covered under Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP) and which require a prescription or premarket approval by or premarket notification to the FDA are required to track all payments or transfers of value, to healthcare providers. As mentioned previously, these include licensed physicians, dentists, podiatrists, optometrists and chiropractors, teaching hospitals, nurse practitioners, physician assistants, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, and certified nurse midwives. Group purchasing organizations (GPOs) and physician-owned distributors of medical devices also need to report.
To comply with the Sunshine Act:
- Register in the Open Payments system.
- Collect all data from the previous year, verifying and attesting its accuracy.
- Submit the data between February 1st and March 31st.
- Review, dispute, and correct data between April 1st and May 15th. If applicable, reporting entities correct the data between April 1st and May 30th.
The Centers for Medicare & Medicaid Services (CMS) will publish the data by June 30th.