Open Payments Program: What is the Sunshine Act?

The Open Payments Program (formerly known as the Sunshine Act) is part of the Physician Payments Sunshine Act (PPSA) of 2010, which requires manufacturers of drugs, devices, and biologics to publicly report payments and other transfers of value made to physicians and teaching hospitals. These payments include consulting fees, honoraria, gifts, entertainment, travel, research grants, and other valuable items.

The act was created in response to concerns that certain relationships between drug and medical device companies and the medical community may hurt medical decisions and healthcare costs. The act aims to provide increased transparency and accountability in the pharmaceutical and medical device industries.

The Open Payments Program also requires manufacturers and group purchasing organizations (GPOs) to report any ownership or investment interests held by physicians or their immediate family members. This information is then made available to the public on the Centers for Medicare & Medicaid Services (CMS) Open Payments website. It includes provisions to ensure that physicians are not unduly influenced by drug and device manufacturers.

From 2015 - 2021:

• Over $63.23 billion has been reported in payments or transfers of value to physicians and teaching hospitals.
• Over 78.82 million payment or transfer of value records have been reported.
• The top five states for reported payments to physicians and teaching hospitals in 2018 were California ($1.1 billion), New York ($935 million), Florida ($862 million), Texas ($717 million), and Pennsylvania ($650 million).
• The top five drug manufacturers reporting payments or transfers of value to physicians and teaching hospitals in 2018 were Pfizer ($279 million), Merck ($271 million), Johnson & Johnson ($220 million), Novartis ($213 million), and Amgen ($197 million).

A survey of approximately 3,000 physicians found that 83.8% of all respondents reported some fiscal relationship with industry during the previous year. Approximately two-thirds (63.8%) received drug samples, 70.6% food and beverages, 18.3% reimbursements, and 14.1% payments for professional services.1

As the numbers demonstrate, the Sunshine Act illuminated the money trail!

For more details on how to submit reports to CMS, and their deadlines, click here.

Our training program can help ensure you never miss a new regulation or deadline!

Recent Updates to the Open Payments Program

Companies should be advised that the government recently announced it would be cracking down on enforcement in conjunction with the Anti-Kickback Statue (AKS).

Most recently, Medicrea, a French medical device manufacturer, was convicted of open payment program violations and was required to pay $2 million in penalties.

In 2020, Medtronic had to pay $9.2 million for violating the AKS, False Claims Act (FCA), and Open Payments reporting requirements.

With proper education and step-by-step guidelines, these grave mistakes can be avoided. Have you undergone the appropriate training to protect yourself and your organization?  

Essential Definitions Under the Open Payments Program

A. Applicable manufacturer

The applicable manufacturer is any entity engaged in the production, preparation, propagation, compounding or conversion of a covered drug, device, biological, or medical supply for sale. It includes entities that hold an ownership interest in the product, are contractually obligated to provide the product to the market, or are under common ownership with an entity that is so obligated.

B. Applicable drug and device manufacturer

Applicable drug and device manufacturers are “applicable manufacturers of a covered drug, device, biological, or medical supply.” Covered drugs, devices, biologicals, and medical supplies are defined as those that require premarket approval, clearance, or authorization from the Food and Drug Administration or are otherwise under the jurisdiction of the FDA.

C. Covered recipient

A covered recipient is a physician or a teaching hospital receiving a payment or other transfer of value from an applicable manufacturer or group purchasing organization.

UPDATE! As of 2021, the following have been added as provider types:

• Physician assistants
• Nurse practitioners
• Clinical nurse specialists
• CRNAs and anesthesiologist assistants
• Certified nurse-midwives

Physician includes any of the following types of professional:

• Doctors of Medicine or Osteopathic Medicine
• Doctors of Dental Medicine or Dental Surgery
• Doctors of Podiatric Medicine
• Doctors of Optometry
• Chiropractors

If any of these apply to you, check your license status and undergo critical training to keep you safe and compliant!

What types of Activities Must be Reported Under the Sunshine Act?

Previously, under the Sunshine Act, the following list had to be reported:

1. Sponsorship or payment for healthcare professionals' meals, travel, or other expenses.
2. Direct and indirect transfers of value to healthcare professionals.
3. Consulting fees, honoraria, or other payments to healthcare professionals.
4. Financial support for scientific and educational activities, such as conferences and continuing medical education programs.
5. Charitable contributions to organizations with which healthcare professionals are affiliated.
6. Payments for research and development activities.
7. Educational grants and donations to healthcare organizations.
8. Payments for scientific and educational materials to healthcare organizations and/or healthcare professionals.
9. Product samples are distributed to healthcare professionals.
10. Gifts of any kind are provided to healthcare professionals.

As of 2021, CMS renamed these Natures of Payment, significantly expanding what had to be reported. The new list reads as follows:

1. Acquisitions: Buyout payments made to covered recipients with an ownership interest in a company acquired.
2. Charitable contribution: A payment or transfer of value made to an organization with tax-exempt status under the Internal Revenue Code of 1986. (i.e., A medical device manufacturer donates funds to a teaching hospital to help pay for a health education program).
3. Compensation for non-consulting services (i.e., faculty/speaker at an event other than a continuing education program).
4. Compensation for serving as faculty or as a speaker for a CME program.
5. Current or prospective ownership of investment interest.
6. Debt forgiveness (i.e., A physician owes Company A an amount of money for medical supplies. Company A forgives the debt so that the physician can keep the supplies without payment).
7. Education.
8. Entertainment.
9. Food & beverage.
10. Gifts.
11. Grants.
12. Honoraria.
13. Long-term medical supply or device loan (i.e., A device manufacturer lends one of its devices to a teaching hospital for 120 days).
14. Research.
15. Royalty or license.
16. Space rental or facility fees.
17. Travel & lodging.

Thankfully, these reporting requirements are not retroactive but are much more comprehensive.

Benefits of the Open Payments Program

First, it provides a way for consumers to access information about the financial relationships between healthcare providers and drug and medical device companies. This is important because it helps to ensure that providers are making decisions based on the patient's best interests rather than for their own financial gain. With a few clicks, patients can look up any provider and see their reimbursement history.

Second, it allows regulators to monitor and track payments and relationships between healthcare providers and drug and medical device companies. Doing so can identify and address potential conflicts of interest quickly and effectively.

Third, it holds the healthcare industry accountable for its actions. Transparency in payments and relationships helps healthcare providers avoid unethical or illegal activities (fraud, waste, abuse).[1] 

Finally, the Sunshine Act promotes a competitive and fair healthcare industry. By making financial relationships transparent, all players in the industry have more of an equal opportunity to compete for business.

The Open Payments Program benefits consumers, healthcare providers, and the healthcare industry. It helps to ensure that healthcare providers are making decisions based on what is best for the patient, that conflicts of interest are identified and addressed quickly, and that the industry is held accountable for its actions.

Challenges of the Sunshine Act Reporting Requirements

Keeping track of all applicable payments

The Sunshine Act requires reporting applicable payments and transfers of value to healthcare professionals (HCPs) and healthcare organizations (HCOs). It is imperative that organizations track payments made to HCPs and HCOs to report all payments on time. This can be a challenge for organizations with multiple vendors and suppliers, as ensuring that all payments are tracked and reported may be difficult.

Understanding the regulations

The Sunshine Act is a complex law that requires organizations to understand the specific regulations and requirements associated with the law. This can be challenging as the regulations may be difficult to interpret and understand. Organizations must also be aware of any regulation updates or changes to ensure compliance.

Data management

The Sunshine Act requires organizations to collect and manage data related to their payments to HCPs and HCOs. This data must be accurate and up-to-date to ensure that all payments are reported promptly. Organizations must have a system to collect, store, and manage this data to ensure compliance.

Avoiding penalties

The Sunshine Act includes various penalties for non-compliance, including fines, reputational damage, and even criminal penalties. To avoid potential penalties, organizations must ensure that all payments are reported accurately and on time.

Civil Penalties

The civil penalties for not complying with the Sunshine Act ranged from $1,000 to $10,000 per violation. With the Open Payments Program, civil monetary penalties (CMP) from CMS are a minimum of $10,000 per violation. They can be up to $100,000 for non-knowing violations and $1 million for knowing violations (adjusted for inflation) per year. That being said, more minor fines have been reported. The government recently announced that it would be enforcing penalties.

Criminal Penalties

The criminal penalties for not complying with the Sunshine Act can be in the millions with combined jail time. The details tend to vary based on the state and severity of the offense(s).

Verifying data

The data reported under the Sunshine Act must be accurate and up-to-date. Organizations must have a system to verify and validate the reported data to guarantee compliance. This can be a challenge for organizations that do not have the resources or expertise to verify the data reported.

How Do I File My Report?

Physician financial transparency reports show the financial relationships between a doctor and a third party (e.g., a pharmaceutical company, medical device manufacturer, etc.). These reports are intended to help prove that financial incentives do not unduly influence a doctor’s decisions regarding patient care.

Doctors and organizations must file these reports annually with the Centers for Medicare and Medicaid Services (CMS). The reports must include the name and address of the third party, the amount of money received from the third party, and the type of payment made (salary, royalty, consulting fee, etc.).

The Sunshine Act has provided a valuable service to healthcare providers and the public by providing transparency in financial interactions. It has helped to reduce the risk of conflicts of interest between the two groups and has helped to bring trust and confidence back to the healthcare industry. However, it has also come with some challenges, most notably the cost of compliance and the amount of paperwork involved in reporting. Despite these challenges, the Sunshine Act protects the public and improves the healthcare industry.

Sources:

1. Campbell, E.G., Rao, S.R., DesRoches, C.M., et al. (2010). Physician Professionalism and Changes in Physician-Industry Relationships From 2004 to 2009. Arch Intern Med, 170(20):1820–1826. doi:10.1001/archinternmed.2010.383.