Written by Corliss Collins BSHIM, RHIT, CRCR, CCA, CAIMC, CAIP, CSM, CBCS, CPDC and Sheryn Honest, MBA, MLS, CHCO, CHA, CPC
The primary goal of the Sunshine Act is to increase transparency in the financial relationships between healthcare providers (physicians and teaching hospitals) and the pharmaceutical and medical device industries. The Sunshine Act aims to help patients and the public understand the financial relationships between healthcare providers and the manufacturers of drugs and devices, potentially uncovering conflicts of interest. The information below is provided by subject matter experts serving on the AIHC Volunteer Education Committee.
What is the Sunshine Act?
The “Sunshine Act,” officially known as the Physician Payments Sunshine Act, mandates those manufacturers of drugs, medical devices, and biologics report payments and transfers of value to physicians and teaching hospitals to the Centers for Medicare & Medicaid Services (CMS).
Manufacturers and group purchasing organizations (GPOs) must report payments and transfers of value to physicians and teaching hospitals, as well as any ownership or investment interests held by physicians or their immediate family members. This Act seeks to discourage conflicts of interest that could compromise treatment decisions, medical research, or increase healthcare costs billed to federal health programs.
Legislative Background
The Sunshine Act was enacted as part of the Affordable Care Act on 03.23.2010, with implementation beginning in 2013. Senator Chuck Grassley spearheaded this legislation, and Representative Pete Stark addressed concerns about potential conflicts of interest in healthcare.
The Physician Payments Sunshine Act, commonly known as the Sunshine Act, was enacted to enhance transparency in the financial relationships between healthcare providers and manufacturers of drugs, medical devices, biologicals, and medical supplies.
- Compliance officers can reference the Affordable Care Act, Public Law 111-148, PUBL148.PS
Key Provisions
Reporting Requirements
- Manufacturers of drugs, medical devices, and biological medical supplies (a.k.a., reporting entities) are required to report payments and other transfers that add value to covered recipients, i.e., teaching hospitals, physicians, and mid-level providers.
- Detailed documentation of financial interactions, including consulting fees, research grants, speaking fees, and gifts
Reporting Categories
- Research Payments
- Ownership and Investment Interests
- General Payments – Natures of Payment:
- Consulting and Speaking Fees
- Honoraria, Gifts, Royalties
- Grants and Research Charitable Contributions
- Entertainment, Travel, Lodging, Food, and Beverage
- Medical Education Programs
- Space Rental or Facility Fees
Reporting Thresholds
- Providers must report Payments and transfers of value above $10
- Aggregate annual payments of less than $100 are exempt from detailed reporting
Annual Activities for Reporting Entities and Covered Recipients:
- Data Collection of payments
- Throughout the year
- Responsible party – Reporting Entity
- Throughout the year
- Data Submission to CMS
- February 1 – March 31
- Responsible party – Reporting Entity
- February 1 – March 31
- Review, Dispute, and Correct Data
- April 1 – May 15
- Responsible party – Covered Recipient review & dispute data
- April 1 – May 30
- Responsible party – Reporting Entity correct data
- April 1 – May 15
- Data Publication
- June 30
- Responsible party – CMS
- June 30
Compliance Officers can reference the following:
- 42 CFR Part 403 – Reporting of Physician Ownership and Investments
- CMS.gov – Open Payments Program
Updates and Amendments
2013: Initial Implementation
- Centers for Medicare & Medicaid Services (CMS), First year of data collection
- Established the Open Payments System
- Initial reporting framework implemented
Sources:
- CMS Open Payments Program: Initial Implementation Report
- Federal Register, Vol. 78, No. 186 (09/25/2013)
2014: First Public Reporting
- The first comprehensive public database launch
- Allowed public access to financial relationships between healthcare providers and medical manufacturers
Sources:
- CMS Open Payments Public Use File (2014), Reports & Guidance | CMS
2016: Expanded Reporting Requirements
- Clarified reporting obligations
- Included more detailed categorization of payments
- Improved data validation processes
Sources:
- CMS Open Payments Program Annual Report (2016)
- Federal Register Updates, Vol. 81, No. 210 Federal Register | GovInfo
2020: COVID-19 Related Modifications
- Temporary adjustments to reporting deadlines due to pandemic
- Continued emphasis on transparency during public health crisis
Sources:
- CMS COVID-19 Reporting Flexibilities Memorandum
- Federal Register: COVID-19 Reporting Modifications
2022: Enhanced Data Transparency
- Improved online database functionality
- More user-friendly search and reporting tools
- Enhanced data accuracy mechanisms
Sources:
- CMS Open Payments Enhanced Transparency Report (2022)
Compliance and Enforcement
Manufacturers face significant penalties for non-compliance such as potential fines, up to $1,000 per payment for compliance violations not reported. The Maximum annual penalty for unintentional violations could be up to $150,000 and a maximum of $1,000,000 for knowing failures to report a yearly penalty.
Sources:
- Department of Health and Human Services Penalty Framework Document
- 42 CFR § 403.914 – Penalties, eCFR :: 42 CFR 403.914 — Preemption of State laws.
Conclusion
The Sunshine Act plays a crucial role in promoting transparency within the healthcare sector. By publicly disclosing financial relationships between healthcare providers and industry manufacturers, it aims to prevent potential conflicts of interest that ensure medical decisions are made in the best interest of patients.
The Act’s evolution over the years signifies an ongoing effort to adapt to the changing healthcare landscape and maintain the integrity of medical practices. The Sunshine Act represents a significant step towards transparency in healthcare, empowering patients and researchers to understand potential financial influences in medical decision-making.
You can refer to the CMS Open Payments Law and Policy page through the sources below for more detailed information on the Sunshine Act and its provisions.
References
- CMS Facts About Open Payments Data
https://openpaymentsata.cms.gov/summary - Department of Health and Human Services (HHS)
https://www.cms.gov/files/document/open-payments-fy-2023-report-congress.pdf - Federal Register Historical Documentation
Federal Register | GovInfo - Open Payments Database, Centers for Medicare & Medicaid Services (CMS),
Reports & Guidance | CMS - Original Affordable Care Act Legislative Text
PUBL148.PS - Search Open Payments Data by Provider, Specialty, State, Teaching Hospital, Company
https://openpaymentsdata.cms.gov/
About the Authors
Corliss Collins, BSHIM, RHIT, CRCR, CCA, CAIMC, CAIP, CSM, CBCS, CPDC is the Principal, Managing Consultant & Founder of P3 Quality LLC, a HealthTech Consulting Company, and serves on the AIHC Volunteer Education Committee.
Sheryn Honest, MBA, MLS, CHCO, CHA, CPC is the Principal at The Honest Approach consulting firm and serves on the AIHC Volunteer Education Committee.
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