With the ultimate goal of transparency, the U.S. enacted the Physician Payments Sunshine Act to shed light on financial relationships between medical device, supply, biologic, and pharmaceutical manufacturers and physicians. The act, passed into law in 2010 and enforced since April 9, 2013, requires reporting on any payments to physicians or to a third-party that they request. It also requires that manufacturers report any financial interest that physicians or their family members have in their companies.
Who Must Complete Sunshine Act Reporting
CMS lists two types of companies that must complete Sunshine Act reporting:
- Type 1 manufacturers: Companies engaging in “production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply.” This category also includes distributors and wholesalers that hold the title of a covered device or product or that are owned by an applicable manufacturer and provides support with a covered product.
- Type 2 manufacturers: Companies under common ownership with a Type 1 manufacturer and that provides support to that company to produce or distribute products covered by the act.
Covered devices or other products are defined in Section 403.902 of the act. Covered medical devices, for example, are defined as those that require premarket approval or premarket notification to the FDA. Only manufacturers located within the U.S. are required to report.
What Exactly Constitutes a Payment?
The Centers for Medicare and Medicaid Services (CMS) states that payments fall into three categories:
- Research payments made in connection with a research agreement
- General payments not made in connection with a research agreement
- Ownership or investment
But payments that medical device manufacturers must report to CMS aren’t only in the form of cash. “Payments” can refer to any type of compensation such as gifts, food, entertainment, travel, research funding, conference funding, and royalties.
How to Comply with the Sunshine Act
If your company produces a covered Medtech device, the first step toward Sunshine Act compliance is registering with CMS’ Enterprise Identity Management (EIDM) and the Open Payments system. CMS says to streamline the process, you should use Internet Explorer version 8, 9, or 10 or the latest version of Firefox and to not use browser navigation buttons, which may delete some of the data you enter. Plan on spending about 30 minutes to complete registration — you can’t save partial information and complete it later. You can ask questions or address issues regarding the registration process via the Open Payments Help Desk.
Keep in mind that the reporting threshold is relatively low. For the January 1, 2019, to December 31, 2019 reporting period, you must report payments of $10.79 or greater or payments totaling $107.91 or more in one year. Your business needs to collect detailed data about payments to physicians, including:
- Physician or recipient information
- Value of the payment and transfer information
- Information on the device or other covered product
- Research-related information if applicable
- Ownership or investment information if applicable
- File metadata
CMS points out that some of the information you need to report about these payments will be the same for all types of payments, whether research, general, or ownership/investment — which could reduce the compliance burden to some degree.
Once you’ve collected the data, you need to verify it and attest to its accuracy. You must then report to CMS by the deadline. Information is published on CMS’ Open Payments website on June 30 of each year. CMS provides an extensive list of resources to help with compliance and answer questions on its Resources page.
What Sunshine Act Compliance Doesn’t Do
CMS stresses that because payments are reported and posted on the Open Payments site that it doesn’t mean anything illegal has occurred. On the other hand, Sunshine Act reporting doesn’t exempt companies from liability — the circumstances around the payment may be transparent, but the company making it may still be violating the Federal Anti-Kickback statute or the False Claims Act.
There’s something else that the Sunshine Act doesn’t seem to do: Raise public awareness about payments and increase trust in physicians. A study published by BMJ found that “Public disclosure of industry payments information through Open Payments did not significantly increase the proportion of respondents who knew whether their physician had received industry payments. It also did not change the proportion of respondents who became aware of the issue of industry payments but did increase the proportion who knew that payments information was publicly available.”
One of the report’s authors, Genevieve P. Kanter, points out that studies also show patients have less trust in physicians that accept industry payments, but that distrust extends to all doctors. “Put differently, patients were reporting diminished trust in doctors who did not accept industry payments because they were aware that other doctors did,” she writes. She suggests the CMS promotes greater awareness and journalists put payments in proper context, noting that most physicians do not accept any payments from manufacturers. “Effective transparency,” she comments, “requires more than a public data dump.”
The Role of the Sunshine Act
If your business makes payments of any type with physicians, researchers, or teaching hospitals, it’s imperative to accurately report those transactions, but it may also be wise to build awareness about why you are making them and how they could ultimately benefit patients and the industry as a whole. Your role in transparency in the healthcare industry and greater accountability should include helping to paint an accurate picture of the types of relationships physicians have with your company.
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