Sunshine Act – Its time to comply. Do you know how?

Practis Blog

Designed to enhance transparency between healthcare companies, physicians and the public, the Physician Payments Sunshine Act requires group purchasing organizations, medical device and pharmaceutical companies to track and report gifts and payments greater than $10 or more than $100 annually per physician.

Effective August 1, 2013, the Sunshine Act – a provision in the Affordable Care Act – is intended to provide CMS an accurate reporting of financial transactions between manufacturers, GPOs and providers. This also includes those manufacturers who are based outside the United States but sell products or services to U.S. providers and teaching hospitals.

Companies out of compliance can be fined anywhere from $1,000 to $1,000,000.

What is subject to reporting

Expenses are broad and can range from consulting fees, honoraria, gifts, travel, entertainment, royalty or license, grants and more. Reporting exclusions include product samples, discounts and rebates, educational materials that benefit patients or intended for patient use and more.

About reporting

With the first reporting annual deadline of March 31, 2014, physicians have through May 15 every year to review reported data for accuracy. The final data will be posted to a public site annually on September 30. This information will be searchable and contain contextual information.

What to report

It’s important to keep detailed records that include images of receipts, details explaining each itemized expense as well as the following:

  • Physician Name
  • NPI
  • Primary Specialty Code
  • Practice/ Hospital Name
  • Practice/ Hospital Address
  • Amount of expense
  • Product detail
  • Nature of benefit

Costs to be compliant

CMS estimates that the total cost to comply will be approximately $269 million in year one and $180 million annually thereafter.1

For a large manufacturer, this means that the average estimated cost to comply for an incremental 2.5 FTE’s with an average hourly rate of almost $36 per hour is $186,000 – that is just for the first year.1

How manufacturers can prepare

Begin tracking and keeping detailed information. There are many services such as Certify or Medispend that allow you to track your expenses.

Look for compliant programs that do not directly benefit one specific physician but rather your entire customer base. An online marketing program such as Encounter Health is an example of this.

How providers can prepare

Start by understanding what payments and gifts are considered to be reportable.

Update your professional information.

Ask manufacturers to notify you of reportable items before they report them to the government. While physicians will have an opportunity to review reported information after the reporting deadline of March 31, they can be proactive and correct any misinformation before it is transmitted it to the government.

It is important to note that CMS will not initiate direct contact with individual physicians. CMS will use listservs and online posting of information. Physicians may also register at CMS Open Payments website to receive information on their reports when CMS releases for review.