Open Payments (Formerly Sunshine Act) 101

Open Payments (Formerly Sunshine Act) 101

Open Payments is a federal program, required by the Affordable Care Act, that collects information about the payments drug and device companies make to physicians and teaching hospitals for things like travel, research, gifts, speaking fees, and meals. It also includes ownership interests that physicians or their immediate family members have in these companies1. The data collected is made available to the public each year on the Centers for Medicare and Medicaid Services (CMS) website.

The goal of the open payments program is to increase transparency related to the financial relationships between physicians, teaching hospitals, group purchasing organizations, drug manufacturers, and medical device manufacturers. Applicable companies or reporting entities must fulfill compliance requirements annually. To ensure your Life Sciences company is in compliance, we suggest you have your practices reviewed by outside counsel because interpretation of the rules can be somewhat subjective. However, the following tips can be used to assist in auditing your current program.

1. Make sure your payment listings are completely accurate

Document exact dollar amounts even when expenses seem insignificant. Making errors in calculations, system mismatches and other related issues can pile up and lead to extensive inaccuracies in your data if they aren’t tracked accurately from the start. Perform quality control checks regularly.

2. Implement ‘Assumptions’ Document

This particular document should provide explanations of reasonable assumptions that have been made, along with the methodologies adopted by your company to interpret and implement tracking and reporting obligations under Open Payments. Be specific and detailed in your notations as to how our assumptions reflect your interpretation of the law.

3. Supporting documentation should always be available

Complying with federal and state requirements while managing your own company’s standard operating compliance procedures can be challenging. Document, document, document. And, when you’re done, document some more. CMS requires that companies maintain complete and accurate records for five years. Avoid auditing nightmares by implementing transparency throughout your compliance practices. If there is any question regarding the type of documentation required from your particular business, contact CMS directly.

4. Be prepared with a Dispute Resolution Plan

Physicians have a 45-day grace period to dispute transfers of value submitted to CMS. Once the dispute is filed, manufacturers have 15 days to respond. To avoid disputes, it is wise to disclose your Open Payment compliance practices to the HCPs and HCOs you interact with regularly. Consider pre-disclosure practices which send reports to HCPs and HCOs prior to reporting to CMS to avoid disputes.

5. Don’t forget that meals must be reported

Meals are considered among the ‘transfers of value’ that need to be reported by companies. This means that you need to decide how the amount spent per person has to be calculated. The regulation states that when food or beverages are served in a group setting, the overall value of the meal should be reported, “only for the covered recipients who actually partook in the food or beverage”.

As noted earlier, consulting with a compliance attorney to set up your best practices is ideal.


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