What is the Sunshine Act?

sunshine-actAs part of the healthcare reform bill in the Patient Protection and Affordable Care Act, the Sunshine Act was passed in March 2010 and put into effect on September 30, 2014. Also commonly referred to as the Open Payments Program, the act was adopted to require certain pharmaceutical and medical manufacturing companies to provide public reports of payments made to physicians and teaching hospitals in the United States. Under these new guidelines, data on payments must be made available for public consumption through a searchable federal database online. Since recent surveys have found that the majority of physicians still do not understand these requirements and 63% report feeling “deeply concerned” about the new website, the following article will offer an overview on what you must know about the act.

Resource: The Ultimate Online Guide to the Affordable Care Act

Requirements for Physician Payments

Each year, medical device and pharmaceutical companies will now be required to submit annual financial reports to the Centers for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services (HHS) regarding all transfers of value made to physicians or teaching hospitals. In other words, payments of less than $10 do not need to be reported for the database unless total payments to the physician exceed $100 in that year. Meals, gifts, entertainment expenses, consulting fees, honoraria, research, educational materials, and travel reimbursements are examples of transfers that require reporting. In the reports, companies must include the name and address of the physician or teaching hospital, the amount of the payment, the form of the payment, and the nature of the payment.

Purpose of the Sunshine Act

In all, the new legislation has been designed to increase the transparency surrounding the financial relationships between physicians, teaching hospitals, and companies within the pharmaceutical industry. The act has declared it a federal mandate to include a considerable amount of data in the public domain for full disclosure of industry-physician financial relationships. Since statistics show that 83% of U.S. physicians have received gifts from pharmaceutical companies, the act was formed from recommendations from the Institute of Medicine (IOM) to identify, limit, and manage potential conflicts of interest in the healthcare industry. It is believed that having this objective information available will enable healthcare consumers to be more informed when choosing medical doctors, osteopathic doctors, dentists, podiatrists, optometrists, chiropractors, and teaching hospitals.

Ways to Prepare for the Open Payments Program

If physicians have not already done so, it is highly recommended that they register with the CMS to review information about payments reported with their names by manufacturers. Annually, physicians will have a 45-day period from June to September to review and dispute any industry data that has been reported before it makes its way into the public’s eye. Physicians should also guarantee that their National Provider Identification (NPI) number is accurate, or fill out the application for a number if they do not have one. It is also suggested that physicians and practices ask all contacts in the pharmaceutical industry about the company’s plans to keep them informed when financial reports are being planned as well.

Overall, the new regulations included within the Affordable Care Act on physician payments were adopted with the overall goal of driving down overall healthcare costs. In the Sunshine Act, it is now required that all applicable manufacturers of drugs, medical devices, biological products, and other healthcare supplies annually report information regarding payments to physicians or teaching hospitals to the CMS.