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. It was put into effect on September 30, 2014. It’s also commonly referred to as the Open Payments Program. The act requires certain pharmaceutical and medical manufacturing companies to provide public reports of payments made to physicians and teaching hospitals in the U.S. Under these new guidelines, data on payments must be made available for public consumption through a searchable federal database online. Recent surveys have found that the majority of physicians still do not understand these requirements. 63% of them 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

Medical device and pharmaceutical companies are required to submit annual financial reports to the Centers for Medicare and Medicaid Services (CMS) regarding all transfers of value made to physicians or teaching hospitals. 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.

Examples of transfers that require reporting are:

  • meals
  • gifts
  • entertainment expenses
  • consulting fees
  • honoraria
  • research
  • educational materials
  • travel reimbursements

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
  • 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
  • companies in 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. 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
  • 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. 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.

The new regulations included in the Affordable Care Act on physician payments were adopted with the 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 annual report information regarding payments to physicians or teaching hospitals to the CMS.