Don't Be in the Dark About the Sunshine Act Compliance

Don't Be in the Dark About the Sunshine Act Compliance

Healthcare certainly has no shortage of compliance requirements. Many of these require dedicated programs to ensure organizations are meeting regulatory mandates. One such law is the Physician Payments Sunshine Act (PPSA).

Sunshine Act compliance relates to ensuring transparency between life sciences healthcare organizations and providers relating to payments or transfers of value. Since its initial implementation, there have been several updates to the law. In this post, we’ll define the basics of the act, important changes, and compliance concerns.

What Is the Sunshine Act?

The Sunshine Act requires the Centers for Medicare and Medicaid Services (CMS) to collect and display information reported by life sciences organizations (pharmaceutical and medical device manufacturers) and group purchasing organizations (GPOs) regarding payments and transfers of value they have made to physicians and teaching hospitals. CMS publishes this through the Open Payments system.

Open Payment Reports Indicate Neither Impropriety nor Exemption

The Open Payments database of exchanges doesn’t suggest or substantiate illegal activity. They are a transparency tool. However, just because you report doesn’t mean your organization is exempt from any liability regarding collusion, bribery, or other fraud. Even when documented correctly, a payment could still violate the Federal Anti-Kickback law or the False Claims Act.

Who Must Complete Sunshine Act Reporting?

CMS defines two types of companies. The first is Type 1 manufacturers, which are those engaging in “production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply.” Distributors and wholesalers that hold the title of a covered product or device or are under the ownership of an applicable manufacturer are liable, too.

The second group, Type 2 manufacturers, include Type 1 subsidiaries that support their production or distribution of a product.

Sunshine Act Updates for 2021

As with any bill, there are always updates. Changes to the law are mostly due in part to the Office of Inspector General (OIG) audit of Open Payments in 2018. The report urged CMS to take “practical steps to improve the accuracy, precision, and consistency of the data.” The report outlined four steps:

In response to the audit, the SUPPORT for Patients and Communities Act (SUPPORT Act), signed into law in 2018, addressed these and other concerns. Those being that “covered recipients” was specific to physicians when many other non-physician practitioners (NPPs) can write prescriptions. The amendments also consider the federal investigations regarding the opioid crisis and the possible financial relationships between these pharmaceutical manufacturers and providers.

The 2020 Medicare Physician Fee Schedule Final Rule (Final Rule) covers the enactment of the SUPPORT Act’s Open Payments provisions. These changes affect 2021 data that you’ll report in 2022.

The Sunshine Act Changes for 2021

The Final Rule includes five major changes. Five new NPPs are now part of “covered recipients.” Those roles are:

There are new “Nature of Payment” categories. These act as descriptors for the payment or transfer of value. The existing categories covered everything from research to consulting fees to gifts, entertainment, and meals. The new areas are debt forgiveness, long-term medical supply or device loans, and acquisitions.

The rule also consolidates the “Nature of Payment” categories related to education programs. CMS combined two current payment categories for continuing education programs (accredited/certified and unaccredited/non-certified) into one payment category.

Medical device and supply product manufacturers must now include a device identifier, much like how pharmaceutical companies must report NDCs. This identifier is in addition to the name of the device or supply product. It’s now mandatory.

The rule also corrects the NDC reporting. The 2015 Medicare Physician Fee Schedule Final Rule inadvertently removed a reference that required NCDs to be reported for non-research payments. The rule clarifies that payments are reportable for research and non-research.

Exclusions for Reporting

The activities that have been non-reportable remain as such, excluding any points above. You don’t have to report individual payments or transfers of value of $11.04 per event. The exception is if you exceed $110.40 per provider per year.

There are also some gray areas in the meal category. If a life sciences company sponsors a meal at a conference, where it’s difficult to discern who is a covered recipient, you don’t have to make a report. However, providing lunch to a hospital staff is reportable if the value is greater than $11.04 per person.

Sunshine Act Compliance: Challenges for 2021

With reporting requirements changing, you may face Sunshine Act compliance challenges ahead. The data you send to CMS isn’t fundamentally different. However, with change comes quandaries. What concerns might you encounter?

There are also some gray areas in the meal category. If a life sciences company sponsors a meal at a conference, where it’s difficult to discern who is a covered recipient, you don’t have to make a report. However, providing lunch to a hospital staff is reportable if the value is greater than $11.04 per person.

Device Identifiers May Be Lengthy

Medical devices aren’t simple. They may consist of many components, all of which require an identifier. CMS is leaving manufacturers responsible for determining what combinations of brand names and device identifiers it includes. With implementation rules fuzzy, this could become cumbersome.

NPPs Add to Open Payments System

Open Payments will have a considerable influx of more recipients. This substantial increase with more reportable data requirements could severely strain organizations that don’t have a robust data collection and reporting system.

Inconsistency in NPPs

A further issue with adding more NPPs is that not all of them have a National Provider Identifier (NPI) number. The licensing for these roles can also vary from state to state. The rule may also classify some NPPs with certain certifications or education as covered recipients when they do not hold advanced practice licenses per the Registered Nurse licensure.

Exclusions for Reporting

The activities that have been non-reportable remain as such, excluding any points above. You don’t have to report individual payments or transfers of value of $11.04 per event. The exception is if you exceed $110.40 per provider per year.

There are also some gray areas in the meal category. If a life sciences company sponsors a meal at a conference, where it’s difficult to discern who is a covered recipient, you don’t have to make a report. However, providing lunch to a hospital staff is reportable if the value is greater than $11.04 per person.

Sunshine Act Compliance: Simplify and Streamline with Tools

New requirements coupled with the burden you’re already under for reporting could significantly impact your organization. You need tools that simplify and streamline.

Life sciences organizations can benefit from Sunset Act compliance tools from MedCompli. With our integrated, intuitive application, you can feel confident in compliance, even with the host of changes coming up.

Explore how our solution works and the many benefits by requesting a demo today.