Published July 6, 2020

Gifts or Inducements? Compliance With the CMS Open Payments National Disclosure Program

Expressing gratitude and appreciation to others can have a positive and lasting effect on personal and professional relationships. However, when it comes to communicating that appreciation in the form of cash payments, gifts, or gratuities between healthcare providers and drug and device manufacturers and/or vendors, things can get complicated.

The Physician Payments Sunshine Act (PPSA or the Sunshine Act), also known as Section 6002 of the Affordable Care Act (ACA) of 2010 and operating as the Open Payments program, requires drug, device, biological, or medical supply manufacturers and/or vendors; distributors; or wholesalers to disclose to the Centers for Medicare & Medicaid Services (CMS) any payments or other transfers of value made to physicians or teaching hospitals. Certain manufacturers and group purchasing organizations (GPOs) are required to disclose any physician ownership or investment interests held in those companies.

The data is published annually on the publicly searchable CMS Open Payments database, a national disclosure program that is statutorily mandated to promote transparency and accountability between physicians (or immediate family members of the physician) and teaching hospitals regarding financial relationships with applicable manufacturers and GPOs. The aforementioned manufacturers, vendors, distributors, and wholesalers are required to comply with the Sunshine Act and must disclose payments or transfers of value (items or information) made to a covered recipient, entity, or individual, either directly or on behalf of another covered recipient.

In CY 2020, the Medicare Program released Revisions to Payment Policies Under the Physician Fee Schedule to further clarify how the program aims to increase transparency and expose potential conflicts of interest (COIs). The database provides a forum for stakeholders to analyze physician relationships and reflect an accurate accounting of physician ownerships or investment interests. The following non-exhaustive list provides examples of items and issues covered by the Open Payments Law:

  • Consulting fees
  • Compensation for services such as speaking or serving as faculty
  • Honoraria
  • Gifts
  • Entertainment
  • Food and beverage
  • Travel and lodging
  • Education
  • Research
  • Charitable or political donations
  • Royalties and/or licenses
  • Ownership or investment interests
  • Grants in conjunction with services or supplies
  • Space rental or facility fees

What you need to know:

Details regarding payments or transfers of value (items or information) made by an applicable company either directly to a covered recipient or on behalf of another covered recipient, entity, or individual, must be submitted annually to the Open Payments database and become publicly available information. Companies can report individual or aggregate totals of payments or transfers of value. Section 1128G of the Social Security Act establishes certain minimum dollar thresholds for required reporting. The statutory threshold for individual payments in CY 2020 is $10.97, and the aggregate amount is $109.69. Companies may incur civil monetary penalties (CMPs) of $1,000 to $10,000 for each payment, transfer of value, ownership, or investment that is not timely and accurately reported. CMPs multiply ten-fold for manufacturers and GPOs that knowingly fail to report.

What you need to do:

Healthcare organizations must ensure that their Code of Conduct and COI policies and procedures outline what activities with vendors and companies are permitted and not permitted. Workforce members and medical staff must be trained and educated on the importance of ethical and appropriate vendor interactions. Such training and education should include examples of improper behaviors and the risk to the organizational culture. Engage vendors by requiring completion or attestation of COI and Open Payments education and training, ensuring all vendors know and agree to the organization’s standards and any related expectations specific to them.

From initial onboarding and annually thereafter, COI forms should be carefully reviewed and compared to the CMS Open Payment database. Identify specific individuals who may be in a position to influence the organization’s purchasing or contracting decisions. These include physicians in administrative roles (e.g., medical directors), those involved in research studies (e.g., principal investigators), and physicians who serve on product selection committees. Investigate and document possible COIs and Open Payment findings and develop intervention strategies that mitigate improper financial relationships between providers and companies. Consider the creation of a COI Committee with the responsibility for identification, monitoring, and/or resolution of potential COI. Include Compliance Work Plan audits that assess your organization’s compliance with conflicts and disclosure practices.

How PYA can help

PYA has developed a CMS Open Payment Registry Review Checklist to assist you in your efforts when it comes to COIs and financial relationships within the healthcare industry. Additionally, PYA’s team of experts can assist with your Sunshine Act compliance needs, including compensation valuation considerations and automation of provider lookups. For more information, contact a PYA executive below at (800) 270-9629.

Executive Contacts

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