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Are You Ready for Open Payments (the Sunshine Act)?

  • Authors: Anita Griner, MBA; Douglas Brown
  • CME Released: 7/18/2014
  • Valid for credit through: 7/18/2015
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Target Audience and Goal Statement

This activity is intended for all physicians, chiropractors, dentists, podiatrists, and optometrists who practice in the United States

The goal of this activity is to describe the provisions of the Physician Payment Sunshine Rule and its implementation in 2013-2014.

Upon completion of this activity, participants will be able to:

  1. Describe the purpose of the Physician Payment Sunshine Rule and the steps involved in collecting and publicly reporting data identifying payments and other “transfers of value” made by manufacturers of pharmaceuticals or medical devices to physicians and teaching hospitals
  2. Identify key dates for the implementation of the rule
  3. Identify types of payments that are covered or exempt under the rule
  4. Summarize steps physicians can take to verify their information in advance of its publication on the Centers for Medicare & Medicaid Services' website


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Medscape, LLC, encourages Authors to identify investigational products or off-label uses of products regulated by the US Food and Drug Administration, at first mention and where appropriate in the content.


  • Anita Griner, MBA

    Director, Data Sharing and Partnership Group, Center for Program Integrity, Centers for Medicare & Medicaid Services, Baltimore, Maryland


    Disclosure: Anita Griner, MBA, has disclosed no relevant financial relationships.

    Ms Griner does not intend to discuss off-label uses of drugs, mechanical devices, biologics, or diagnostics approved by the FDA for use in the United States.

    Ms Griner does not intend to discuss investigational drugs, mechanical devices, biologics, or diagnostics not approved by the FDA for use in the United States.

  • Douglas Brown

    Deputy Director, Data Sharing and Partnership Group, Center for Program Integrity, Centers for Medicare & Medicaid Services, Baltimore, Maryland


    Disclosure: Douglas Brown has disclosed no relevant financial relationships.

    Mr Brown does not intend to discuss off-label uses of drugs, mechanical devices, biologics, or diagnostics approved by the FDA for use in the United States.

    Mr Brown does not intend to discuss investigational drugs, mechanical devices, biologics, or diagnostics not approved by the FDA for use in the United States.


  • Jane Lowers

    Director of Government Strategy, Medscape, LLC


    Disclosure: Jane Lowers has disclosed no relevant financial relationships.

CME Reviewer(s)

  • Nafeez Zawahir, MD

    CME Clinical Director, Medscape, LLC


    Disclosure: Nafeez Zawahir, MD, has disclosed no relevant financial relationships.

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    Medscape, LLC designates this enduring material for a maximum of 1.00 AMA PRA Category 1 Credit(s)™ . Physicians should claim only the credit commensurate with the extent of their participation in the activity.

    Medscape, LLC staff have disclosed that they have no relevant financial relationships.

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Are You Ready for Open Payments (the Sunshine Act)?


Note: Dates might have changed since this activity was published. Please check for the most updated.

Open Payments (the Sunshine Act) Section 1128G of the Social Security Act, implements Section 6002 of the Affordable Care Act, which requires manufacturers of pharmaceuticals or medical devices to publicly report payments made to covered recipient physicians and teaching hospitals. The Centers for Medicare & Medicaid Services (CMS) will make the data available to those providers for review, followed by release to the public -- a process that will begin in 2014 with 2013 data. Anita Griner, Director of the Data Sharing and Partnership Group, and Doug Brown, Deputy Director of the Data Sharing and Partnership Group, describe Open Payments which implemented Section 6002 and what it means for physicians, teaching hospitals, applicable manufacturers, and applicable group purchasing organizations (GPOs).

Medscape: What is Open Payments (the Sunshine Act)?

Ms Griner: The rule implements Section 6002 of the Affordable Care Act, the Sunshine Act, now more commonly known as Open Payments, which is designed to create greater transparency about the financial relationships -- called "transfers of value" -- between applicable manufacturers and physicians and teaching hospitals. It is also designed to create greater transparency about any ownership interest that a physician might have in an applicable GPO or applicable manufacturer. The program requires information to be reported annually to CMS.

Two basic kinds of information have to be reported: (1) any payments or transfers of value provided by manufacturers of drugs, devices, biologicals, or medical supplies to physicians and teaching hospitals; and (2) ownership or investment interests that are held in either applicable GPOs or applicable manufacturers by physicians or their immediate family members.

Medscape: So this includes financial relationships with physicians and their immediate family members?

Mr Brown: Yes, the statute affects all physicians with an active medical license in the United States, whether or not they are enrolled in Medicare, Medicaid, or Children's Health Insurance Program (CHIP). This includes:

  • Doctors of dentistry (DDS)
  • Doctors of optometry (OD)
  • Doctors of medicine (MD)
  • Doctors of osteopathy (DO)
  • Chiropractors (DCM)
  • Doctors of podiatry (DPM)

Ownership interests held by immediate family members of physicians are also included in the reporting requirements. The rule defines immediate family members as: spouse; natural, step or adoptive parent; child or sibling; grandparent or grandchild; and spouse of a grandparent or grandchild.

It also includes teaching hospitals (any institution that receives either direct or indirect support of medical education from CMS). The CMS will publish an online list of teaching hospitals well in advance of data starting to be collected.

Medscape: Can you provide more information on applicable manufacturers?

Ms Griner: For applicable manufacturers, it applies to any applicable manufacturer who makes at minimum 1 product or device that is covered by Medicare, Medicaid, or CHIP. So if you make 10 products and only 1 of them is covered by Medicare, Medicaid, or CHIP, then all the payments that you make to physicians or teaching hospitals, regardless of whether or not the payments are related to the one covered product, would have to be reported to CMS. The exception is for companies that receive less than 10% of their gross revenue from covered products. They would not have to report on the entire universe of their transfers of value, but just on those transfers related to the products that are specifically covered by Medicare, Medicaid, and CHIP. The rule applies to separate operating divisions of applicable manufacturers, and to parent/subsidiary companies -- as well as companies with a common owner (specifically when a single entity owns 5% or more of each organization).

For example:

If Company X earns 9% of gross revenues from a covered product or set of products, then they just have to report to CMS any transfer of value related to those products in particular. But if they earn 10% or more of their gross revenue from covered products, then any transfer of value to a physician or teaching hospital related to any of their products would have to be reported.

Medscape: Before we move on to the mechanics, what is the purpose and value of making this information publicly available?

Mr Brown: Collaboration among physicians, teaching hospitals, and applicable manufacturers can contribute to the design and delivery of life-saving drugs and devices. However, while some collaboration is beneficial, payments from applicable manufacturers to physicians and teaching hospitals can also introduce conflicts of interest.

An open question right now is whether certain kinds of transfers of value alter prescribing behavior or alter healthcare utilization in some way that might not be clinically appropriate. Some transfers of value are beneficial or neutral, and necessary to the advancement of healthcare. Others have the potential to create inappropriate influence on research, education, standard setting, or clinical decision making.

Open Payments is not taking a stand on which relationships are beneficial or which may cause conflicts of interest. It is more focused on data transparency which may discourage inappropriate conflicts of interest between providers and applicable manufacturers that ultimately could increase the cost of health care. It’s meant to provide the public with reliable, accurate information on what the financial ties are between physicians, teaching hospitals, and the industry, and to illustrate the nature and the extent of those relationships.

Eventually, I think it will encourage the right kinds of interactions and discourage perhaps what might be inappropriate influence on research, education, standard setting, and clinical decision making. But the first step is transparency into these relationships. There have been other important transparency programs, but not on this scale, and not involving all physicians as defined under the act. This is the first national program that will allow CMS to better understand the nature of these interactions.

Medscape: Will there be education for consumers about how to understand the context of these data?

Ms Griner: We envision a broad outreach program that would involve consumers. We have started outreach so the general public is aware that this program exists and knows to expect the data down the line. As we draw closer to the time when the actual data will become available, we will engage consumers with more details about how they might choose to use the data as they interact with their physicians.

In order for it to be a viable transparency program, getting consumers involved will be essential. It is important for them to view the data and then have some open discussions with their physicians about what it does or does not mean in their practice.

After applicable manufacturers report the data and physicians have had a chance to review it, we’ve included an open field and other optional fields specifically to help provide context for consumers. For example, one of the option fields is what portion of a payment or other transfer was intended to fund the clinical care. It benefits everyone to know that a payment attributed to a physician actually directly or indirectly aided in patient care. This is an opportunity for physicians to be proactive about how their data are represented publicly in the online database.

Timeline for Open Payments

Medscape: When will the program take effect?

Mr Brown: The first year, 2013, was a partial year in terms of data collection because the rule just came out in late February 2013. Industry (applicable manufacturers and applicable GPOs) was required to collect data from August 1, 2013 through December 31, 2013. As of June 1, 2014, physicians and teaching hospital representatives are able to register in CMS’ Enterprise Portal. Registration for physicians and teaching hospitals will be conducted in 2 phases for this first Open Payments reporting year. Phase 1 includes user registration in CMS' Enterprise Portal. Phase 2 includes physician and teaching hospital registration in the Open Payments system, and allows them to review and dispute data submitted by applicable manufacturers and applicable GPOs prior to public posting of the data on September 30, 2014.

The Open Payments review, dispute and correction process spans a total of 60 days. The initial 45-day period is for physicians and teaching hospitals to review and initiate any disputes they may have regarding the data reported about them by applicable manufacturers and applicable GPOs. The remaining 15-day period is additional time that has been provided to industry to submit dispute corrections.

January 1, 2014 also began the calendar year of data collection for all of 2014. Data collected in 2014 will be submitted to CMS by the end of the first quarter of 2015. Each year, physicians will be given 45 days of viewing their data prior to public reporting in order to dispute whatever’s appropriate. After 2014, CMS will have to make the data available on the public site by June 30 each year rather than September 30.

What types of data are reported?

Medscape: Let’s get into the program specifics. What is meant by transfer of value?

Ms Griner: There are lots of different kinds of interactions that physicians and teaching hospitals have with industry. They can range from consulting fees to gifts, even meals. Transfers of value are really meant to encompass a broad range of payments or interactions. All payments or other transfers of value (except those specifically excluded) must be reported with details of the interaction, including a description of the reason for making the transfer of value, which are listed in the chart below.

  • Consulting fee
  • Compensation for service other than consulting including serving as faculty or as a speaker at an event other than a continuing education program
  • Honoraria
  • Gift
  • Entertainment
  • Food and beverage
  • Travel and lodging (including the specified destinations)
  • Education
  • Research
  • Charitable contributions
  • Royalty or license
  • Current or prospective ownership or investment interest
  • Compensation for serving as faculty or as a speaker for an unaccredited and non-certified continuing education program
  • Compensation for serving as faculty or as a speaker for an accredited or certified continuing education program
  • Grant
  • Space rental or facility fees (teaching hospital only)

Let’s look at some different scenarios, in which the underlined text indicates a transfer of value:

Scenario 1: Dr Smith is known in her region as a skilled pulmonologist. A pharmaceutical sales representative arranges a lunch for Dr Smith and her clinical team to discuss a new drug that prevents asthma attacks. Dr Smith likes what she hears and tries out the drug samples the rep left behind. Impressed with how well the drug works, Dr Smith agreed to speak to physicians and other clinicians throughout her referral base about the drug. Dr Smith spends the next 12 months traveling and speaking, with expenses and honoraria paid by the applicable manufacturer.

Scenario 2: Dr Jack is a licensed physician and researcher who did groundbreaking work leading to a possible new biological product to treat neurological diseases. ABC, a biotechnology firm, agreed to sponsor clinical trials for further testing and provided Dr Jack millions of dollars under contract through Dr Jack’s teaching hospital, to fund the trials and pay Dr Jack as the Principal Investigator (PI). ABC engaged a Contract Research Organization (CRO) to stand up and run the trials, including engaging other teaching hospitals/PIs and distributing the funds. Dr Jack received additional funds from ABC to talk about the work at research conferences and industry meetings, knowing this would advance his career.

Scenario 3: Dr Brown’s practice is devoted to elderly patients with difficulty walking. Many years ago, Dr Brown helped establish a GPO to negotiate discounts on wheelchairs and scooters. Today, the GPO serves many practices and touts deep discounts, particularly on Dr Brown’s favorite products. With the revenue he receives from the GPO, Dr Brown is able to spend more time with each of his patients.

All of these are common scenarios that involve reportable transfers of value. Physicians are involved in the entire spectrum of healthcare delivery, from bedside decisions to helping to set standards of practice or doing the research that might lead to new practice guidelines, new standards, or new modalities. Physicians have to make sure that they are not allowing these interactions to unduly influence healthcare decisions or influence them in a way that might be contrary to good clinical practice.

Physicians should also keep in mind that not all transfers of value have to be direct. So, for example, if an applicable manufacturer provided funding to a specialty society for the purpose of supporting a physician’s research or other activities, that funding may become reportable once it goes to a physician.

Medscape: The rule covers direct and indirect transfers of value between an applicable manufacturer and physician. In continuing education (CE), an applicable manufacturer who provides a grant supporting an education activity to an accredited CE provider has no say in the faculty selection. So would the CE provider’s honoraria to faculty be considered transfer of value?

Mr Brown: If the industry sponsor does not influence, suggest, or determine who gets the CE or who delivers it, then it really doesn’t become a reportable activity as long as the activity meets the requirements of one of the professional accrediting bodies for CE and the manufacturer does not pay the speaker directly. If, however, the manufacturer does make, suggest, or require a specific doctor to provide the course, or provide the CE vendor with a choice of certain doctors to provide the course, then that becomes a covered activity that has to be reported.

If in the process of either receiving or providing the CE, the audience members are paid to travel to where the CE is being held that travel expense would be reportable.

Reportable Value

Medscape: Let’s talk in more detail about value. Can you explain the $10 standard?

Ms Griner: An individual transfer of value has to be greater than $10 in order to be reported to CMS. Some transfers of value are so small that it would be logistically challenging to keep track of all of them. However, if multiple individual $10 transfers add up to more than $100 over the course of a year, then all payments under $10 must be reported.

For example, let’s say you get numerous $9 meals from the same company. If you have twelve $9 meals, then in aggregate they amount to greater than $100 and must be reported to CMS as a single transfer of value in excess of $100. But as long as that activity was not either individually $10 or more or in aggregate more than $100, then it would not have to be reported at all.

Medscape: What about medication samples?

Mr Brown: Samples are specifically excluded from this rule. It’s pretty typical that a pharmaceutical company will detail a physician and provide samples for patient use. Samples are addressed in a sister provision, Affordable Care Act Section 6004, that is being implemented by the Food and Drug Administration (FDA).

Medscape: How does the rule address transfers of value to personnel who work for a physician? If a pharmaceutical representative brings ten $10 sandwiches to an office with 3 MDs, 4 nurses, and 3 administrative staff, how will that be reported?

Ms Griner: The rule is fairly specific that only those transfers of value actually gained by the physician can be reported to CMS. So in the example above, 10 people shared a meal that was $100 (10 sandwiches at $10 each), but only 3 of them were physicians, so the total cost of the meal ($100) would be divided by 10 and only the per capita cost would be reported to CMS under each physician’s name.

But this raises another example: Suppose a group of physicians work in a department that gets a transfer of value from an applicable manufacturer. Under the final rule, the transfer of value would be reported in the names of each physician who requested or was intended to benefit from the transfer of value -- for example, in a multispecialty practice, a gift of radiology textbooks would be reported as a transfer of value to the radiologists only. If an applicable manufacturer provides a transfer of value for a physician who is an employee of that hospital, the transfer would be reported only for the physician, because he or she is the intended recipient. If the payment was not passed through entirely, the applicable manufacturer will need to report how much was transferred to the hospital and how much was delivered to the physician.

Medscape: Are there any other notable exclusions?

Mr Brown: Physicians who conduct research might be interested in an exception around delayed publication. An applicable manufacturer is required to report research transfer of values, but the publication of certain research payments are eligible for delayed publication. The thinking is that if there were public transparency, it might stifle companies from getting involved in very early research or clinical trials for new products because they would then have to essentially disseminate information about that research to the public earlier than they perhaps would be prepared to do. In such cases, an applicable manufacturer is allowed to delay publication for up to 4 years or until FDA approval of the product, whichever comes first. And that’s again to specifically protect that research space.

The reporting and review process

Medscape: Who will report the data?

Ms Griner: The actual data will be reported by the applicable manufacturers and applicable GPOs. This relieves much of the burden for physicians and shrinks the pool of entities that need to report.

Applicable manufacturers and applicable GPOs will collect the data over the course of a calendar year and send that data as an electronic file submission to CMS. Then CMS will aggregate that data by specific physician and teaching hospital, make sure the data are accurate, and ultimately put it up on a public website for anyone to view.

Medscape: At what intervals should physicians expect to get involved in the process of collecting and reporting?

Mr Brown: Physicians are not required to interact with the data if they choose not to, but we hope they will become aware of this program, recognize its importance, and choose to become involved.

CMS has encouraged applicable manufacturers and applicable GPOs to set up a pre-submission review process, where they will inform physicians about the data they plan to report about them. While a pre-submission review process is not mandatory, we hope that applicable manufacturers and applicable GPOs will see the benefit of allowing physicians to review their data in advance -- and we hope that physicians will avail themselves of the opportunity to review their data at this pre-submission stage. Once the data are received by CMS, physicians will have 45 days to review their own data before they are made public and can dispute whatever they feel is not accurate. They can provide information during that dispute process to explain why they feel a reported transfer of value is inaccurate. CMS will route that information to the reporting applicable manufacturer or applicable GPO, which will then engage in a dispute resolution process directly with the physician and re-report any data that are changed. After the end of the 45-day period, there will be an additional 15-day period to further resolve the disputes.

Disputed data that are not resolved by the end of the 15-day period will be published on the public website, but will be marked as disputed. Physicians will have the opportunity to review their data each year prior to the public posting. Additionally, once the data are publicly available, physicians still can review and dispute them, but the data that were disputed will remain on the website, with a notation that they are in dispute.

Physician involvement in this aspect of the program is not required, but it’s very important.

Medscape: How can physicians be proactive about this process?

Ms Griner: Physicians who have direct relationships with the industry, such as research support, honoraria, and travel should be keeping track of what their transfers of value are, in order to confirm that the information reported on their behalf to CMS was accurate. Similarly, physicians should be keeping track of ownership or investment interests that they -- or their immediate family members -- hold in applicable manufacturers or applicable GPOs. I can’t emphasize this enough: Data accuracy is extremely important to CMS because this will become a public dataset and asset.

Another very simple, proactive step is to make sure the applicable manufacturer or applicable GPO has an accurate record of the physician’s name, business address, specialty, medical licensure information, and NPI (National Provider Identifier) on file. Those fields will help ensure that CMS can identify the physicians and aggregate physician-specific information across the multiple applicable manufacturers and applicable GPOs. One way to keep that information up to date is to use the National Plan and Provider Enumeration System (NPPES) to match physician data against their NPI.

Finally, as we mentioned before, applicable manufacturers and applicable GPOs may provide optional contextual information for each transfer of value. Context is extremely important because it may help to explain why the payment occurred. However, applicable manufacturers and applicable GPOs may not always have the right contextual information. It is important for physicians to advocate to applicable manufacturers and applicable GPOs that they collect and report the contextual information and that physicians provide appropriate information for every interaction or transfer. This does require physicians to be more proactive, but the benefit to themselves and individuals seeing the data will be tremendous.

Medscape: Are there requirements for the format in which industry will be required to report the data?

Mr Brown: We have provided applicable manufacturers and applicable GPOs with standardized schemas that clearly spell out the required data fields, as well as fields that are optional for reporting.

Medscape: What penalties are involved for applicable manufacturers that either do not report or inaccurately report data?

Ms Griner: First, any penalties would be levied against applicable manufacturers and applicable GPOs, not physicians or teaching hospitals. The industry is taking accountability for the provision of accurate data. They will be required to legally attest that the data they submitted was accurate and complete, and in the event of disputes they are the ones who must re-report the data.

There are 2 possible types of penalties. The first is for failure to report data accurately, completely, or timely, and the second, larger penalty is for knowingly failing to report data in an accurate, complete, and timely fashion. Each 1 of those has an associated penalty that CMS can levy against the applicable manufacturer or applicable GPO and collect as a civil monetary penalty. For failure to report, the penalty is at least $1000 or up to $10,000 for each transfer of value or ownership/investment interest not reported, up to $150,000 per year. For knowing failure to submit required information in a timely manner, the penalty is at least $10,000 or up to $100,000 for each transfer of value or ownership/investment interest not reported as required. The maximum total for knowing failure to report is $1,000,000 per year.

Medscape: Are there any final points physicians should consider in preparing for Open Payments?

Mr Brown: It’s important for physicians to be ready to discuss the reporting requirements with their patients. Hopefully it will be a conversation that patients will want to have with their doctors in order to actually understand the important work that their physician may be doing with the industry, and what impact, if any, that work has on the physician-patient interaction. At the end of the day, I think that’s probably the most important aspect of this work: the discussions, hopefully very collaborative and constructive, that will happen at the bedside.

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