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Shining a Light on the Physician Payments Sunshine Act

April 1, 2021
April 1, 2021

In this issue of the Healthcare Workforce Advisor, we look at some of the challenges physicians face, talk with industry experts about the solutions that are needed, and explore a few areas where help may be on the way. This post excerpts an article by HealthStream’s Karen Sorensen, Associate Vice President, National Initiatives. Subscribe to Healthcare Workforce Advisor.

Before his appointment to the United States Supreme Court, Louis Brandeis made his famous statement that “sunlight is said to be the best of disinfectants” in a 1913 Harper’s Weekly article. While the roots of the Physician Payments Sunshine Act may not reach that far back, the groundwork was laid in the 1990s when researchers were able to document that financial considerations could affect physicians’ practice patterns. This realization eventually led to anti-kickback legislation and the Stark Law, which prohibits physicians from referring Medicare and Medicaid patients to a facility with which the physician or a member of his or her immediate family has a financial relationship. The 1990s also saw an increase in federal funding of medical research, which prompted the National Institutes of Health in 1995 to encourage medical institutions to have a process in place to manage potential conflicts of interest. However, at the time, there was no targeted legislation to reinforce this recommendation.

By the early 2000s, research started to show that even small gifts, such as the pens and mugs that were routinely given to physicians, could influence prescribing patterns. This led to significant changes to some pharmaceutical marketing practices. In 2007, Senators Charles Grassley (IA) and Herb Kohl (WI) introduced the Physician Payments Sunshine Act in an effort to increase transparency in payments to physicians. However, the legislation failed as a stand-alone bill.

By 2008, Sen. Grassley was holding congressional hearings on the relationship between the pharmaceutical and medical device industry and physicians. The persistent exposure of conflicts of interest between physicians and pharmaceutical companies paved the way for the inclusion of provisions of Grassley and Kohl’s proposed Physician Payments Sunshine Act into the final language of the Affordable Care Act of 2010.

Since 2013, these Sunshine Act provisions have required pharmaceutical companies and medical device manufacturers to report payments and/or transfers of value of $10 or more (or annual aggregate value of $100 or more) given to physicians and teaching hospitals that participate in Medicare, Medicaid and other federal healthcare programs. CMS is responsible for implementing these provisions, which it calls the Open Payments program.

Companies must group payments or transfers of value into one of 14 categories, which are then summarized into Research, Ownership, and General Payments. Manufacturers and Group Purchasing Organizations (GPOs) are also required to report ownership or investment interests held by physicians and/or their immediate family members in those companies. Prior to public reporting, physicians are able to review the payments being reported and to contest any data they believe is incorrect.

The complete article includes:

  • Reporting the Transactions
  • If There’s Smoke Is There Always Fire?
  • The Hospital’s Role in Managing Conflicts of Interest