The Open Payments program established by the Physician Payments Sunshine Act (Sunshine Act) requires manufacturers of covered drugs, medical devices, biologicals, and medical supplies (applicable manufacturers) to report annually to the Centers for Medicare and Medicaid Services (CMS) certain payments and other transfers of value made in the previous calendar year to “covered recipients,” which currently are defined as US-licensed physicians and teaching hospitals. Applicable manufacturers and Group Purchasing Organizations also must report any ownership or investment interests held by physicians or members of their immediate family. CMS makes this information available to the public on the agency’s Open Payments webpage and refreshes it annually.

The CY 2020 Physician Fee Schedule proposed rule includes revisions to the regulations that govern the Open Payments program. Under the proposed rule, CMS would expand the definition of a covered recipient, revise the nature of payment categories, and standardize identification data on reported covered drugs, devices, biologicals, and medical supplies. CMS also would make a correction to the national drug codes (NDCs) reporting requirements for drugs and biologicals.

With the exception of the proposed correction to the NDCs reporting requirements, which would be effective 60 days following publication of the final rule, these proposals would be effective for payments reported in 2022, with payment tracking that is modified to comply with these CMS proposals starting at the beginning of calendar year 2021.

Applicable manufacturers that report payment data under the Open Payments program will want to carefully assess their tracking and reporting practices in light of the new CMS proposals and to determine whether they want to submit comments to the proposed rule. The deadline for submitting comments is September 27, 2019.

Expanding the Definition of a Covered Recipient

As first reported in our October 24, 2018, LawFlash, the SUPPORT Act, signed into law that same day, expands the definition of “covered recipient” to include payments and other transfers of value made to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives. To that end, applicable manufacturers will be required to report transfers of value pertaining to advanced care practitioners in the same manner in which they report payments to physicians and teaching hospitals. The previous exclusion from reporting for payments made by applicable manufacturers to employed physicians will be extended to these advanced care practitioners.

Nature of Payment Categories

Applicable manufacturers are required to characterize the “nature of payment” made to covered recipients by selecting the category that most closely describes the reported payment. Based on stakeholder comments in response to the CY 2017 proposed physician fee schedule rule in which CMS asked for feedback as to whether the exiting categories were adequately inclusive, CMS proposes to consolidate two duplicative existing categories and add three new categories. The three new categories are:

Debt Forgiveness – Would be used to report transfers of value related to forgiving the debt of a covered recipient, a physician owner, or the immediate family of the physician who holds an ownership or investment interest.

Long-Term Medical Supply or Device Loan – Would be used to report transfers of value related to the loan of a covered device or the provision of medical supplies for longer than 90 days. The Sunshine Act regulations currently include an exclusion to reporting for a loan of a covered device or the provision of a limited quantity of medical supplies for a short-term trial period not to exceed 90 days. However, the nature of payment categories currently do not include a category for loans that are outside the exclusion period.

Acquisitions – Would be used to report transfers of value related to buyout payments made to covered recipients in relation to the acquisition of a company in which the covered recipient has an ownership interest.

The existing categories that would be consolidated are the two separate categories for reporting compensation for serving as faculty or a speaker for continuing medical education (CME) programs. When the Sunshine Act was first implemented, the regulations included a special exclusion for reporting payments or other transfers of value associated with a CME program if the payment was provided to an accredited or certified program. In response to stakeholder feedback to the CY 2015 physician fee schedule proposed rule, CMS eliminated the special exception such that all payments, both for accredited/certified programs and unaccredited/noncertified programs, had to be reported.

Each type of program, however, currently has its own separate nature of payment category. CMS now proposes to collapse these categories into a single “medical education programs” nature of payment category because the agency “no longer believe[s] that the distinction in this category is necessary.”

Standardizing Data on Reported Covered Drugs, Devices, Biologicals, or Medical Supplies

When reporting payments or other transfers of value related to specific covered drugs or biologics, CMS currently requires applicable manufacturers also to report the names and the applicable NDCs. The same reporting requirements did not apply to device manufacturers, however, because there weren’t any federally recognized device identifiers when the Open Payments program first started. With the advent of unique device identifiers (UDIs) that were established, and continue to be implemented by the FDA, CMS now believes that the use of UDIs and device identifiers (DIs), which are a subcomponent of the UDI, have become more standardized. As such, CMS proposes that the DI component, the mandatory fixed portion of the UDI assigned to a device, be reported by device manufacturers going forward to provide “more concise information about the medical supplies and devices associated with a transaction.”

Finally, the agency proposes to correct an error from the CY 2016 physician fee schedule final rule that resulted in the inadvertent removal of the requirement for applicable manufacturers to report the NDC for drugs and biologics for payments or transfers of value related to research.

We propose to correct this error in order to reiterate that NDCs are required for both research and non-research payments and to make the change effective 60 days from publishing the final rule.

Conclusion

Although CMS also noted in the proposed rule that it has been “committed to stakeholder engagement in an effort to limit burden in the Open Payments program reporting processes,” this is difficult to reconcile with the significant increase in reporting obligations through implementation of the requirements of the SUPPORT Act. CMS’s proposal to create three new nature of payment categories, consolidate two others, and require reporting of DIs may enhance the precision of data reported to the public, but it does nothing to limit the burden on applicable manufacturers. Applicable manufacturers need to begin modifying their data collection and aggregation systems to accommodate the extensive expansion of covered recipients from two to five different types of healthcare professionals in order to begin collecting data at the beginning of 2021.