The Centers for Medicare and Medicaid Services (“CMS”) has included proposed changes to the implementing regulations for the Physician Payments Sunshine Act (“Sunshine Act”) as part of its proposed 2020 Physician Fee Schedule. The proposed regulatory changes fundamentally expand the scope of the Sunshine Act and will require reporting entities to make substantial updates to their payment tracking policies and procedures. Entities that are required to report payment data under the Sunshine Act should review the proposed rules, submit comments, and evaluate how these proposals will affect future financial relationships with health care providers on a going-forward basis.

CMS is accepting comments on the proposed rule until September 27, 2019. If finalized, the regulatory changes to be promulgated in 42 C.F.R. Part 403 would be effective for data collected during calendar year 2021 that must be reported by March 31, 2022 .

The Sunshine Act, currently operating as the “Open Payments program,” is intended to increase transparency in the financial relationships between the pharmaceutical and medical device industry and certain types of health care providers. The program currently requires manufacturers of covered drugs, devices, biologicals, or medical supplies and group purchasing organizations to annually submit information about payments and transfers of value made to “covered recipients” in the preceding calendar year. “Covered recipients” under the original Sunshine Act included only physicians and teaching hospitals.

Last year, President Trump signed the bipartisan opioids legislation package enacted as the SUPPORT for Patients and Communities Act (“the SUPPORT Act”), which we discussed in a previous blog post. The SUPPORT Act in part expanded the definition of “covered recipients” under the Open Payments program to include physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives. CMS proposes to implement this definitional change into the regulations through the 2020 Physician Fee Schedule. CMS estimates that this change would result in a $10 million dollar increased burden annually for reporting entities and new covered recipient groups.

In the 2020 Physician Fee Schedule, CMS is also proposing the following changes to the categories through which reporting entities characterize the nature of payments made to covered recipients:

  1. the consolidation of two separate categories for continuing education programs into a single “medical education program” category, in order to streamline reporting requirements which currently distinguish between accredited/certified programs and unaccredited/non-certified programs; and
  2. the addition of three new nature of payment categories related to debt forgiveness, long term medical supply or device loans, and company acquisitions, based on public comments received from stakeholders in response to the 2017 proposed rule that suggested these additions.

These changes would clarify for reporting entities how to characterize payments and are not anticipated to create significant costs.

Lastly, the proposed regulation seeks to standardize reported data between drugs and devices. Currently, manufacturers are required to submit names and national drug codes for payments or transfers of value related to specific drugs and biologicals, but there is no analogous reporting for medical devices. CMS is proposing to now require manufacturers to report device identifiers, which can be used to validate submitted device information. CMS anticipates that, by having more precise information, the Open Payments data would be more useful to the public. The estimated costs associated with these changes would depend on whether reporting entities are already tracking this data element and whether they would need to implement system changes to report the element. The regulation also makes some clarifications in the reporting requirements for drugs and biologicals.