Compliance
February 7, 2018

Sunshine Act compliance: All you need to know

Josh Anish

What is the Sunshine Act?

Its full name is actually The Physician Payments Sunshine Act (PPSA) and it was designed to boost transparency around the financial relationships between physicians, hospitals, and drug companies.

The Sunshine Act requires that drug companies and makers of medical devices and supplies covered by the three big federal healthcare programs—Medicare, Medicaid, and State Children's Health Insurance Program (SCHIP)—document and track all financial relationships with physicians and teaching hospitals.

Why was it needed?

Trillions of dollars flow annually in and out of medicine, research, and pharmaceutical sales—accordingly, there’s clearly tons of opportunity for collusion, bribes, and other forms of fraud at the expense of consumers. 

What is Open Payments?

It’s a federal program that collects information about payments drug and device companies make to physicians and teaching hospitals for travel, research, gifts, speaking fees, meals, and other costs. It also includes ownership interests that physicians or their immediate family members have in medical companies.  

In other words, it’s a federal database filled and studied for Sunshine Act compliance.

What does Sunshine Act reporting look like?

Manufacturers must submit annual data on payments and transfers to covered recipients into Open Payments. Physicians then have 45 days to review the Sunshine Act data—and then approve or dispute its accuracy and completeness prior to the data becoming available to the public. 

Specifically, regulators then look for malfeasance in the following areas: gifts, direct payments, food/meals, grants, entertainment, investment interests, education, honoraria services, travel, charity contributions, consulting fees, royalties, services outside  consulting, and research.

What does the Sunshine Act have to do with Obamacare?

The basic parameters of the law were introduced via a bipartisan effort by Senators Chuck Grassley (R) and Herbert Kohl (D), in 2007. The proposal subsequently failed to become a law on its own but the idea persisted and was part of the broader Affordable Care Act when it debuted in 2010.

Will the Sunshine Act go away if Obamacare is repealed?

The short answer is: no one knows. President Trump has never commented publicly on the issue. Proponents of the Sunshine Act fear that the push to broadly overturn Obamacare will sweep up and discard the substantial progress made by Open Payments and its concomitant breath of transparency. Those same folks also hope that the relatively bipartisan genesis and aim of the law (to protect Americans from collusion in Big Medicine) will help keep it above the political fray, and on the books.

What’s the penalty for businesses that fail to comply with the Sunshine Act?

The fines laid out in the law are extremely succinct; they read:

Knowingly failing to submit payment information will result in a civil money penalty of not less than $10,000, but not more than $100,000, for each payment. The penalty will not exceed $1,000,000. Combined, penalties may not exceed $1,150,000.

What is less clear is the law’s current level of enforcement. Reports in the field vary from blind eyes turned, to slaps on the wrist, to smaller fines of around $2500 per infraction.

With that said, it’s only a matter of time before enforcement ramps up and violating companies will face the stiff fines outlined in the letter of the law. You can park at the meter for only so long before you get a ticket.

How can AppZen help companies with Sunshine Act Compliance?

AppZen is the world’s leading automated solution for Sunshine Act Compliance. Employees no longer have to shoulder the load of documenting every single meeting with a medical professional, or depend on 3rd-party databases for validation. AppZen’s AI examines every business attendee to determine if he or she is likely to be a medical professional. The whole process takes seconds.

For a Fortune 50 client, AppZen detected that out of a possible 61,348 names added as business guests, 1828  (almost 3% of the entire list) had names matching HCP, potentially saving the company millions of dollars in compliance penalties.

Want to learn more about how AppZen can help your business with Sunshine Act Compliance? Get a demo today