On June 30, 2021, the Centers for Medicare & Medicaid (CMS) released Open Payments data for the past year, 2020. This new data publication comes amid heightened government scrutiny of payments by drug and medical device manufacturers to health care providers. We offer below steps that manufacturers and providers can take to ensure compliance with the Open Payments program and related State laws.
Background on the Open Payments Program
The Open Payments Program is a statutorily mandated disclosure program, administered by CMS pursuant to the Physician Payment Sunshine Act (the Sunshine Act, 42 U.S.C. § 1320a-7h), also known as section 6002 of the Affordable Care Act. Enacted in 2010, with the first data collection occurring in 2013, the Sunshine Act requires manufacturers of covered drugs, devices, biological and medical supplies to track and report all payments and other “transfers of value” made to certain health care providers and U.S. teaching hospitals (collectively referred to as “covered recipients”) with limited exceptions. Manufacturers and group purchasing organizations (GPOs) are also required to report ownership interests held by physicians and their immediate family members.
Through the Open Payments program, applicable manufacturers and GPOs (reporting entities) must report to CMS, on an annual basis, payments made or transfers of value to covered recipients. A wide range of payments must be reported, including food and beverage, royalties, licensing, research payments, consulting fees, rental or facility fees meals, gifts, speaking fees, travel/lodgings, royalties, and charitable contributions.
Initially, “covered recipients” meant only licensed physicians and teaching hospitals. However, in response to the statutory changes set forth in the Substance-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), the Open Payments program was recently expanded to include five new “covered recipients”: (i) physician assistants; (ii) nurse practitioners; (iii) clinical nurse specialists; (iv) certified registered nurse anesthetists; and (v) certified nurse-midwives. Pub. L. 115-271, Stat. 3894, Subt. L, § 6111 (Oct. 24, 2018); see 42 C.F.R. § 403.904. Effective, January 1, 2021, reporting entities’ data collection now includes these additional covered recipients.
Through the Open Payments Data website, CMS publishes the prior year’s data each year by June 30. The website provides a search tool that allows anyone—including patients—to query any manufacturer or providers. The website also permits the entire dataset to be downloaded.
2020 Open Payments Data
For 2020, CMS reports that reporting entities paid $9.12 billion in 6.38 million payments. By comparison, in 2019, CMS reported $10.86 billion in 11.22 payments. Thus, for 2020, CMS reports about a 16% decrease in payment amount, and significantly larger drop in number of payments. That may reflect the decrease in travel, conferences, and other in-person events because of the COVID-19 pandemic.
Increased Enforcement of Open Payments Requirements
This latest release of Open Payments data is especially important because the U.S. Department of Justice (DOJ) and the U.S. Department of Health and Human Services – Office of Inspector General (HHS-OIG) have made enforcement of Open Payment violations and the Anti-Kickback Statute (AKS) a priority. The Open Payments program provides another, robust data set that DOJ and HHS-OIG match with Medicare data as part of their larger efforts to use data analytics to guide enforcement, as we have detailed.
Notably, in the past year, DOJ announced the first two enforcement actions ever concerning Open Payments violations, which also involved AKS allegations:
- The first ever Open Payments Program settlement occurred on October 29, 2020. In this enforcement action, the government focused on a series of payments totaling approximately $87,000 made by Medtronic (a U.S. medical device company) to a restaurant owned by a physician. According to the government, Medtronic reported only the value of the food and drinks that individual physicians consumed at the restaurant in each physician’s own name rather than reporting the total amount paid to the restaurant as a payment or transfer of value to the physician owner. Medtronic agreed to pay $1.11 million to resolve the Open Payments violations allegations and $8.1 million to resolve other claims related to AKS and False Claims Act violations.
- On May 19, 2021, DOJ announced the second settlement involving alleged violations of the Open Payments Program. In the settlement, a French medical device manufacturer and its American affiliate, agreed to pay $1 million to resolve allegations that the companies failed to fully report physician entertainment payments and transfers of value under the Open Payments Program. The companies paid another $1 million to resolve allegations that the companies, by entertaining U.S.-based physicians during a 2013 conference in France violated the AKS and FCA.
State Sunshine Laws and Regulations
As we have addressed before, many states have their own Sunshine Acts, and some require additional disclosures and compliance requirements that go beyond the federal Open Payments program. For example, pursuant to Minn. Stat. § 151.252 Subd. 3, “a drug manufacturer or outsourcing facility shall file with the board an annual report . . . identifying all payments, honoraria, reimbursement, or other compensation . . . paid to practitioners in Minnesota during the preceding calendar year.” The report must identify the practitioner and the nature and value of any payments totaling $100 or more to a particular practitioner during the year.
Like the federal Sunshine Act, many states require annual reporting and have penalties associated with a failure to comply with the state Acts, including the applicable reporting requirements. For example, in Massachusetts, G.L. c. 111N §7 and 105 CMR 970.010 provide that knowing and willful violation of the M.G.L. c. 111N, Pharmaceutical and Medical Device Manufacturer Conduct, shall subject an entity to a fine of not more than $5,000 for each violative transaction, occurrence, or event.
Manufacturers should ensure that they are aware of these state Sunshine Act requirement and take affirmative steps to ensure compliance.
Incorporating Open Payments and State Requirements in Your Compliance Program
Given the patchwork of state laws and regulators’ increased focus on payments to providers, health care companies—manufacturers and providers alike—should take steps to prioritize compliance with Open Payments and state law analogs in their compliance programs. Although providers are not required to make Open Payments reports, providers benefit from knowing what payments its employees are receiving so that operational and reputational risks can be managed. Important steps for manufacturers and health care providers could include:
- Update your organization’s transparency policies and training materials to ensure all payments are accurately and timely reported. This update is especially important because, as noted, “covered recipients” now includes non-physician providers.
- Ensure your organization has a process to verify and document the business need for all payments.
- Update your organization’s conflict of interest policy to include spend limits and approvals and review data against the policy for compliance.
- Review the 2020 Open Payments data for your organization and individual providers to determine whether the data are accurate and whether the payments raise any questions. For providers, a low-burden approach would be to review only a subset of the highest-risk individual providers through CMS’s search portal. A more comprehensive, but more burdensome approach would be to obtain the entire data set for analysis. Given the size of the data, users will benefit from advanced analytics software (i.e., more than Excel).
- Document your compliance policies and activities thoroughly. Should you ever face government scrutiny, robust documentation will well-position you to demonstrate your compliance efforts.
- Remain current on and comply with each state’s reporting requirements.