B2B Payments

The Sunshine Act: Promising Clarity, Delivering Confusion


The old adage is sunshine is the best disinfectant.

The logic behind the Sunshine Act says that by throwing a little daylight on the money device makers and pharmaceutical companies are paying to doctors and hospitals, regulators can make corruption in those payments remarkably less attractive.

The idea is simple: making those payments a matter of public record makes it undesirable for anyone to try to buy influence with medical experts—on the assumption that buying someone off is only effective if no one knows that person has been bought off.

Doctors are normally great fans of disinfectant of all kinds—and yet they have their doubts about the Sunshine Act. A cynic might shrug that off as expected—the group of people materially advantaged by their clandestine payment relationships is of course going to be opposed to significant reform of that system.

It is difficult, however, to take quite so dim a view of people who have dedicated their lives to curing sick people. A letter co-signed by 20 pharmaceutical groups and medical societies including The American Association of Neurological Surgeons, The American Urological Association, The Biotechnology Industry Organization, and The Pharmaceutical Research & Manufacturers of America speaks to concerns that run somewhat deeper than naked self-interest.

No one is a supporter of abuses of a system or payments that are little more than bribes—however, the concern is that the Open Payments database as currently constructed offers a list of payments without context—which can easily breed confusion and paranoia where none is warranted. Further, if user groups don’t know how to properly use the database—which the co-signatories assert they do not—the public will be offered an inaccurate contextless database to review medical industry payments.

Given the concerns, the fact that failure to comply (either by error or design) is attached to expensive punishments and the reality that the clock is ticking down to when this database is up and running, it seems fair to ask:  Is the Sunshine Act heading toward injecting clarity or confusion into the complicated payments landscape between physicians, hospitals, drug makers and device manufactures? Even if it is the former, will that clarity come at the expense of patient care and future research?

Can There Be Clarity Without Context?

“Initially, and perhaps most importantly, we note that physician and industry stakeholders have not received any information from CMS describing how context will be provided to the general public when Sunshine data is made available in September,” wrote the co-signatories in their July 28 open letter to Centers for Medicare & Medicaid Services (CMS) Administrator Marilyn Tavenner.

The CMS is the agency responsible for posting the all of the payments data in an online, searchable database.

The Open Payments Act requires U.S. doctors and teaching hospitals to report detailed information about payments and gifts provided by pharmaceutical and device makers, broken down into categories such as funds for consulting, speaking, research, food, research and gifts. This requirement is for payments great and small—anything above $10 must be reported to the CMS.

Although doctors know what categories they are reporting under, they aren’t sure what categories the public is going to see.

Dr. Robert Harbaugh recently received a $250K grant from device mater Integra Life Sciences to fund an international physician exchange, The Wall Street Journal reported. He admits he has not personally verified his entry in the system as of July 28th, but he is concerned that it will appear as though he alone is the recipient of a large grant—when really that money will be used to a program between the Pennsylvania State University Milton S. Hersey Medical Center and a Chinese hospital.

“It would be nice to be able to put some context around the dollar figures,” he noted, reports The WSJ.

The physicians also noted the CMS’s less than perfect track-record with such large databases. Earlier this year the CMS released similar data base to explain  Medicare Part B payments, which was widely derided as useless because it  made it impossible to distinguish potential abusers from those who received large payments relating to high overhead costs.

“We do not believe this is an effective way to share data with the public and, in fact, can lead to confusion and misinterpretation,” the doctors wrote.


A High Cost Of Failure

Supporters of the system laud it for deterring fraud and making useful information available to patients about the relationships their doctors have with certain types of businesses.

Although that may turn out to be the case, it will almost certainly make a lot of useless information available as well. According to the CMS, there are 1,100 hospitals that must register with the program, not to mention the ~60 percent of doctors in private practice of one type or other. Open Payments requires <i>all</i> payments more than $10 be reported—common sense observes that means a lot of useful data is going to be bracketed by a lot of worthless data about $45 dollar bagel breakfasts.

But it all has to be reported, and reported correctly, as the fines for failing to comply are steep. Failure to report data in an accurate and timely fashion—for any reason— can lead to fine of $1,000 to $10,000 per transaction. A knowing failure to report data in an accurate and timely fashion can lead to fines of $10,000 to $100,000 per infraction.


The Right Prescription
Currently, large sections of the medical community are simply concerned that this change, which is slated for next month (September 2014), is something no one is prepared for.

“We understand that CMS has hosted multiple webinars and created a fact sheet with some of this information. However, the information being provided to physicians has not been delivered in a timely manner, which

which is leading to confusion among physicians. It is our understanding that many of physicians remain unaware of the Sunshine Act in general, much less the specifics regarding its timeline and public reporting process. Many physicians do not even know that they must register–twice–to review data that is being captured about them.”  

They are urging more public outreach and education. They are also warning that the shift into administrative medicine, particularly compliance offers that this change will entail, will mean that funding priorities for patient care—such as nurses and lab technicians—could be cut back.

The CMS reported to The Wall Street Journal in the last week of July that the agency does plan to make available the nature of payment for each payment or transfer of value made to a physician or teaching hospital. They also plan to provide context, and say they are in the midst of an extensive reach-out campaign to educate both doctors and hospitals about how to use the system.

The nation will see how well they do in September, when and if the system launches.



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