CMS Auditing Companies for Sunshine Compliance: Are You Ready?

by Amanda Johnston

As the Sunshine Act reporting deadline of March 31, 2024 draws near, medical device and pharmaceutical companies are gearing up for their Sunshine Act reporting.

Are you prepared for a Sunshine Act audit? Reporting entities are subject to Sunshine Act compliance audits by HHS, CMS, and/or the OIG to ensure that reported data is accurate, complete, and submitted on time. Civil monetary penalties (CMPs) of up to $1,150,000, as adjusted annually, may be imposed on reporting entities for violations.

Gardner Law manages all aspects of Sunshine Act compliance and reporting, including data collection, review, and submission. Ensure you're prepared for the Sunshine Act, state transparency reporting, and potential audits by partnering with a knowledgeable team.

Sunshine Act Overview

The Physician Payments Sunshine Act (the "Sunshine Act"), originally enacted as part of the Patient Protection and Affordable Care Act, requires medical device and drug manufacturers to annually report payments and transfers of value provided to "covered recipients" (e.g., physicians, teaching hospitals, certain advanced practice nurses). The Centers for Medicare and Medicaid ("CMS") operates the program, which is known as the Open Payments Program. The intent of the Sunshine Act is to promote transparency and accountability in the U.S. healthcare system. Open Payments reports for the 2023 calendar year must be submitted to CMS by March 31, 2024.

Audits and Penalties for Noncompliance

CMS is auditing companies for compliance with the Sunshine Act. Reporting entities are subject to audits by HHS, CMS, or OIG to ensure that the data they report is accurate, complete, and submitted on time. Civil monetary penalties (CMPs) of up to $1,000,000, as adjusted annually, may be imposed on reporting entities for violations of the Sunshine Act. For more information, see CMS’s website on Audits and Penalties associated with the Sunshine Act.

How can your Company Prepare for a Sunshine Act Audit?

• Ensure all transactions are accurately recorded and documented with clear and accessible supporting evidence.
• Regularly review and understand the latest Sunshine Act regulations and changes to ensure compliance.
• Conduct frequent internal audits to check for discrepancies and address them.
• Provide ongoing training for all staff involved in reporting and compliance to ensure they understand their roles and the importance of Sunshine Act compliance.
• Implement a comprehensive compliance program that includes checks and balances to prevent errors in reporting.
• Have all necessary documentation organized and ready for review, including Sunshine Act policies, procedures, work instructions, and related documentation utilized in data collection, review, submission, attestation, dispute, and correction processes. Maintain copies of all “Assumptions Documents.”
• Retain all records related to financial transactions with covered recipients for at least 5 years after the records are published in Open Payments.
• If errors are identified in Sunshine Act reporting, proactively address and correct them.
• Engage with legal or compliance consultants specializing in the Sunshine Act to review practices and provide guidance.

What’s New this Year?

The following Sunshine Act changes became effective in the calendar year 2023, and are applicable to data reported in 2024: 

• Adding a mandatory payment context field for records to Teaching Hospitals, e.g., the check number or wire number for the payment, related department of the hospital, or other relevant pieces of information; 
• Adding the option to re-certify and attest annually even when no records are being reported; 
• Disallowing record deletions without a substantiated reason; 
• Adding a definition for a Physician-Owned Distributorship as a subset of Applicable Manufacturers and Group Purchasing Organizations and an updated definition of ownership interest; 
• Requiring companies that have not had reportable payments within the last two years to keep contact information updated in Open Payments; 
• Disallowing publication delays for General Payment records; 
• Clarifying that the exception for short-term loans of equipment applies for 90 total days in a calendar year, regardless of whether the 90 days were consecutive; and 
• Removing the option to submit and attest to General Payment records with an ‘‘Ownership’’ Nature of Payment category.

For more information, see the Final Rule (November 19, 2021)

Looking for Support?

Navigating the complexities of transparency reporting requires specialized knowledge and experience. Gardner Law is equipped to support your organization in every aspect of Sunshine Act reporting, from data collection and review, submission, and reporting to assessing the reportability of specific payments under the law. Should you have any questions regarding Sunshine Act reporting or need assistance, please do not hesitate to contact us.