Sunshine Act Compliance: How to Take Action to Meet Reporting Requirements and Avoid Costly Penalties

The clock is ticking for medical device and pharmaceutical companies to fulfill their obligations under the Physician Payments Sunshine Act (the "Sunshine Act"). With the reporting deadline of March 31 looming and CMS actively auditing companies, taking action now is crucial to avoid potential penalties.

Transparency in Healthcare: A Closer Look at the Sunshine Act

Enacted as part of the Affordable Care Act, the Sunshine Act aims to increase transparency around financial relationships between manufacturers of drugs and medical devices and healthcare providers (HCPs). This includes physicians, teaching hospitals, and certain advanced practice nurses. By requiring the disclosure of payments and other transfers of value, the Act seeks to shed light on potential conflicts of interest and promote ethical practices within the healthcare industry.

The Price of Non-Compliance: Why You Need to Act Now

Failing to comply with Sunshine Act reporting requirements can have serious consequences. CMS has the authority to impose civil monetary penalties (CMPs) of up to $1,150,000 for violations. These penalties can be assessed for a variety of infractions, including inaccurate reporting, incomplete data, missed deadlines, and failure to respond to information requests.

"Sunshine Act compliance is not merely a suggestion, it's a legal obligation," emphasizes Mark Gardner, Founder and Managing Partner of Gardner Law. "Companies that neglect their reporting duties face significant financial and reputational risks. In today's environment of heightened scrutiny, proactive compliance is essential."

Staying Ahead of the Curve: Key Compliance Strategies

Meeting the demands of the Sunshine Act requires a multifaceted approach. Here are some key strategies to ensure your company stays compliant:

• Maintain Accurate Records: Accurate and readily available records of all payments and transfers of value are the foundation of compliance. This includes not only the amount of the payment but also the date, purpose, and recipient of the transfer.

• Adapt to Regulatory Changes: The Sunshine Act is not static; it's subject to ongoing revisions and updates. Staying informed about the latest requirements is essential for maintaining compliance. CMS regularly publishes guidance documents and updates its website with important information.

• Proactive Internal Audits: Regular internal audits are critical for identifying and rectifying any reporting discrepancies before they become major issues. This involves a systematic review of your data collection processes, reporting procedures, and internal controls.

• Empower Your Team Through Training: Ensure all relevant staff members receive comprehensive training on Sunshine Act requirements and reporting procedures. This includes personnel in finance, sales, marketing, and compliance departments.

• Seek Expert Counsel: Partnering with experienced legal professionals specializing in Sunshine Act compliance can provide invaluable guidance and support. Legal experts can help you navigate complex regulations, interpret guidance documents, and develop robust compliance programs.

Key Changes for Program Year 2024 Reporting

Several significant changes to the Sunshine Act took effect in 2023, impacting reporting in 2024. These updates include:

• Mandatory Payment Context: The addition of mandatory payment context fields for reporting payments to teaching hospitals adds another layer of detail to the reporting process. This requires companies to provide specific information about the nature and purpose of payments.

• Annual Re-certification: The requirement for annual re-certification, even for companies with no reportable payments, underscores the ongoing nature of compliance obligations. Companies must actively confirm their compliance status each year.

• Stricter Record Deletion Rules: Stricter regulations on record deletion, requiring substantiated reasons, emphasize the importance of data integrity and accountability.

• Revised POD Definition: A revised definition of Physician-Owned Distributorships clarifies the scope of reporting requirements for these entities.

"Keeping pace with evolving requirements can be challenging," acknowledges Amanda Johnston, Partner at Gardner Law. "Our firm is committed to helping clients navigate Sunshine Act requirements and ensure accurate and timely reporting. We provide tailored guidance and support to meet each client's specific needs."

Partner with Gardner Law for Comprehensive Sunshine Act Support

Gardner Law offers a full range of services to help medical device and pharmaceutical companies achieve and maintain Sunshine Act compliance. Our expertise includes:

• Data Collection and Validation: We assist with the collection, validation, and organization of data to ensure accuracy and completeness.

• Accurate and Timely Reporting: We ensure that reports are submitted accurately and on time, meeting all CMS deadlines.

• Reportability Assessments: We provide expert guidance on the reportability of various payments and transfers of value, helping you avoid common pitfalls.

• Comprehensive Audit Support: We offer comprehensive audit support, including pre-audit preparation, responding to information requests, and defending against findings.

Contact Gardner Law today to safeguard your company from costly penalties and ensure compliance with the Sunshine Act.