Are You Prepared for Open Payments/Sunshine Expansion?

On November 15, 2019, the Centers for Medicare & Medicaid Services (CMS) published the final 2020 Physician Fee Schedule which, along with the October 2018 passing of Section 6111 of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act), introduces several changes to the Open Payments Program.[1] The following post provides a brief outline of the new reporting requirements along with their likely impact on life science manufacturers.

  1. Expanding the definition of “Covered Recipient” – Section 6111 of the SUPPORT Act expanded the definition of “Covered Recipient” under 42 U.S.C.A. § 1320a-7h(e)(4) to include the following healthcare provider types:
    1. Physician Assistant
    2. Nurse Practitioner
    3. Clinical Nurse Specialist
    4. Certified Registered Nurse Anesthetist
    5. Certified Nurse Midwife

Because this change was part of the SUPPORT Act, CMS had no discretion with regard to the rule change. The SUPPORT Act requires reporting on these new provider types for data submitted after January 1, 2022 (transfers of value occurring in 2021).

Impact on manufacturers – The addition of approximately 377,000 potential new reportable “Covered Recipients” will require manufacturers to update customer master databases to include relevant credentials to facilitate matching upon submission to the Open Payments portal.  

  1. Nature of Payment Categories - The final rule consolidates existing nature of payment categories and adds additional categories. The following is a list of the final nature of payment categories set forth at 42 C.F.R. § 403.904(e)(2) with the changes highlighted in red text.
  • Consulting fee
  • Compensation for services other than consulting, including serving as faculty or as a speaker at an event other than a continuing education program
  • Honoraria
  • Gift
  • Entertainment
  • Food and beverage
  • Travel and lodging (including the specified destinations)
  • Education
  • Research
  • Charitable contribution
  • Debt forgiveness
  • Royalty or license
  • Current or prospective ownership or investment interest
  • Compensation for serving as faculty or as a speaker for an unaccredited and non-certified continuing education program
  • Long-term medical supply or device loan
  • Compensation for serving as faculty or as a speaker for medical education programs an accredited or certified continuing education program
  • Grant
  • Space rental or facility fees (teaching hospital only)
  • Acquisitions

The prior categories related to compensation for serving as faculty at accredited and unaccredited medical education programs were consolidated into a single nature of payment category. Debt forgiveness, long-term medical supply or device loans and acquisitions are new nature of payment categories. Pursuant to 42 C.F.R. § 403.902, a “long-term medical supply or device loan means the loan of supplies or a device for 91 days or longer.” All changes referenced above are prospective in nature and do not require updates to previously reported data.

Impact on manufacturers – Manufacturers will have to update policies, procedures and transactional source systems in order to properly value and capture transfers of value related to the new categories of payment. New requirements must be in place to capture data beginning in CY 2021 and reported in CY 2022

  1. Standardizing Data on Reported Covered Drugs, Devices, Biologicals or Medical Supplies -  When applicable manufacturers report non-research payments and transfers of value to CMS related to drugs and biologics, they are required to report both the name of the product as well as the associated national drug code (NDC) number. When the Open Payments Program commenced, there was no equivalent unique identifier, like the NDC number, for medical devices. However, in 2013, the FDA established a system for the use of standard unique device identifiers (UDIs) for medical devices and requires that the UDI be included on the label for the device.

Based, in part, on the recommendation of the Department of Health and Human Services Office of Inspector General to require more specific information about devices, CMS will now require that the device identifier (DI) part of the UDI be reported in conjunction with the device name. The DI is a mandatory, fixed portion of the UDI that identifies the labeler and the specific version or model of the device. The DI is alphanumeric and contains 7 to 24 characters.

In addition to the requirement to include the DI for payments and transfers of value related to medical devices, the Secretary will require that the NDC code associated with a drug or biologic be reported for all research payments. The requirement to report the NDC code for research related transactions takes effect 60 days from the publication of the final rule. The requirement to report the DI portion of the UDI takes effect for the 2021 data collection period (reportable in CY 2022).

Impact on manufacturers – The requirement to report the DI will be a significant challenge for device manufacturers. A single device with multiple components may have hundreds or thousands of related DIs and will require the manufacturer to implement processes and procedures for identifying and reporting the correct DI.  

Reference materials on the UDI and DI are available at

[1] Medicare Program; CY 2020 Revisions to Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment Policies, 84 FR 62568-01.


Tim Robinson, Esq.

Chief Legal and Privacy Officer, MediSpend

Posted on Feb 27, 2020 10:39:23 AM

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