Unpacking the Sunshine Act to Boost Protection and Transparency in Health Care Spend

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Health care is a highly regulated industry and with good reason. Hospitals, pharmaceutical companies, and health care entities all care about supporting the health of their patients as well as protecting the financial integrity of their operations.  

The Sunshine Act offers an extra layer of reporting that can make life somewhat easier for health care compliance professionals and corporate travel and expense (T&E) managers looking to reduce unnecessary employee spend. However, unpacking the Sunshine Act itself and ensuring compliance in addition to the company’s card program guidelines can also pose a new set of challenges. 

What Is the Sunshine Act? 

The Sunshine Act was designed to establish more transparency among the financial relationships between health care providers and medical manufacturers. This includes disclosing whether a physician or teaching hospital has a conflict of interest in a particular medical device or drug that could affect their better judgment. The Sunshine Act also helps guard against any situations where a manufacturing sales rep may try to ‘wine and dine’ a physician in an effort to get them to recommend their drug or medical device to patients.  

The Act was passed into law and added to the Affordable Care Act in 2010, but it actually began being enforced in 2013. As of March 2014, the Centers For Medicare and Medicaid Services (also known as the CMS) has been collecting spend data applicable to the Sunshine Act and releasing it to a public website for accountability and transparency purposes. 

While health care compliance professionals were closely monitoring employee spend long before the Sunshine Act, this regulation hones in on exactly what manufacturing sales reps and other employees are spending during their meetings with physicians including details like: 

  • How much meals cost 
  • The number of people attending meals 
  • Whether gifts or direct payments are provided 
  • And more while setting reasonable limits for all these expenditures 

Why It’s Important 

Trillions of dollars pass in and out of medicine, research and pharmaceutical sales. Needless to say, the Sunshine Act is important to medical drug and device firms for a number of reasons. To start, this is a Federal law that must be followed. Failure to comply with the Sunshine Act can lead to fines up to $150,000 per reporting period along with legal charges and possibly jail time. 

Next, complying with the Sunshine Act can also help clean up employee spend reporting. Compliance, in general, adds an extra layer of accountability and protection. Knowing that corporate spend on travel cards needs to be closely tracked and publicly reported for pharmaceutical and medical device manufacturers adds an extra layer of transparency. 

This can help protect the manufacturing company against fraud and further legal implications. In addition, it can also save companies money by tightening up employee spending so that sales reps are not consistently buying physicians lavish meals and gifts during meetings. 

A $9.2 Million Violation 

A clear example of a Sunshine Act violation occurred in October of 2020 when a medical device company named Medtronic failed to accurately report spending and payments to a physician named Dr. Asfora. 

According to the U.S. Department of Justice, Medtronic agreed to pay for 130 events at a local restaurant that South Dakota-based neurosurgeon, Dr. Asfora, and his wife owned spending a total of $87,000. While the events themselves were already against Medtronic’s compliance policies, sales reps allegedly stated that they were held to discuss educational content and business information.  

Although, government officials allegedly found that these events seemed to be more of the social nature involving elaborate meals and alcohol along with some guests who were social acquaintances to the physician and not colleagues from the same hospital. Medtronic’s sales reps made a few other mistakes including: 

  • Failing to report the full value of its payments and transfer to Dr. Asfora to CMS, the Centers for Medicare and Medicaid Services (instead, Medtronic only submitted the value of food and drinks that each physician attending the event consumed instead of the total amount paid to the restaurant for the events) 
  • Withholding information regarding the restaurant events to the company’s compliance department 
  • Improperly coaxing Dr. Asfora to order certain medical devices and submit claims to Medicare, Medicaid, and TRICARE by bribing him with lavish restaurant events and meals

Needless to say, Medtronic agreed to a settlement where they paid $8.1 million to resolve their government violations (including the Anti-Kickback Statute) and $1.1 million to resolve Sunshine Act violations.  

How to Comply With the Sunshine Act 

As you can see, complying with the Sunshine Act is key. Medical device companies should register with Open Payments System as well as CMS’ Enterprise Identity Management (EIDM). Detailed spend information should be collected on a monthly basis to make the reporting process run more smoothly.  

However, sorting through millions of dollars of transactions can come with its own challenges which is why you may want to consider hiring an expense monitoring company to help boost protection and transparency by detecting red flags and communicating findings. Card Integrity specializes in helping companies comply with the Sunshine Act by providing detailed expense monitoring services that can help consolidate a compliance officer or expense managers’ workload. 

Card Integrity Can Help 

Through our monitoring tool and services, we offer numerous customizable reporting and alerts that will call out areas of fraud, misuse, and overspending. All of this is done while keeping your unique travel and expense company card policies in mind. Working with Card Integrity is a personalized experience as each client is paired with an expert forensic principal who is available to carefully examine your company spend and break down reporting by card, department, spend category, or even a single cardholder. 

If you need employee training, Card Integrity can also help provide your team with courses to educate them on corporate card spending policies so they’ll know how to keep their spend in compliance. 

If you’re looking to tighten up your compliance program and improve your Sunshine Act spend reporting, give us a call at 630-501-1507 or fill out our online form today to learn more about how we can serve your needs.  

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