The Times They Are A-Changin’: CMS Solicits Comments to Proposed Changes to the Open Payments Program

Since the April 2013 effective date of the Final Rule implementing the “National Physician Payment Transparency Program: Open Payments” (also known as the federal “Sunshine Law”), CMS has been annually collecting information on drug and medical device manufacturers that meet the definition of an “applicable manufacturer” and certain payments or other transfers of value that these entities make to physicians and teaching hospitals. The Open Payments Program also requires that “applicable manufacturers” and group purchasing organizations (GPOs) disclose annually any ownership or investment interests held in such entities by physicians (or their immediate family members), in addition to reporting information on payments or other transfers of value made to such owners or investors.

The program was designed to further the goals of the Affordable Care Act by increasing transparency into financial relationships between certain healthcare practitioners and manufacturers of medical devices, drugs, biologics, and medical supplies. The Open Payments Program was expanded with the passage of the “SUPPORT for Patients and Communities Act.” Beginning with data collected in 2021, applicable manufacturers and GPOs are now required to report payments and other transfers of value provided by an applicable manufacturer to an expanded list of healthcare professionals, including physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists & anesthesiologist assistants, and certified nurse-midwives, in addition to physicians and teaching hospitals.

Proposed Changes to the Open Payments Program

On July 13, 2021, the Centers for Medicare and Medicaid Services (CMS) proposed additional changes to the Open Payments Program when it released its 2022 Physician Fee Schedule Proposed Rule. The proposed changes, which would be effective for data collection beginning in CY 2023 and reporting in CY 2024, include the following:

  • Adds a mandatory payment context field for payments to teaching hospitals, such that teaching hospitals can more readily identify reported payments during the review and dispute process. This proposed addition is based on feedback received by CMS from teaching hospitals indicating that Open Payments submissions do not contain sufficient information to identify reported payments or transfers of value in the hospital’s records.
  • Adds the option to allow reporting entities to recertify annually and attest that they do not have any records to submit.
  • Prohibits record deletions without a substantiated reason. CMS proposed the following regulatory language: “[A]n entity that has reported payments or transfers of value under the scope of this rule may not remove, delete, or alter the records in the Open Payments system unless it discovers an error in the information furnished, or the record is otherwise believed to meet existing exceptions for reporting that were previously unknown.”
  • Updates the definition of ownership and investment interest to include the exceptions for titular ownership and employee stock ownership programs (ESOPs) that are qualified under Internal Revenue Service regulations for consistency in application.
  • Adds a definition for a physician-owned distributorship as a subset of applicable manufacturers and GPOs, for the purposes of Open Payments program reporting only (the definition would not apply for purposes of any other laws or regulations). The proposal would also require the physician-owned distributorship to identify their status as physician-owned distributorships when registering or recertifying.
    • The proposed definition of a physician-owned distributorship means an entity that:
      • Meets the definition of an applicable manufacturer or applicable group purchasing organization as defined in this section, and
      • Meets at least one of the following two conditions:
        • Has a minimum of five percent direct or indirect ownership or investment interest in the applicable manufacturer or applicable group purchasing organization held by a physician or a physician’s immediate family member, or
        • A physician or a physician’s immediate family member receives compensation from the applicable manufacturer or group purchasing organization in the form of a commission, return on investment, profit sharing, profit distribution, or other remuneration directly or indirectly derived from the sale or distribution of devices by the applicable manufacturer or group purchasing organization in which the physician or physician’s immediate family member has ownership.
  • Makes it mandatory for a company that has had reportable payments or transfers of value within the past two calendar years to keep its contact information up-to-date in the Open Payments system.
  • Disallows publication delays for general payment records and only permits publication delays of research payments.
  • Clarifies that the exception for short-term equipment loans applies for 90 total days in a calendar year, regardless of whether the 90 days were consecutive.
  • Removes the option to submit and attest to general payment records with an “Ownership” Nature of Payment category. There are currently two ways to report ownership: submit an ownership record or submit a general record with a Nature of Payment category of “Ownership.” The proposed rule would thus remove the general report method in an attempt to “create a cleaner and more consistent data set.”

The changes are meant to clarify some of the Open Payments Program reporting requirements, address stakeholder concerns, and improve the utility and quality of the data reported. CMS is formally soliciting feedback via comments on the 2022 Physician Fee Schedule. Comments are due by 5 PM EST on September 13, 2021. For more information, please contact Jennifer D. Burgar.