The Sunshine Act: everything you need to know

Eoin Landers
Eoin Landers

February 18 ∙ 7 minutes read

Open Payments, Sunshine Act, Sunshine Rule; a piece of legislation so critical to the healthcare industry that it has three names. 

If you work in or around the healthcare industry, however you refer to it, you’ll know it results in the daunting task of capturing, verifying and reporting on spend or payments between healthcare providers and manufacturers. Payments for things like gifts, dinners, even conference funding – more on this later.

It’s important because failure to comply can result in financial penalties of up to $100k – per expense or payment. Wow. There’s no messing around here. 

To be honest, we felt a little out of our depth on it so have taken a deeper dive. Why was it introduced? What does it mean? How can healthcare company leaders ensure compliance? 

Naturally, we wanted to share this with you, so here’s everything you need to know about the Sunshine Act and how to manage it.

What exactly is the Sunshine Act?

The US act of law known as the Sunshine Act was introduced in 2010. In the UK, it’s known as the Sunshine Rule but falls under the wider Bribery Act also introduced in 2010. 

It was established to increase the transparency of the financial relationships between healthcare providers and manufacturers of drugs, medical devices, biological and medical supplies. 

These relationships between physicians and medical product manufacturers are common and can have many positive outcomes, particularly in the context of consulting and research funding where they’re often a key component in the development of new drugs and devices. However, they can also create conflicts of interest and in some cases can blur the line between promotional activities and the conduct of medical research, training, and practice.

The demand for greater transparency was therefore introduced to uncover potential conflicts of interests and, for patients, they’re able to see there’s no undue influence on the relationships between their doctors and manufacturers. 

In its explanation of the Sunshine Act, the BMJ, leading general medical journal, refers to a US Senate probe that indicated “even small financial ties have been shown in various studies to bias physicians.” There’s a lot at stake. In 2019 alone, over 600,000 physicians received over $2B in general payments and more than $71.5M in research payments. 

As a result, all drug and device makers must collect and disclose payments made by manufacturers to physicians, with the data openly available to the public. It also includes information on ownership or investment interests held by doctors or their family members. 

Why payments need to be captured

Trillions of dollars flow in and out of medicine, research, and pharmaceutical sales every year. The opportunities for collusion, bribes, and other forms of fraud are consequently abundant – all at the expense of ordinary consumers like you and me. Nobody can dispute the introduction of the law in safeguarding US residents who already fork out significant funds for healthcare.

It’s in everybody’s best interests to comply and none more so than the financial penalties for businesses who fail to comply with the Sunshine Act. To quote the exact wording: “knowingly failing to submit payment information will result in a civil money penalty of not less than $10,000, but not more than $100,000, for each payment. The penalty will not exceed $1,000,000. Combined, penalties may not exceed $1,150,000.”

It goes without saying that organisations affected by the legislation need robust systems and processes to track spend. And they need to do this now more than ever. The law is about to undertake a shift where the expanded scope of the Sunshine Act will dictate changes to the number and types of payments that businesses need to track.  

The types of expenses that need to be tracked under the Sunshine Act

Generally, the Centers for Medicare and Medicaid Services (CMS) state that payments fall into the following three categories:

  • Research payments made in connection with a research agreement
  • General payments not made in connection with a research agreement 
  • Ownership or investment

Payments don’t necessarily mean “cash”. Different types of payments or transfers of value include but are not limited to food and drink, gifts, entertainment, travel and lodging, consulting fees, contributions to charity and much more. And even if a doctor or physician participates in international engagements, if they have an active licence registered in the US, those payments must be declared regardless of where the activity took place. 

Critically, manufacturers not only have to collect the relevant data, but they also need to verify it and attest to its accuracy, then report it to the CMS who post the reported payments to its website for public consumption. The threshold for declarations changes every year meaning it’s essential that all payments, no matter their size, are tracked by manufacturers.

The Act requires manufacturers to collect detailed data about payments or other transfers of value. It requires information including personal and business contact details, licence numbers and spend data about the payments themselves such as amount, form of payment and date. 

Ensuring compliance through expense management 

I mentioned “robust systems and processes to track spend” earlier. But how exactly can they help?

For starters, all of the above clearly indicates that Sunshine Act reporting has the potential to be a huge admin burden, but a necessary one to reduce the chance of penalties and fines. Yet manual tracking is time-consuming and can be error-prone, leaving exposure to risk. So, the immediate benefit of automation in enabling organisations to easily track and control transactions in their spend or expense management systems is clear.  

It’s an obvious place for manufacturers to manage compliance, as payments or transfers of value made to physicians can be detected in expense claims. Each claim for a gift, a meal or travel will hold a lot of the necessary data in the receipt and OCR-powered expense management systems will easily extract this information and report on it, ready for businesses to share with the CMS when the deadline approaches. 

However, complexities arise when it comes to aligning spend data to specific physicians. Traditional expense tracking systems don’t allow this, but by using an expense management system that sits within a CRM this means expenses can be logged against specific business contacts and activities such as physicians and practices. For example, if you have physicians and their practices as “Accounts” or “Opportunities”, you can claim expenses directly against them. 

You’ll have already captured the necessary business and contact details including speciality, national provider identifier, state license numbers and so on as part of your normal business practice. By submitting expenses against these accounts, essential details are pre-populated from the outset and all that remains is for OCR-receipt scanning to automatically capture spend or payment data. 

Expense management on Salesforce

The additional benefit of managing expenses on a CRM system like Salesforce means reporting is straightforward too. As all data resides on the same platform, there is no manual reconciliation work to be done and preconfigured reports that need to be produced for CMS reporting is at the touch of a button.

Lastly, manufacturers can take automation a step further than most by building in workflows to identify which declarations need to be made and to identify potential instances of non-compliance. You no longer have to shoulder the load of documenting every single meeting with a medical professional, or depend on alternative data sources for validation. The whole process takes seconds.

SalesTrip customers including Embody, Inc. (VA) and RS&A, Inc. (NC) are already taking advantage of such a system, reaping the rewards of automated spend management to ensure compliance without being a drain on employee productivity. Find out what they’re doing by requesting a demo here or watch our short video below.


Eoin Landers

Eoin Landers