Complying with the Physician Payments Sunshine Act
September 12, 2013
By Austin Klein
As of August 1, 2013, the Physician Payments Sunshine Act requires medical supply companies to report certain payments and items of value given to health care professionals. The law requires disclosure of direct compensation, food, entertainment, gifts, travel, consulting fees, honoraria, education, research, grants, charitable contributions, royalties or licenses, current or prospective ownership or investment interests, speaker fees or any other transfer of value as defined by the Secretary of Health and Human Services. The data will be available on a public searchable database beginning in 2014.
Sunshine Act compliance challenges and fines
Companies impacted by the Sunshine Act should already be tracking those expenditures incurred in direct marketing as part of their expense reporting process. However, the challenge in tracking these types of expenses with the level of detail required by the provisions of the law lies in the complexity associated with breaking down cost detail and knowing exceptions and state specific requirements.
Yet, it’s financial irresponsible to neglect the required reporting. For each failure to report, fines of up to $10,000 will be applied, not to exceed $150,000 annually. For each knowing failure to report, fines of up to $100,000 will be applied, not to exceed $1,000,000 annually.
Meeting new legislative requirements
Ensuring compliance has prompted medical device and pharmaceutical companies to find solutions that track expenses without adding undue administrative burden to employees. Manual reporting (such as paper-based forms), or systems that do not provide data collection at the required level of detail is inadequate for supporting the aggregation of total data and ineffective for efficient operation of the business.
The expense reporting output should be electronic, searchable, and easily downloaded. An expense solution that supports these requirements from the beginning of the input process allows the business to have proactive control and management, not only of the data itself, but of the direct marketing process as a whole.
Control of the reporting process is paramount to ensuring accuracy and the ability to data thereby helping to meet the new legislative requirements.
Automated expense software as a solution
Automated expense management software can help companies maintain compliance with enhanced tracking, policy and reporting functionality. Web-based travel and expense management software simplifies the tracking of expenses by easily itemizing and categorizing expenses by recipient.
Software should also be customizable to meet individual states’ rules and threshold limits. The application’s reporting structure should allow users to create standard reports as well as define reports on an ad-hoc basis.
If you’re evaluating software, ask your vendor to explain the specific tracking, policy and reporting functionality that comply with the Sunshine Act, such as:
In addition, automation of expense reporting ensures compliance of travel and entertainment policy through a standardized approval process while eliminating paper processes and manual data entry for both employees and finance departments. The real time status of filed reports ensures reimbursements and payments are done ontime and accurately, allowing travelers to focus on business needs rather than administrative tasks.
About the author: Austin Klein is Product Manager – Travel Services at Runzheimer International and is responsible for the overall product management, strategic planning and product road map of Runzheimer’s travel line of business. Mr. Klein has been a featured speaker at the Global Business Travel Association (GBTA) and the Association of Corporate Travel Executives (ACTE). He holds a Bachelor of Science degree from Taylor University and MBA from the Keller Graduate School of Management.
As of August 1, 2013, the Physician Payments Sunshine Act requires medical supply companies to report certain payments and items of value given to health care professionals. The law requires disclosure of direct compensation, food, entertainment, gifts, travel, consulting fees, honoraria, education, research, grants, charitable contributions, royalties or licenses, current or prospective ownership or investment interests, speaker fees or any other transfer of value as defined by the Secretary of Health and Human Services. The data will be available on a public searchable database beginning in 2014.
Sunshine Act compliance challenges and fines
Companies impacted by the Sunshine Act should already be tracking those expenditures incurred in direct marketing as part of their expense reporting process. However, the challenge in tracking these types of expenses with the level of detail required by the provisions of the law lies in the complexity associated with breaking down cost detail and knowing exceptions and state specific requirements.
Yet, it’s financial irresponsible to neglect the required reporting. For each failure to report, fines of up to $10,000 will be applied, not to exceed $150,000 annually. For each knowing failure to report, fines of up to $100,000 will be applied, not to exceed $1,000,000 annually.
Meeting new legislative requirements
Ensuring compliance has prompted medical device and pharmaceutical companies to find solutions that track expenses without adding undue administrative burden to employees. Manual reporting (such as paper-based forms), or systems that do not provide data collection at the required level of detail is inadequate for supporting the aggregation of total data and ineffective for efficient operation of the business.
The expense reporting output should be electronic, searchable, and easily downloaded. An expense solution that supports these requirements from the beginning of the input process allows the business to have proactive control and management, not only of the data itself, but of the direct marketing process as a whole.
Control of the reporting process is paramount to ensuring accuracy and the ability to data thereby helping to meet the new legislative requirements.
Automated expense software as a solution
Automated expense management software can help companies maintain compliance with enhanced tracking, policy and reporting functionality. Web-based travel and expense management software simplifies the tracking of expenses by easily itemizing and categorizing expenses by recipient.
Software should also be customizable to meet individual states’ rules and threshold limits. The application’s reporting structure should allow users to create standard reports as well as define reports on an ad-hoc basis.
If you’re evaluating software, ask your vendor to explain the specific tracking, policy and reporting functionality that comply with the Sunshine Act, such as:
- Policy and reporting functionality to help manage specific state requirements
- Policy and reporting functionality that supports the law’s exemption of expenses less than $10 for reporting, until the aggregate annual total per company, per covered recipient reaches $100, at which point all payments (retroactively) must be disclosed
- The application distinguishes between and validates attendees
In addition, automation of expense reporting ensures compliance of travel and entertainment policy through a standardized approval process while eliminating paper processes and manual data entry for both employees and finance departments. The real time status of filed reports ensures reimbursements and payments are done ontime and accurately, allowing travelers to focus on business needs rather than administrative tasks.
About the author: Austin Klein is Product Manager – Travel Services at Runzheimer International and is responsible for the overall product management, strategic planning and product road map of Runzheimer’s travel line of business. Mr. Klein has been a featured speaker at the Global Business Travel Association (GBTA) and the Association of Corporate Travel Executives (ACTE). He holds a Bachelor of Science degree from Taylor University and MBA from the Keller Graduate School of Management.