California Passes New Law Requiring Physicians and their Employers to Notify Patients about the Open Payments Database

A new California law (AB 1278) will require physicians and their employers to provide patients with several forms of notices about the Open Payments database, starting January 1, 2023. The law is intended to increase patients’ awareness of the Open Payments database so they can make informed decisions about drugs and devices prescribed by their physician.

Background on the Open Payments Program

The Open Payments Program (otherwise known as the Sunshine Act) requires manufacturers of drugs, biologicals, devices, or medical supplies covered by Medicare, Medicaid, or CHIP (Manufacturers) to track and report annually to the Centers for Medicare & Medicaid Services (CMS) certain payments or transfers of value made to physicians, teaching hospitals, and other advanced practice clinicians.  CMS publishes this data in a searchable online database accessible by the general public.  The Open Payments Program authorizes the imposition of Civil Monetary Penalties up to $190,000 for non-knowing violations and up to $1.26 million for knowing violations (both adjusted for FY 2022) per year.  Recently, lawmakers began urging the Department of Health and Human Services to investigate and enforce Open Payments non-compliance, and Department of Justice has begun to enforce Open Payments violations in conjunction with violations of the federal Anti-Kickback Statute (AKS).

The intent behind the Open Payments Program is to increase transparency of payments made by Manufacturers to physicians and other health care providers in part so that patients can be aware of potential conflicts of interest and make informed choices about medications and devices ordered by their physicians. However, research shows that public awareness of the Open Payments Program is minimal and very few patients are aware that their physician has received payments from Manufacturers. 

California Law

According to AB 1278’s author, this law will “empower patients with important information about their recommended medical treatment so they can make informed choices about any treatment prescribed.” The bill was amended several times in committee and as introduced would have required specific disclosures regarding remuneration received by physicians from drug and device manufacturers, developers, and distributors in addition to providing notice of the Open Payments Database. Not surprisingly, the bill was sponsored by the Center for Public Interest Law and supported by Consumer Attorneys of California, Consumer Federation of California, and Consumer Watchdog, among others.

Effective January 1, 2023, physicians and surgeons licensed under California’s Medical Practice Act and the Osteopathic Act must provide written or electronic notice to patients of the Open Payments database and retain the notice in the medical record (written or electronic, depending on form of notice).  Written notice must include a signature from the patient or patient’s representative and the date of signature.

The notice must contain the following text: “The Open Payments database is a federal tool used to search payments made by drug and device companies to physicians and teaching hospitals. It can be found at https://openpaymentsdata.cms.gov.”

Additionally, physicians must post an Open Payments database notice in each location where they practice in an area likely to be seen by all persons who enter the location.  The Open Payments database notice must include an internet website link to the Open Payments database and the following text:

“For informational purposes only, a link to the federal Centers for Medicare and Medicaid Services (CMS) Open Payments web page is provided here. The federal Physician Payments Sunshine Act requires that detailed information about payment and other payments of value worth over ten dollars ($10) from manufacturers of drugs, medical devices, and biologics to physicians and teaching hospitals be made available to the public.”

Beginning January 1, 2024, if a physician’s practice maintains an internet website, then the website must include an Open Payments database notice placed conspicuously.  If a physician is employed by a provider of health care services, then the employer, not the physician, is responsible for complying with the website requirements.

Physicians who do not follow the new law may be disciplined by their respective licensing boards for unprofessional conduct.

Takeaways

The new California law is yet another reason for Manufacturers to review reportable payment information for compliance with the AKS and similar state laws.  We anticipate the California law will result in an increase in public awareness of the Open Payments Program, which could result in more researchers, consumer advocates, and potential whistleblowers pouring over the data to find patterns, high levels of payments, and physician ownership information. Health care providers should review their policies on conflicts of interest and payments from Manufacturers, and prepare their physicians and other employees on how to handle patient inquiries related to Open Payments Program data. Physicians should also update their patient intake and records retention policies and procedures to ensure that required notices are properly given and retained in the medical record.  

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