Effective January 1, 2023, California Assembly Bill 1278 requires California-licensed physicians and surgeons, including physicians and surgeons licensed under the Medical Practice Act or the Osteopathic Act (but excluding physicians and surgeons working in a hospital emergency room), to provide each patient at the initial office visit a written or electronic notice of the Open Payments database. Such notice must include 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.”—as well as a signature from the patient or a patient representative and the date of signature. Physicians and surgeons are required to maintain a record of such notice. 

Further, physicians and surgeons must also post in each location where they practice, in an area that is likely to be seen by all persons who enter the office, an Open Payments database notice that includes the 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.”

Effective January 1, 2024, internet websites of physicians’ and surgeons’ practices or their health care employers must “conspicuously” post the Open Payments database notice described above.
Violation of the notice requirements under this new law constitutes unprofessional conduct.

What Is CMS Open Payments? 

The Sunshine Act, or CMS Open Payments, is a federal transparency and reporting law that requires applicable manufacturers (generally manufacturers with a prescription drug or biologic, medical device, or medical supply on the market and that is reimbursable by Medicare, Medicaid, or Children’s Health Insurance Program) and group purchasing organizations to report certain data regarding payments and transfers of value made to Covered Recipients, which is defined to include physicians (or Doctors of Medicine, Osteopathic Medicine, Dental Medicine, Dental Surgery, Podiatric Medicine, or Optometry, and Chiropractors), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and anesthesiologist assistants, certified nurse-midwives, and teaching hospitals, including investment or ownership interest held by physicians or their immediate families. Reporting entities are required to submit applicable data by the end of March annually to CMS. After data submission, Covered Recipients can review and dispute the data before CMS publishes the data in the publicly searchable database.

Implications for Manufacturers

This California law will increase public scrutiny of the payments and transfers of value made to healthcare professionals and reported by manufacturers. Applicable manufacturers should work together with Covered Recipients to ensure that all the data reported to the CMS Open Payments are accurate. Manufacturers should note that reporting to the CMS Open Payments is separate and independent from the regulatory analysis regarding whether a payment or transfer of value should have been provided to a healthcare professional in the first instance, or if the payment or transfer of value is prohibited under the federal Anti-Kickback Statute. To ensure healthcare regulatory compliance, we recommend applicable manufacturers to implement a comprehensive healthcare compliance program that not only addresses reporting obligations under the Sunshine Act and applicable state transparency and reporting laws, but also regulatory risks under other applicable federal and state laws, such as the federal Anti-Kickback Statute, False Claims Act, and the Federal Food, Drug, and Cosmetic Act. 

For More Information

For more information regarding compliance with the new California law or any other federal or state healthcare laws or implementation of a healthcare compliance program, please contact any member of Wilson Sonsini’s FDA regulatory, healthcare, and consumer products practice.

Eva F. Yin contributed to the preparation of this Wilson Sonsini Alert.