Physicians and Their Employers Must Notify California Patients About Open Payments Database

November 9, 2022

Under a new California law, effective Jan. 1, 2023, physicians and their employers must begin notifying their California patients during a patient’s initial visit of the Open Payments database, and documenting such notice in each patient’s medical record. As enacted, California Assembly Bill Number 1278 (AB 1278) makes violations of such disclosure requirements unprofessional conduct subject to disciplinary action by the state physician licensing boards.

Background

The Physician Payments Sunshine Act (Sunshine Act), a federal law designed to promote transparency in healthcare through the Open Payments program, requires manufacturers of drugs, medical devices and biologics reimbursed by federal healthcare programs such as Medicare and Medicaid to report payments and other transfers of value. While certain exceptions apply, manufacturers generally must report such payments to physicians, physician assistants, nurse practitioners, academic medical centers and other healthcare providers.

Pursuant to the Sunshine Act, the Centers for Medicare and Medicaid Services maintains the publicly accessible Open Payments database that lists all such payments by manufacturers to assist patients in assessing potential conflicts of interest related to prescription drugs and devices ordered by their physicians.

AB 1278

The new law applies to physicians and surgeons licensed pursuant to the California Medical Practice Act or the California Osteopathic Act and their employers. In practice, the law applies to any physician providing professional medical services to patients located in California, regardless of whether the physician is physically located within California. For example, a physician providing telehealth services to patients in California will likely be subject to the new law even if the physician is located within another state. Notably, AB 1278 does not apply to physicians working in hospital emergency rooms.

Under AB 1278, beginning Jan. 1, 2023, physicians and their employers must notify patients of the Open Payments database during the patient’s initial office visit. The patient notice may be either written or electronic and must include the following text:

The Open Payments database is a federal tool used to search payments made by drug and device companies to physician and teaching hospitals. It can be found at https://openpaymentsdata.cms.gov.

Physicians must obtain the signature of each patient or the patient representative and a copy of the notice must be included in the patient’s medical record.

AB 1278 requires physicians to display a similar notice in each location where they practice medicine, in an area likely to be seen by all persons who enter the location. Beginning Jan. 1, 2024, if the physician’s practice has a website, the website must also include the notice. The notice must contain an internet 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.

Failure to comply with the new law constitutes unprofessional conduct, and physicians in violation of the new law could be subject to discipline by the applicable licensing board.

Related Developments

While AB 1278 focuses on a notice requirement, advocacy for transparency, public education and awareness, and sensitivity about healthcare providers’ financial relationships remains an ongoing topic in recent legislation. For example, in March 2022, Maryland passed a law requiring each authorized prescriber (defined to include dentists, podiatrists, advanced practice nurses with prescriptive authority, and other individuals with the authority to prescribe drugs and devices — but explicitly excluding physicians) who receives financial incentives exceeding $5,000 per year in the aggregate from a pharmaceutical manufacturer or distributor to file a disclosure with his or her licensing board within 30 days of receipt of such incentives.

Practical Takeaways

Physicians and their employers who provide professional medical services and employ physicians should ensure that their policies and procedures, patient-facing notice documents, signage and medical records comply with the requirements to provide and document this notice. AB 1278 does not include font or sign-size requirements for the notice or the signage.

  1. Physicians and their employers should consider including both the patient notice and the practice location/website notice on all patient-facing notice documents and signage to ensure patients’ receipt of notices.
  2. As enacted, AB 1278 does not address whether physicians and their employers must request signatures from existing patients and patient representatives in connection with the notice requirement. However, in the absence of explicit protections, physicians and their employers should consider obtaining signed acknowledgements for all patients upon each patient’s first office visit after AB 1278 becomes effective.
  3. Each employer of physicians in California should consider monitoring the Open Payments database regularly with respect to its physician employees and ensure that policies related to payment for outside or consulting activities, conflicts of interest, and information shared with patients address the requirements of the new law.
  4. Physicians and manufacturers should ensure that the information contained in the Open Payments database is accurate, especially with respect to matters related to financial relationships.
  5. Physicians and their employers located in other states should remain vigilant about proposed legislation that may result in similar requirements in other states.

McGuireWoods will continue to provide updates related to this new law and similar legal and regulatory developments in other states.

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