New California Law Requires Physicians to Notify Patients about Open Payments Database

On September 29, 2022, California Governor Gavin Newsom signed into law California Assembly Bill 1278 (AB 1278) which will require physicians and their employers to provide patients with notice of the Open Payments database at the initial office visit. By adopting AB 1278, which goes into effect on January 1, 2023, California becomes the first state to impose this disclosure obligation on physicians.

What is the Open Payments Database?
In 2010, federal legislation called the Physician Payments Sunshine Act (“Sunshine Act”) was passed in an effort to shed light on financial relationships between physicians and medical device, pharmaceutical and other biologic manufacturers. The Sunshine Act created the Open Payments Program which requires certain drug and medical device manufacturers that are reimbursable by Medicare, Medicaid, or CHIP to disclose to the Centers for Medicare & Medicaid Services, on an annual basis, payments or transfers of value made to physicians, hospitals, and certain other clinicians. This data is stored in the Open Payments database.

 The purpose of the Open Payments Program is to provide transparency regarding such payments in order to inform the public, especially patients, of any potential conflicts of interest that a physician may have in recommending or prescribing a particular drug or medical device, thereby enabling patients to make more informed choices when considering the recommendations of their physician.

Despite the availability of this data, which is maintained online and easily accessible by the general public, the Open Payments Program is still relatively unknown by the majority of patients.

Key Requirements of AB 1278
To address this insufficiency, California AB 1278 aims to proactively empower patients with important information about their recommended medical treatment so they can make informed choices about any treatment prescribed. Specifically, as of January 1, 2023, all physicians licensed under California’s Medical Practice Act and the Osteopathic Act, or those employers who employ such physicians, must provide written or electronic notice to patients of the Open Payments database. Likewise, they must maintain a copy of the notice signed by patient or the patient’s representative’s and provide a signed and dated copy of the notice to the patient.

The 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.

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.” 

Additionally, the physician must also post an Open Payment Database notice at each of their locations, in an area which will likely be seen by visitors to the office. Finally, effective January 1, 2024, the same notice must appear on the physician’s website.

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

Next Steps for California Physicians
All physicians and health care providers subject to AB 1278 should consider reviewing the Open Payment database to ensure that information pertaining to them is accurate. Also, they may wish to update internal policies and procedures to ensure that the required notices are given and retained in the patient’s medical record.

If you have questions about the new CA law or other healthcare law issues, please contact Michael Brown at [email protected] or 949-636-8128.

Michael Brown is a Partner with our California-based team, bringing over three decades of senior in-house counsel experience in the area of business, employment, healthcare, compliance, and privacy. Michael has served as in-house counsel to healthcare giants such as Tenet HealthSystems (hospitals), Apria Healthcare (Home medical equipment, respiratory and infusion therapy); Clarient, a GE Healthcare company (clinical laboratories); and Edwards Lifesciences (medical device) where he also was a member of the AdvaMed Diagnostic and Compliance Committee that revised the AdvaMed Code of Conduct for the medical device industry.