Nov 08 2017
Karen Kroll
4 Minutes to read

The Sunshine Act and the Open Payments reporting system can have an impact on your food spending. Of course, you expect your team to be compliant with your expense policies. But with these regulations, it can also be legally required. Here’s how the Sunshine Act and Open Payments can affect your budget management and reporting.

What Is the Sunshine Act?

The Sunshine Act is a 2010 health care law that was passed along with the Affordable Care Act. It was enacted for transparency between healthcare providers and the pharmaceutical industry. The goal of the regulation is to make sure doctors’ recommendations aren’t swayed by payments they receive. And that includes food-related expenses. Instead, they should be offering patients the treatments best for them, says Tammie Lunceford, healthcare advisor, with Warren Averett, an accounting and advisory firm.

So if you work for a pharmaceutical or medical device company or group purchasing organization operating in the U.S. and have at least one product that’s reimbursed by Medicare, Medicaid, or the Children’s Health Insurance Program, tracking and controlling food spending takes on additional importance.

Reporting Requirements

To be compliant with the Sunshine Act you have to report to the Centers for Medicare and Medicaid Services (CMS) most direct payments or transfer of items of value of $10 or more ($100 in a year) made to physicians or teaching hospitals using Open Payments. Open Payments is a federal program that collects information about any payments firms make to physicians and teaching hospitals for travel, research, meals, and other expenses. That includes any food spending. Meals and other food often account for a large percentage of the volume of these expenses, even though they tend to be smaller dollar amounts, says Joanna Sears, managing director with Acquis Consulting.

The Sunshine Act doesn’t limit the amount you can spend on, say a lunch and learn or sales meeting that include physicians. But it’s important to calculate your expenses precisely. This is straightforward when you’re serving individual meals. Each has a specific value. But, say you are bringing a sandwich platter into a lunch meeting. This makes calculating the price per head even more important. If your sandwich platter costs $100 and you have a meeting with five physicians, take your total and divide it by the number of people who took part. If everyone ate, then you should report $20 per person. However, if only four of the doctors ate, you should report this as $25 per person. It’s important to identify the specific physicians who received food when you’re reporting the expenses. All the reported expenses are accessible online on the Open Payments website, so there is complete transparency for healthcare organizations.

Some states also have their own reporting requirements, Sears says. These can differ slightly from the federal requirements. Some require companies to record payments, including for food or catered events, to nurses or office staff. Because there’s such a range of laws at both the state and federal level, it’s usually better to report more. You don’t want to under-report and have to add the information later. This means you need to be scrupulous in tracking payments, especially when it comes to catering expenses. There are also a number of software solutions that can help you streamline reporting.

How to Be Compliant

Just to be safe, you should make sure your team is reporting all expenses to Open Payments for transparency. That way no one has to decide whether or not an expense needs to be reported. And it minimizes your risk if something had been overlooked. Establish policies that make it as easy as possible to report all expenses. But also be very clear that you expect everyone will be on board. If every knows what to do, they will be more likely to follow your policies. And make sure you’re holding trainings on any systems you’re putting into place. Everyone needs to know exactly what this all means. Compliance is a team effort. Don’t leave any details out.

See how ezCater can help your organization ensure employees comply with both government regulation and internal policies that govern food spending and reporting.

Written by:

Karen Kroll

Karen Kroll is a Minneapolis-based business and financial writer. She's written for AARP,, Business Finance, CFO, Global Finance, and other publications.

Posted in: Managing Food Spend

Tagged with: Policies and Compliance