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Sunshine Act: 7 things you need to know


The Sunshine Act will go into effect soon. Here's what you need to know to keep on the right side.

Having a financial relationship with a manufacturer does not necessarily mean that you or your treatment decisions are influenced by that relationship. As a matter of public perception, however, it is important for you to understand the new Physician Payment Sunshine Act so you can determine what relationships to have with manufacturers and group purchasing organizations going forward.

Congress passed the act as part of the Affordable Care Act to shed light on financial relationships between drug and medical device manufacturers and doctors with the goal of enabling patients to make better and informed decisions when choosing healthcare professionals and deciding about treatments. The law also is meant to deter inappropriate financial relationships that might lead to increased healthcare costs.

Beginning August 1, applicable manufacturers of pharmaceuticals, biologics, and medical devices must collect and track data regarding payments and other transfers of value they make to physicians and teaching hospitals. They must electronically submit such data to CMS by March 31, 2014. Affected manufacturers and group purchasing organizations (GPOs) also will be required to report certain physician ownership or investment interests. CMS will post the reported information on its Web site by September 30, 2014.

Before then, you will want to familiarize yourself with the act. Here are the answers to some questions you might have.


Briefly, the rule specifies that if you have a financial relationship with, or an ownership interest or investment interest in, an applicable manufacturer, or if you have an ownership interest or investment interest in a GPO, then the entity is required to collect and report certain information about you and your relationship with it. Similar ownership interests held by an immediate family member of a physician (spouse; parent; child; sibling; stepparent; stepchild; stepsibling; father-, mother-, daughter-, son-, brother-, or sister-in-law; grandparent; or grandchild) also must be reported.

The rule defines “physician” as a doctor of medicine or osteopathy, a dentist, a podiatrist, an optometrist, or a chiropractor who is legally authorized to practice by the state in which he or she works. Advance practice nurses, registered nurses, physician assistants, residents, and pharmacists are not covered recipients, but payments made to non-physician prescribers to be passed through to a doctor are considered indirect payments to the physician and, therefore, would have to be reported under the name of the doctor.

The manufacturers and GPOs must report annually all ownership and investment interests in their entities that were held by a doctor or an immediate family member of a physician.


The final rule defines affected manufacturer, covered drug, device, biological, or medical supply, and payment or transfer of value. Generally, a manufacturer is required to report information if its prescription drugs, biologics, devices, or medical supplies require premarket approval/clearance or notification to the Food and Drug Administration and if payment is available for them under Medicare, Medicaid, or the Children’s Health Insurance Program.

Generally, GPOs that operate in the United States and purchase, arrange for, or negotiate the purchase of covered drugs, devices, biologicals, or medical supplies for a group of individuals or entities also are required to report.


Manufacturers must report the following physician information for payments or transfers of value made to doctors:

  • The name, business address, national provider identifier (NPI), license number and state of licensure, and specialty of the physician (the NPI must be reported but will not be published on the CMS Web site).

  • The amount of payments or other transfers of value.

  • The date of payment.

  • The form of payment (cash or cash equivalent, in-kind item or service, stock, stock option or any other ownership interest, dividend, profit or other return on investment, or any other form of payment or other transfer of value).

  • The nature of payment-consulting fees, compensation for services other than consulting, honoraria, gift, entertainment, food, travel (including the specified destinations), education, research, charitable contribution, royalty or license, current or prospective ownership or investment interest, direct compensation for serving as faculty or as a speaker for a medical education program, grant, or any other nature of the payment or transfer of value.

  • The name(s) of related covered drugs, devices, biologicals, or medical supplies.

  • Whether the payment or other transfer of value was provided to physician or the immediate family of the physician who holds an ownership interest in the applicable manufacturer.

Manufacturers and GPOs also must report the following physician-related information for ownership interests:

  • Whether the physician or the immediate family of the physician held the ownership interest.

  • The dollar amount invested by each physician or immediate family member of the physician.

  • The value and terms of each ownership interest or investment interest.

  • Direct and indirect payments or other transfers of value provided to a physician holding an ownership or investment interest, and direct and indirect payments or other transfers of value provided to a third party at the request of or designated by or on behalf of the physician owner or investor.

Dividends or other profit distribution from, or ownership or investment interest in, a publicly traded security or mutual fund do not have to be reported.


The final rule requires that when a physician does not receive a payment or other transfer of value, but the applicable manufacturer provides the payment or other transfer of value to another entity “in the name of” or “on behalf” of the physician, this is still considered to be a payment made to the physician. Thus, to avoid reporting, you must make very clear to manufacturers that you are waiving the payment and that any payment should be made to another entity or individual, not in your name or on behalf of you.


Some exceptions to reporting requirements in the final rule:

  • Food and drink. If an applicable manufacturer offers buffet meals, snacks, or coffee at conferences or other large-scale events where it would be difficult to definitively establish the identities of physicians who partake in the food, then it does not have to report such offerings where the food is made available to all conference attendees. This exception does not apply to meals provided to select individual attendees at a conference where the sponsoring applicable manufacturer can establish the identities of the attendees.

  • De minimis payment. Currently, small payments or other transfers of value less than $10 do not need to be reported, except when the total annual value of payments or other transfers of value provided to a covered recipient exceeds $100.

  • Discounts and rebates for covered drugs, devices, biologicals, and medical supplies provided by applicable manufacturers to physicians are excluded from reporting requirements.

  • In-kind items for provision of charity care. Items provided to a physician for one or more patients who cannot pay for such services or for whom payment would be a significant hardship, where the physician neither receives nor expects to receive payment because of the patient’s inability to pay, are excluded from reporting. This exclusion does not cover the provision of in-kind items to a physician, even if the recipient is a charitable organization, for the care of all of the physician’s patients (both those who can and cannot pay).

  • Product samples, including coupons and vouchers that can be used by a patient to obtain samples that are not intended to be sold and are intended for patient use, are excluded from reporting requirements.

  • Educational materials and items that directly benefit patients or are intended to be used by or with patients, including the value of an applicable manufacturer’s services to educate patients regarding a covered drug, device, biological, or medical supply, are excluded are well.

  • Payments related to continuing education programs. Payments or other transfers of value provided as compensation for speaking at a continuing education program are not required to be reported if all the following conditions are met:

  • the event at which the physician is speaking meets the accreditation or certification requirements and standards for continuing education of the Accreditation Council for Continuing Medical Education, the American Academy of Family Physicians, the American Medical Association, the American Osteopathic Association, or the American Dental Association’s Continuing Education Recognition Program;

  • the applicable manufacturer does not pay the physician speaker directly; and

  • the applicable manufacturer does not select the physician speaker or provide the third party (such as a continuing education vendor) with a distinct, identifiable set of individuals to be considered as speakers for the continuing education program.


Although the Sunshine Act authorizes civil monetary penalties for applicable manufacturers for failure to report required information on a timely basis in accordance with the final rule, as well as for knowing failures, up to a combined maximum annual total of $1.15 million, there is no reporting requirement of physicians and thus, no penalty to physicians, for the manufacturer’s or GPO’s noncompliance.


So now that the Sunshine Act is law, be sure to take these steps to protect yourself and your practice:

  • Assess your relationships with manufacturers and GPOs and ask whether they are subject to the Sunshine Act reporting requirements.

  • Decide whether to accept the payments or transfers of value, or maintain the ownership interests, that would result in the financial relationship being made public.

  • Each time you are approached or offered a payment or something of value, ask whether acceptance will result in reporting under the Sunshine Act-which the manufacturer and its representatives should know-to be fully informed about how such acceptance will be disclosed and how it could be perceived by patients, employers, and potential purchasers of your practice. 

The author is a partner in the healthcare department of Ungaretti & Harris, with offices in Chicago and Springfield, Illinois, as well as Washington, DC.








Physician groups welcome transparency prompted by Sunshine Act, but concerns remain

Final rule versus proposed rule

By Lois A. Bowers, MA

The Centers for Medicare and Medicaid Services says the final rule differs from the proposed rule in the following ways, based on feedback the agency receiving during the comment period:

  • The definition of applicable manufacturer was revised to specify that manufacturers must be “operating in the United States.”

  • Common ownership was defined an ownership interest of at least 5%.

  • All entities under common ownership are now permitted to submit consolidated reports.

  • Applicable manufacturers are now allowed to report multiple associated products for each payment or other transfer of value.

  • The instances in which indirect payments or other transfers of value need to be reported was clarified, including the addition of a time period limiting the awareness requirements for reporting indirect payments.

  • More information was provided on the nature of payment categories.

  • The reporting of payments in the context of medical continuing education was limited.

  • Requirements for allocating the costs of group meals were revised.

  • The process was revised for reporting research payments to ensure that such payments are not double-counted and do not suggest that the physician principal investigator received the entire research payment amount.

  • The process for the review and correction period, including dispute resolution, was clarified.

  • A 15-day period after the formal review and correction period was created for applicable manufacturers, applicable group purchasing organizations, physicians, and teaching hospitals to resolve disputes.

Source: Centers for Medicare and Medicaid Services

More tips

By Lois A. Bowers, MA

Additional insights from attorneys on steps you can take now that the Physician Payment Sunshine Act has been finalized:

Mark Dahlby, JD, of Hall, Render, Killian, Heath, and Lyman: During contract negotiations with manufacturers and group purchasing organizations (GPOs), discuss how information about you will be used so that you know what you need to monitor. Also, don’t just rely on them to keep records; keep track of your own information so you have something to compare with their records. Doing so will aid the appeal process if one is necessary.

Joshua Freemire, JD, of Ober Kaler: Stay informed by reading professional publications such as Medical Economics and newsletters from law firms and other entities, and periodically perform an Internet search so you know what information is out there about you.

Joe Wolfe, JD, of Hall, Render, Killian, Heath, and Lyman: Determine whether the rule applies to any entity with which you have a relationship. (Contact the manufacturer/GPO and/or your attorney.) “Keep in touch with vendors, or at least realize that they are now operating in a new world of transparency.”


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