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Wednesday, May 1, 2013


On February 8, 2013, the Center for Medicare and Medicaid Services issued the Final Rule1 to implement Section 6002 of the Patient Protection and Affordable Care Act (PPACA) referred to as the “Sunshine Law.”2 The Sunshine Law requires applicable manufacturers of drugs, devices, biological or medical supplies (“applicable manufacturers”) covered under Medicare, Medicaid or the Children’s Health Insurance Program (“CHIP”) to report annually certain payments or other transfers of value to physicians and teaching hospitals to the Secretary of Health and Human Services (“HHS”). Applicable manufacturers and applicable group purchasing organizations (“GPOs”) must report certain information regarding the ownership or investment interests held by physicians or their immediate family members in such entities. HHS is required by statute to publish the reported data on a public website.  

According to HHS, payments from manufacturers to physicians and teaching hospitals can cause conflicts of interest that may influence research, education and clinical decision-making in ways that compromise clinical integrity, and may lead to health care costs.  CMS states that financial ties, alone, do not signify an inappropriate relationship, but the required transparency will give the public information regarding the nature and the extent of the relationship between applicable manufacturers and/or applicable GPOs and physicians.


The Sunshine Law required that applicable manufacturers and applicable GPOs begin collecting the required data on January 1, 2012. However, CMS stated that because the Final Rule had not been issued on January 1, 2012, applicable manufacturers and applicable GPOs would not be required to begin collecting the required data until after the publication of the Final Rule. Now, with the publication of the Final Rule, CMS has announced that the data collection requirement will begin on August 1, 2013. Applicable manufacturers and applicable GPOs must report this information to HHS by March 31, 2014.

Definition of “Physician”

The definition of “physician,” within the meaning of the Final Rule, includes doctors of medicine and osteopathy, dentists, podiatrists, optometrists, and chiropractors who are legally authorized to practice the profession by the State in which they practice. Thus, for the purpose of the Sunshine Law, the term “physician” encompasses other licensed health professions.  The definition “physician” does not include a physician who is an employee of the applicable manufacturer.

Payments or other transfers of value to medical residents, whether or not the medical resident is licensed to practice in the state, will not need to be reported.

Identification of Physicians

The Sunshine Law requires that applicable manufacturers report a physician’s name, business address, NPI and specialty. CMS recognizes that not all physicians have an NPI, but expects that applicable manufacturers will make a good faith effort to obtain physicians’ NPI (or lack thereof). CMS stated that a good faith effort includes, but is not limited to, specifically requesting an NPI from the physician or using the National Plan & Provider Enumeration System (NPPES) database. The applicable manufacturer may leave the NPI field blank if the applicable manufacturer is unable, after making a good faith effort, to identify an NPI for the physician.

Required Information to be Reported

A report must contain the following information for each payment or other transfer of value. 

  • 1Name of the physician.
  • 2Primary business address.
  • 3Physician’s identifiers: (i) specialty, (ii) NPI, (iii) state professional license number(s) (for at least one state where the physician maintains a license), and the state in which the license is held.
  • 4Amount of the payment or other transfer of value.
  • 5Date of the payment or transfer of value.
  • 6Form of each payment or transfer of value (cash or cash equivalent; in-kind services; stock, stock option, or other ownership interest; dividend, profit or other return on investment).
  • 7Nature of payment or transfer of value. The categories include: (i) consulting fee; (ii) compensation for services other than consulting including serving as a faculty or as a speaker at an event other than a continuing education program; (iii) honoraria; (iv) gift; (v) entertainment; (vi) food and beverage; (vii) travel and lodging (including specified destinations); (viii) education; (ix) research; (x) charitable contribution; (xi) royalty or license; (xii) current or prospective ownership or investment interest; (xiii) compensation for serving as a faculty or as a speaker for an unaccredited and non-certified CME program; (xiv) compensation for serving as a faculty or speaker for an accredited or certified CME program; (xv) grant; (xvi) space rental or facility fees (hospital only).
  • 8Related covered drug, device, biological or medical supply.  The name(s) of the related covered drugs, devices, biological, or medical supplies must be reported unless the payment or transfer of value is not related to a particular covered drug, device, biological or medical supply.

 Special Rules for Reporting Food and Beverage

CMS received numerous comments regarding the allocation method for food and beverage in a group setting where the cost of each individual covered recipient’s meal is not separately identifiable, such as a platter provided to physicians in a group practice setting. CMS decided that applicable manufacturers must report the per person cost (not the per covered recipient cost) of the food or beverage for each covered recipient who actually partakes in the meals (that is, actually ate or drank a portion of the offerings). In other words, applicable manufacturers must divide the total value of the food provided by the number of people who actually partook in the food and beverage including both covered recipients and non-covered recipients (such as support staff). If the per person cost exceeds the minimum threshold amount ($10.00), then the applicable manufacturer must report the food or beverage as a payment or other transfer of value for each covered recipient who actually participated in the group meal.

CMS stated that it established this rule in order to avoid disputes between applicable manufacturers and physicians on the value of meals to be reported!

Applicable manufacturers are not required to report or track buffet meals, snacks, soft drinks, or coffee made generally available to all participants of a large scale conference.

Special Rules for Payments and Other Transfers of Value Related to CME Programs

Payments or other transfers of value provided as compensation for speaking at a CME program are not required to be reported if all of the following conditions are met:

  • The event at which the covered recipient is speaking meets the accreditation or certification requirements and standards for CME of one of the following:

The Accreditation Council for Continuing Medical Education.

The American Academy of Physicians.

The American Dental Association’s Continuing Education Recognition Program.

The American Medical Association.

The American Osteopathic Association.

  • The applicable manufacturer does not pay the covered recipient speaker directly.
  • The applicable manufacturer does not select the covered recipient speaker or provide the third party (such as the CME vendor) with a distinct identifiable set of individuals to be considered for the continuing education program.

Payments and other transfers of value that do not meet all of the requirements listed above must be reported.

No Required Pre-Submission Review Period

In the proposed Rule, CMS considered that prior to submission of the data to CMS, applicable manufacturers and GPOs would first provide the information for review to covered physicians so that physicians would have an opportunity to review the proposed submission and offer corrections, if necessary. In the Final Rule, however, CMS decided not to make a pre-submission review process mandatory.  

Applicable manufacturers or GPOs may voluntarily provide physicians a pre-submission review process, and it is recommended that physicians inquire with the applicable manufacturer or GPO whether it will voluntarily provide a pre-submission review process.

Reporting Data

The statute provides that applicable manufacturers are required to report the data to CMS by March 31, 2013 and on the 90th days of the calendar year thereafter. As stated above, because of the publication date of the Final Rule, reports including 2013 data will not be due until March 31, 2014.

Post-Submission Review

After the data is submitted to CMS, physicians will have a 45 day period to review the information before the data is made public by CMS. In order to have an opportunity to review and correct the data, physicians must register with CMS. If a physician registers, CMS will match the data attributed to the physician.

Following the end of the 45 day review and correction period, there will be an additional 15 days that applicable manufacturers and GPOs will have for purposes of resolving disputes.

Dispute Resolution Process

If a physician decides to initiate a dispute, he or she will be directed at the CMS website to fill out electronic fields detailing the dispute, including the proposed corrections. The system will automatically flag that the transaction was disputed and the system will notify the appropriate applicable manufacturer or GPO of the dispute. The applicable manufacturer or GPO and the physician will then be responsible to resolve the dispute. CMS will play no role to mediate the dispute.

If a dispute cannot be resolved by the end of the 15 day resolution period, CMS will publish only the applicable manufacturer’s or GPO’s account but will mark the information as “disputed”. The parties may continue to resolve disputes at the close of the 15 day resolution period, or may leave the data as “disputed.”


Physicians are under no obligation to report any information under the Sunshine Law. The burden to report payments and other transfers of value to physicians and teaching hospitals is placed upon applicable manufacturers and GPOs. However, physicians will have an opportunity to review and correct the data attributed to them by applicable manufacturers or GPOs. If a physician is to verify the accuracy of payment information that may be attributed to the physician, the medical practice will need to maintain ongoing records relating to its relation with industry and payments or other transfers of value received from industry. Most often, this responsibility will be assigned to office assistants, but the physician should ensure the accuracy of the record keeping.

Physicians are encouraged to register with CMS in order to ensure that they receive a communication about the processes to review and correct the information. As CMS publishes more information about the registration process, the updated information will be made available. Medical Societies also will provide updates regarding the registration process.



142 C.F.R. Part 403 Subpart 1

2Payment Disclosures Under the Sunshine Law



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