Physician Payments Sunshine Act: What You Need to Know

Last updated: August 6, 2013

As of August 1, 2013, manufacturers of drugs, medical devices, and biological agents will track their payments to physicians as required under the Physician Payments Sunshine Act. This information will be reported annually to the Centers for Medicare & Medicaid Services and published on a publicly accessible website. Manufacturers and group purchasing organizations (GPOs) also must report ownership interests by physicians and immediate family members. Physicians will neither be penalized nor required to take any action under this legislation; however, physicians will have the right to review and challenge these reports.

Am I a covered recipient under this program?

If you hold a Doctor of Medicine or Doctor of Osteopathy degree and are legally authorized to practice medicine in the United States, then you are considered a covered recipient. Medical students, residents, nurses, physician assistants, and others are not included in this program.

What is being reported?

Direct Financial Transfers: Manufacturers of a drug, device, biological, or medical supplies participating in federal health care programs will have to report to CMS any direct payments or “transfers of value” to physicians and/or teaching hospitals of $10 or more. However, there are exceptions where a direct payment or transfer of value is not subject to reporting (see below for details).

Indirect Financial Transfers: Transfers that are not made directly to physicians. These are categorized as third party transfers and other types of indirect transfers.

  • Third party transfers are those where a physician does not receive the payment or transfer. For example, a physician (or someone acting on his or her behalf) may specify that a transfer of value should be given to another person or entity, such as a preferred charity.
  • Other types of indirect transfers occur when an entity transfers value to a physician indirectly by way of a third party or intermediary. A good example would be when a pharmaceutical company makes a payment to a physician organization and then requires, instructs, or directs the payment or transfer of value to be provided to a specific physician or intended for physicians (in the latter case without regard to whether specific physicians are identified in advance).

Ownership Interests: Manufacturers and GPOs participating in federal health care programs will have to report on certain ownership interests held by physicians and their immediate family members. The transparency report must include the dollar amount invested, the value, and terms of ownership or investment interest, and any payment provided to physician owner or investor. However, there are certain ownership interests, such as securities that may be purchased on terms generally available to the public and that are listed on a stock exchange in which quotations are published on a daily basis, that are not reportable.

How will reported payments be described?

Manufacturers are required to categorize how the recipient received the payment, such as cash or cash equivalent, in-kind items or services, or stock, stock option(s), or any other ownership interest, dividend, profit, or other return on investment. They must also choose a reason for the payment. Those categories include:

  • Consulting fee
  • Compensation for services other than consulting, including serving as faculty or as a speaker at an event other than a continuing education program
  • Honoraria
  • Gift
  • Entertainment
  • Food and beverage
  • Travel and lodging (including the specified destinations)
  • Education
  • Research
  • Charitable contribution
  • Royalty or license
  • Current or prospective ownership or investment interest
  • Compensation for serving as faculty or as a speaker for an unaccredited and non-certified continuing education program
  • Compensation for serving as faculty or as a speaker for an accredited or certified continuing education program
  • Grant
  • Space rental or facility fees (teaching hospital only)

Are there any exemptions from reporting?

Certain payments and transfers of value are exempt from reporting, including:

  • Indirect payment made to a speaker at a continuing education program in which: (1) the program meets the accreditation or certification requirements and standards of the ACCME, AOA, AMA, AAFP or ADA CERP; (2) the applicable manufacturer does not select the covered recipient speaker nor does it provide the third party vendor with a distinct, identifiable set of individuals to be considered as speakers for the accredited or certified continuing education program; and (3) the applicable manufacturer does not directly pay the covered recipient speaker.
  • Buffet meals, snacks, soft drinks, or coffee generally available to all participants of large-scale conferences or similar large-scale events.
  • Product samples that are not intended to be sold and are intended for patient use.
  • Educational materials that directly benefit patients or are intended for patient use.
  • The loan of a medical device for a short-term trial period, not to exceed 90 days, to permit evaluation of the covered device by the covered recipient.
  • Items or services provided under a contractual warranty or service or maintenance agreement, including the replacement of a covered device, where the terms of the warranty are set forth in the purchase or lease agreement for the covered device.
  • A transfer of anything of value to a physician when the physician is a patient and not acting in his or her professional capacity as a physician.
  • Discounts (including rebates).
  • In-kind items used for the provision of charity care.
  • A dividend or other profit distribution from, or ownership or investment interest in, a publicly traded security and mutual fund.
  • In the case of an applicable manufacturer who offers a self-insured plan, payments for the provision of health care to employees or their family under the plan.
  • In the case of a physician who is also a licensed non-medical professional, a transfer of anything of value to the physician if the transfer is payment solely for the non-medical professional services of such licensed non-medical professional. For example, payments to a physician who is licensed to practice law and who is retained by a manufacturer to provide legal advice would not be subject to reporting.
  • In the case of a covered recipient who is a physician, a transfer of anything of value to the covered recipient if the transfer is payment solely for the services of the physician with respect to certain legal proceedings.
  • Payments or transfers of less than $10, unless they exceed $100 in annual aggregate.

Can I opt out of this program?

The only way to opt out of reporting is to refuse a payment or transfer of value. As noted above, certain payments and transfers are exempt from reporting.

How can I find out what is being reported about me?

Physicians will have the opportunity to review their information and work with manufacturers and GPOs to make any necessary corrections before the information is made public.

  • CMS will have a website where physicians will be able to check a consolidated report at the end of the annual reporting period. Physicians will have 45 days to review information about them. If a physician believes something has been incorrectly reported, he or she can dispute it and work with the manufacturer or GPO to correct the information.
  • Once the dispute is resolved, the applicable manufacturer or GPO must send CMS a revised report for the correct data and re-attest that it is correct. The manufacturer or GPO has 15 days after the initial 45-day period to do so.
  • If the applicable manufacturer or GPO cannot resolve the dispute with the physician and correct the data in the initial 45 days or subsequent 15 days, the manufacturer or GPO should continue trying to find a resolution. In cases when a dispute cannot be resolved, the most recent submitted and attested data by the applicable manufacturer or GPO will be published, but will be marked as disputed.

What are the key dates for implementation of these regulations?

The regulations will be implemented per the following timeline:

  • August 1–December 31: Manufacturers must begin tracking payments to physicians, as well as physician ownership information.
  • January 1, 2014: Physicians can register for a CMS online portal to view reports.
  • March 31, 2014: Manufacturers will begin submitting reports to CMS.
  • June 2014: CMS will provide physicians with access to their reports via the CMS portal. Physicians can contact manufacturers through the portal to correct errors in the reports.
  • September 2014: The reports will be published on a publicly accessible website.

What should I do to prepare my practice?

  1. Ensure that all financial disclosures and conflicts of interest are current and regularly updated.
  2. If you have a National Provider Identifier (NPI), be sure that the information is up-to-date and the specialty designation is correct. Manufacturers will use the NPI and other information to identify physicians. Access the NPI enumerator database to check your NPI information.
  3. View the CMS fact sheet for additional information.
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