CMS final Sunshine Act Transparency Rule: Managed care and hospital impacts


On February 1, 2013, the Centers for Medicare & Medicaid Services (CMS) released new regulations about the reporting of fees, meals, travel expenses, and other transfers of value for the implementation of the Physician Payment Sunshine Act (PPSA). These new regulations require that data on the payments and gifts that drug and medical device companies make to physicians will become available publicly in a searchable database beginning in September 2014.1

On February 1, 2013, the Centers for Medicare & Medicaid Services (CMS) released new regulations about the reporting of fees, meals, travel expenses, and other transfers of value for the implementation of the Physician Payment Sunshine Act (PPSA). These new regulations require that data on the payments and gifts that drug and medical device companies make to physicians will become available publicly in a searchable database beginning in September 2014.1


Manufacturers have a long history of spending significant monetary resources to educate and serve those individuals whose prescriptive power influences the market share of their products. States began to examine potential conflict of interest (COI) in respect to their health programs. This perception of conflict was strengthened by the Institute of Medicine and Medicare Payment Advisory Commission’s reports recommending physician disclosure programs. Seven states (Massachusetts, California, Maine, Minnesota, Nevada, West Virginia, and Vermont) and the District of Columbia adopted various approaches to regulations enforcing their laws seeking information and transparency by manufacturers and physicians providing services within their states. These laws sought manufacturer transparency and reductions in COI through disclosure of payments and the ban of gifts.2  

Under the CMS regulations, manufacturers will begin collecting information about the payments and gifts they make to physicians on August 1, 2013.

far-reaching implications

The Affordable Care Act of 2010 (ACA) mandates data collection for transparency reporting.

The PPSA was included in the ACA to provide similar transparency and disclosure of financial arrangements between manufacturers and group purchasing organizations (GPOs) with physicians and institutions on a national level. The intent of these disclosures is to decrease COI in selection of products and devices to ensure appropriate patient care and treatment decisions.

On February 1, 2013, CMS released the long-awaited final rule on the PPSA. Beginning August 1, 2013, manufacturers and GPOs, including physician-owned distributors, must begin collecting data on payments or other transfers of value they make to physicians and teaching hospitals. The final rule excludes foreign manufacturers that may contribute to manufacturing a product but had no business presence in the United States. The final rule requires manufacturers of drugs, devices, biologics, and medical devices with at least 1 covered product under Medicare, Medicaid, and/or Children’s Health Insurance Program (CHIP) to report all payments or transfers of value they make to physicians or teaching hospitals to CMS.3  CMS requires reporting of all covered products regardless of the method of payment used for reimbursement. For example, devices reimbursed as part of a bundled payment would still require disclosure.4  The final rule excludes over-the-counter (OTC) products and medical devices not requiring premarket approval or premarket notification to FDA.

In the disclosure to CMS, manufacturers and GPOs must provide a specific list of payment details on each “covered recipient” for all their products. Covered recipient continues to be defined as physicians with current licenses to practice and teaching hospitals. The definition does not include non-physician prescribers. The nature (consulting fees, food, travel, etc.) and the form (cash, in-kind service, stock, etc.) of payment must be recorded by the manufacturer. Transfers of value less than $10 will not be disclosed unless the annual total of transfers exceeds $100. Indirect payments must be recorded unless they meet the exclusion criteria. Payments or value transfers for research agreements must be reported to CMS, but publication may be delayed for 4 years or until FDA approval of the new product, whichever occurs earlier. Research for new applications of existing products reporting will only be delayed if the research does not meet the definition of “clinical investigation.” 3  The payment for speaking at a continuing education event will not require disclosure if the event meets the accreditation standards of 1 of the specified professional organizations, the  manufacturer does not directly pay the recipient, and does not select and/or provide a distinct list of individuals to be considered for the program. Payments made to Continuing Medical Education (CME) providers used to subsidize attendees’ program tuition or registration fee will not be reportable.  However, paid expenses for travel and meals will be reportable.

The previous calendar year data must be submitted electronically to CMS by the 90th day of each year. CMS will collect the first data set on March 31, 2014, for 2013. Important to healthcare providers, CMS has not made notification to cover recipients a requirement for manufacturers and GPOs so it’s incumbent on the healthcare providers to determine if they are on a list. The ACA does require a review and correction period which CMS has finalized at 45 days. Individuals must register with CMS in order to review their personal data. CMS will use the assistance of manufacturers, GPOs, professional organizations, listservs, online posting at CMS website, and the federal register as well as emails collected through registration for notification that data is available for verification. Manufacturers and GPOs will have an additional 15 days to make corrections to the data before publication. Corrections made after the 60 days will be applied in the next update to the publication. CMS will publish reports on September 30, 2014, and June 30 in following years.3

Should an applicable manufacturer or GPO fail to submit the required data in a timely, accurate, and complete manner, CMS may assess monetary penalties. Each payment or transfer of value that is not reported may be assessed a penalty of not less than $1,000 and not more than $10,000. Annual monetary penalties will not exceed $150,000. An entity found to have knowingly failed to submit will be assessed no less than $10,000 for each payment but no more than $1 million. The combined total of monetary penalties will not exceed $1.15 million annually.3,5

Other Issues or Impacts

For pharmaceutical and device manufacturers, protocols have been in place for several years. Many of these organizations therefore have a chief compliance officer that mandates codes of conduct and strict adherence to compliance guidelines when interacting with healthcare providers. Healthcare providers who are currently invited to participate in speaker program activities, where the majority of exchange of funds would normally take place, agree to complete training, written agreements, and compliance obligations. The compliance obligations generally state the use of only approved materials from the company and no direct or indirect promotion of off-label uses for the respective product(s) discussed. Many corporations maintain a centralized electronic system to track and review the aggregate spending for these events as well as other activities that healthcare providers would actively participate in such as advisory boards, market research focus groups, and surveys. Now with the final ruling of the PPSA, this information will be available to the general public.

There will be an overall increase in communication as physicians will need to be notified on an annual basis about what is actually reported on their behalf. There is a 45-day review period followed by a 15-day correction period prior to the public posting. However, the largest impact will be the willingness of healthcare providers to participate in future speaker programs, advisory boards, and market research activities, as relationships that were once considered between physician and the respective company are now transparent to the general public.

What one can expect as a direct result from the final ruling will be an increase in CME-related activities since these events have been determined to be non-reportable as long as certain criteria are met. The key to successful implementation and working within the final ruling of the PPSA will be educating all stakeholders. Increasing the awareness around the final ruling, key dates of implementation and reporting, and what will actually be reported are an excellent value-added service for the pharmaceutical and device manufacturers to assist physicians in better understanding the PPSA. 

Details have finally been released by CMS for the Sunshine regulations under ACA 2010. Data collections are already under way by most manufacturers, and will be required by August 2013 in order to meet the 2014 posting deadline for physicians.

Accredited CME activities are exempted and expected to expand, but non-accredited programs are included for reporting purposes as well as other indirect payments that are determined to be directed by a manufacturer to a physician. Significant fines on manufacturers for non-compliance with the regulations can now be levied by CMS.

Federal law pre-empts rules that are similar but does not eliminate the need to report if the state requires additional information or from a broader group of covered healthcare providers. In addition, it does not eliminate state-level gift bans.

Hospital and other healthcare organizations, nonetheless, may have more strict rules or requirements of their medical staff members than the Sunshine Act. Physicians today, and all clinical providers in the future, need to remain aware of any source of transparency rules or regulations that can affect their practice as well as workplace. ■


Fiegl C.Public can see pharma payments to doctors starting in 2014. Med Ad News. Available at: Accessed March 25, 2013.

Curi SE, Vernaglia L. Industry “gift bans”: Massachusetts and beyond. American Health Lawyers Association’s Physicians and Physician Organization Law Institute. February 24, 2010: 1-7. Available at Accessed February 18, 2013.

Medicare, Medicaid, Children’s Health Insurance Programs: transparency reports and reporting of physician ownership or investment interests, Federal Register, Feb. 8, 2012. Available at Accessed February 18, 2013.

Physician Payment Sunshine Act final rule: quick reference guide. Policy and Medicine. February 13, 2013. Available at: Accessed February 18, 2013.

Physician Payment Sunshine final rule: cost and impact of regulation. Policy and Medicine. February 11, 2013. Available at: Accessed February 18, 2013.


Ms Marcoux is clinical associate professor of managed care at the University of Rhode Island, College of Pharmacy, Kingston, R.I. Mr Collins is principal of Healthcare Stakeholder Solutions, Medford, N.J., and senior consultant to Bentelligence, Sharon, Mass. Mr Vogenberg is managing principal of Bentelligence and adjunct professor of pharmacy management at the University of Rhode Island.

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