CMS Releases Sunshine Act Final Rule

On February 1, 2013, the Centers for Medicare and Medicaid Services (CMS) released the final rule regarding Transparency Reports and Reporting of Physician Ownership or Investment Interests (also known as the “Sunshine Rule”).

In response to growing concerns of potential conflict of interest between physicians and the pharmaceutical and medical device industries, the so-called Physician Payment Sunshine Provision (Section 6002, "Transparency Reports and Reporting of Physician Ownership or Investment Interests") was included in the Patient Protection and Affordable Care Act signed into law on March 23, 2010.

Highlights of Section 6002 of PPACA

According to the health care reform law, all manufacturers of a medication, device, biological, or medical supply must provide a public report that discloses payments or transfers of value exceeding ten dollars to a physician and/or teaching hospital, excluding physicians who are full-time employees of the applicable manufacturer.

Highlights of the Final Rule

The final rule was not published in time for applicable manufacturers and applicable group purchasing organizations (GPOs) to begin collecting the information as required by statute. The final rule outlined the new timeline for implementation as followed:

  • April 2, 2013 — Final rule goes into effect
  • August 1, 2013 — Applicable manufacturers and applicable GPOs begin collecting data required
  • March 31, 2014 — First data reporting requirement for applicable manufacturers and applicable GPOs to cover the time period from August 1, 2013 through December 31, 2013
  • September 30, 2014 — CMS report to States regarding the first data reporting requirement for those States
  • September 30, 2014 — Information will be available on a public website
  • April 1, 2015 — Report due to Congress regarding the first data reporting requirement

The final rule:

  • Finalizes requirements for applicable manufacturers to annually report certain payments or other transfers of value to covered recipients;
  • Provides definitions of numerous terms, such as applicable manufacturer, and covered drug, device, biological, and medical supply;
  • Clarifies how applicable manufacturers should report and characterize payments or other transfers of value, including rules for research payments, and indirect payments provided to a covered recipient through a third party;
  • Finalizes which payments or other transfers of value are excluded from the reporting requirements;
  • Finalizes the requirements for applicable manufacturers and applicable GPOs to annually report information about certain ownership or investment interests held by physicians and the immediate family members of physicians in such entities, as well as payments and other transfers of value to such physicians;
  • Details what constitutes an ownership or investment interest for purposes of the reporting requirements, and defines for whom they must be reported; and,
  • Clarifies the content for the ownership or investment interest report.

View the detailed summary of the final rule »

Show / Hide All

The Society submitted comments on the Sunshine Proposed Rule which goes into effect April 1, 2013. 


View the Society’s Comments on the Sunshine Proposed Rule and detailed information, including the Centers for Medicare and Medicaid Services' response to the Society's concerns below.


Establishment of an opt-out option

The Society suggested the creation of an opt-out option. Similarly to junk mail opt-out, physician could log on to a website and informed the Agency that he/she has opt-out from receiving financial rewards or gifts from manufacturers.

CMS Response in the Final Rule

CMS did not agree that it would be possible to implement an “opt-out” system, and believes that such a system would be overly burdensome for both CMS and applicable manufacturers to track who has opted out and ensure that no payments or other transfers of value are made to those individuals. CMS stated that a physician who wants to opt out should simply refuse all payments or other transfers of value from manufacturers, and will, accordingly, not be included on the public website (unless they hold ownership or investment interests in an applicable manufacturer or applicable GPO).

Food and Beverage

In the proposed rule, CMS proposes that when a manufacturer representative brings food and beverage to a multi-physician practice, the cost of the meal would be divided by the number of recipients in the practice regardless of his or her participation in the event. HRS expressed concerns that a physician who chooses not to accept any transfer of value from industry and therefore does not attend or endorse the industry-“sponsored” event will be assigned a receipt even though he/she purposely did not attend or endorse the event.

CMS response in the Final Rule

For meals in a group setting (other than buffet meals provided at conferences or other similar large-scale settings), CMS will require applicable manufacturers to report the per person cost (not the per covered recipient cost) of the food or beverage for each covered recipient who actually attended in the meals (that is, actually ate or drank a portion of the offerings). If the per person cost exceeds the minimum threshold amount, 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 by eating or drinking a food or beverage item.

In situations where a sale representative drop off foods at a covered recipient's office where the attendees are not controlled or selected by the applicable manufacturer, CMS believed that it constitutes payments or other transfers of value to a covered recipient, so they must be reported. Applicable manufacturers are responsible for keeping track of food and beverages provided to covered recipients and must use the same attribution method for all meals as described previously regardless of whether the manufacturer's representative remained in the office for the entire meal.

Indirect Payment through a Third Party

In response to the proposed rule, HRS recommended that CMS exclude payments (or transfers of value) to a covered recipient though a third party when the third party is an accredited continuing education (CE) provider. The Society asserted that CE requirements currently in place are sufficient to ensure transparency, independence, and accountability for accredited educational programs. 

CMS Response in the Final Rule

While CMS did not provide a blanket exclusion for all payments to physicians serving as speakers at an accredited or certified continuing education program, the Agency did provide a reporting exemption, provided that the following conditions are met:

  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.

Research Payments in the Final Rule

Applicable manufacturers are required to report numerous types of payments to physicians and teaching hospitals. The payments are outlined in the statute and include categories, such as consulting fees, food and beverages, and research payments.

The proposed rule provided special consideration to research payments since collaboration between physicians and teaching hospitals, and manufacturers is essential to the development of new products. Research payments often include payment for all research activities, including patient tests and supplies, and the administration of the study. The final rule outlines procedures to ensure that the nature of these relationships is understood, and that there is also sufficient information on the extent of the research relationship.

In addition to including information on the nature of these relationships, the statute also protects applicable manufacturers' competitive interests by allowing CMS to delay publication of certain research payments until the earlier of: (1) Food and Drug Administration (FDA) approval of the product that is the subject of the research; or (2) four years after the payment date.

Relevant Exclusions in the Final Rule

Payments or Other Transfer of Value of Less Than Ten Dollars 
Small payments or other transfers of value, which the statute defines as payments or other transfers of value less than ten dollars, 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 one hundred dollars.

CMS provided additional guidelines expanding the proposed rule and will finalize that these guidelines will apply to conference and similar events, as well as events open to the public. At events open to the public, CMS agrees that it will be extremely difficult for applicable manufacturer to identify physician-covered recipients. Therefore, CMS will finalize that small incidental items that are under ten dollars (such as pens and note pads) that are provided at large-scale conferences and similar large-scale events will be exempted from the reporting requirements.

Payments or other transfers of value of ten dollars or more (for CY 2013) need to be tracked and reported even when provided at large-scale conferences or similar events. CMS believes that if an applicable manufacturer is handing out an item above the threshold, they should be able to track who received the payment.

Educational Materials that Directly Benefit Patients or are Intended for Patient Use
CMS agreed that patient education "materials" should be interpreted somewhat more broadly for purposes of the exclusion. A device manufacturer may give a physician an anatomical model to help explain to patients how a procedure would work, and this would fall within the exclusion. Overhead expenses, such as printing and time, should be included in the exclusion as long as they are directly related to the development of the materials, which directly benefit patients or are intended for patient use.

CMS finalizes that educational materials provided to covered recipients for their own education, but that do not "directly" benefit patients, do not fall within the exclusion and are therefore subject to the reporting requirements.