May 2020 Volume LV Number 3


Sunshine Act Final Regulations Require Reporting from Drug and Device Manufacturers

November 2013 Volume XLIX Number 6



Surprise! Yet another provision in the Affordable Care Act (ACA) is going to have a burdensome impact on health care practice. The Sunshine Act seeks to expose payments and other economic benefits that may influence research, education and clinical decision-making. Earlier this year the Centers for Medicare and Medicaid Services (CMS) issued final regulations to implement section 6002 of the ACA, commonly known as the Physician Payment Sunshine Act.1 CMS refers to this as "Open Payments" stating "[t]he program increases public awareness of financial relationships between drug and device manufacturers and certain health care providers."


The ACA "Sunshine Act" final regulation requires manufacturers and distributors of drugs, devices, biological or medical supplies covered under Medicare, Medicaid and the Children's Health Insurance Program (CHIP) to report financial transactions and transfers of value to covered recipients and to begin collecting data Aug. 1, 2013 for reporting these transfers of value. This information will be reported to CMS by March 31, 2014, for release on a public website by Sept. 30, 2014. Under the law a "physician" includes a doctor of dentistry and dental surgery, but excludes medical or dental residents.


Dentists should be aware of possible manufacturer or distributor inquiries toward the required reporting under the Sunshine Act, which relates to transfers of value including certain payments for entertainment, gifts, meals and travel. The final regulation has the following key requirements: 
  • Any manufacturer of drugs, devices, biologicals, or medical supplies covered under Medicare, Medicaid or the Children's Health Insurance Program (CHIP) must report transfers of value to a physician or teaching hospital.
  • Applicable manufacturers are required to report separately any physician or dentist ownership and investment interests and payment of value to physician or dentist owners, investors and immediate family members. This includes physicians or dentists with ownership interest or stock with an applicable manufacturer, regardless of amount, although dividends or other profit distribution from a publically traded security or mutual fund are not reportable. 
Failure to adhere to reporting requirements may result in civil monetary penalties for manufacturers. There are exclusions for:
  • Transfers of value of less than $10 unless the aggregate amount for a year exceeds $100. There is an exception to this aggregate for items provided at conferences and large scale events. Pens and notepads provided at conferences are excluded if their value is under $10.
  • Product samples intended for patients.
  • Educational materials that directly benefit patients.
  • Discounts or rebates.
  • In-kind items for charity care.
  • Applicable manufacturers must report the name, date,

NPI, state license number, specialty and address of the entity or individual receiving the payment, along with the amount of payment, nature (consulting fee, food, entertainment, travel education or research) and form (cash, stock, stock option or in-kind items or services). CMS will review and provide individuals with 45 days to review and 15 days to dispute a report with the manufacturer. CMS will publish reports in a publicly searchable data base with the physician or dentist name and information and indicate whether the report is disputed.

The following key qualifiers relate to corporate sponsorships of professional societies or associations (such as the AAPD):

  • Where a manufacturer provides a general, unrestricted grant to a medical or dental association for use at its discretion, the physicians or dentists who are the eventual recipients of such funds will not be reported.
  • Manufacturers are not required to report attendees of accredited or certified education events so long as they provide the financial support to the sponsoring association and not individual attendees. Food and beverage provided at large scale conferences for which covered manufacturers provide general support are also excluded. However, manufacturers would be required to report participants who attend a sit-down, invitation-only meal supported by a company and held during a medical or dental association meeting. 
  • Direct compensation for speakers at accredited continuing education events are not reported if the program meets ADA CERP requirements, the manufacturer does not directly pay the speaker, and the manufacturer does not select the covered speaker nor provide to the association a discrete list of potential speakers.

Additional information is on the CMS website at:



CMS requires manufacturers to track payments and transfers of value beginning on August 1, 2013, and submit the data to CMS on March 31, 2014, for the August through December 2013 reporting period. There is concern about the regulation being onerous for physicians and dentists, group practices, and applicable professional societies. CMS recommends all covered recipients register on the agency's website, presumably to ensure that CMS will notify physicians or dentists in a timely manner after the manufacturer submits a report, so there will be an opportunity to dispute the report. It is also recommended that physicians and dentists and practice groups retain their own records of items of value received from manufacturers to ensure they are prepared to evaluate and challenge the accuracy of reports that include them.


Rep. Nydia Velazquez, (D-7th N.Y.), ranking minority member of the House Small Business Committee, on July 18, 2013, urged CMS to delay the transfer of value data collection scheduled to begin Aug. 1. She expressed "serious concerns" with the Feb. 1, 2013 final regulation as amended and "the short timetable" for compliance. In a letter drafted with assistance from the American Dental Association (ADA), Velazquez stated that "CMS should be assisting professional associations to ensure physicians, manufacturers and distributors are provided ample time to understand the impact of the amended rules on their members. This extension will ensure the affected parties are provided accurate guidance so they can comply with the law." Further, "Proper implementation is a challenge because the professional community consists of many small businesses that need to be duly informed prior to any implementation of the requirements. With solo practitioners making up nearly 70 percent of all dental practices, many lack the time and resources to dedicate towards researching the new rules. The burden of compliance, from implementing proper recordkeeping to correct reporting, will harm the 92 percent of small manufacturers in the dental industry because uncertainty remains in the final rules."


In many respects the regulations are "vague and provide insufficient guidance for professionals, manufacturers and distributors," wrote Velazquez.


The ADA has developed a Q and A on the Sunshine Act which is available at


As of press time no delay had been granted by CMS. Because of the complexity of the Sunshine Act, expect some future Litch's Law Log updates on this topic.


For further information contact Chief Operating Officer and General Counsel C. Scott Litch at (312) 337-2169, ext. 29, or slitch@