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What Physicians Need to Know About the Sunshine Act

By Tim Callahan | 12 Apr 2021

As you likely already know, the Sunshine Act (SA) is part of the Patient Protection and Affordable Care Act and overseen by the Center for Medicare and Medicaid Services (CMS) as part of the Open Payments Program. It requires pharmaceutical companies, medical device manufacturers, and group purchasing organizations (GPOs) to disclose financial relationships with physicians and makes the information accessible to all.

Since the Obama administration first enacted the Sunshine Act, it has underscored the importance of transparency in these affiliations. It also helps prevent nefarious relationships that could impact patient care or, at the very least, patients’ wallets and create an unfairGettyImages-1175811131-1 advantage in an otherwise open marketplace.

At the end of 2020, CMS issued an update on thresholds that require applicable manufacturers and GPOs to report. In light of these updates, we figured it’s a good time to brush up on how the Sunshine Act works and what physicians need to know:

What Constitutes Payment According to the Sunshine Act

The Sunshine Act requires pharmaceutical companies, medical device manufacturers, and GPOs to report any payments made to physicians with whom they have no contractual employment agreement, as well as any compensation to teaching hospitals for education programs they facilitate.

But what does that mean, exactly?

Here’s a breakdown of what constitutes a payment:

  • Food and Beverage: Any food and drinks supplied to a physician’s office.
  • Travel and Lodging: Any payments for travel costs and lodging for physicians engaging in trade or serving as an employee or representative of the manufacturer.
  • Consulting Fees: Any payments physicians receive when designing a new research protocol, consulting on a new product, or using and opining a product.
  • Honoraria: Payments received for typically complimentary services like, for example, if a physician attends an engagement and speaks on a manufacturer’s behalf.
  • Research: Any payment in connection with researching medical devices or drugs. Reports must include exactly what they evaluated and a written outline of the agreement and/or research protocol involved in the study.
  • Ownership and Investment: Current or prospective investment interests or ownership. For example, if a physician is involved in developing a new medical device and asks if they or a family member can invest in the company, potentially becoming an owner of a percentage of the company.

Exemptions from The Sunshine Act

There are some items of value that don’t have to be reported to CMS. These include: 

  • Product samples not intended to be sold
  • Educational materials directly benefiting the patient
  • Rebates, in-kind items, and discounts for use in charity care 

2021 Sunshine Act Expansions

This year, the Sunshine Act is expanding the healthcare professionals it considers “recipients,” and now includes:

  • Physicians Assistants
  • Nurse Practitioners
  • Certified Nurse-Midwives
  • Certified Registered Nurse Anesthetists
  • Clinical Nurse Specialists

Manufacturers and GPOs have 90 days at the beginning of the new year to report any payments. Beginning April 1 through May 15, physicians and teaching hospitals can formally dispute inaccurate information using the CMS online National Physicians Payment Transparency Program. On June 30, information about these payments become available to the general public. For more information on the national disclosure program, Open Payments, visit the CMS website.

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