What Are the Main Issues Involved with The Implementation of the Physician Payments Sunshine Act?

In Part One of our discussion of the Affordable Care Act’s “Sunshine” Rule, we reviewed why the rule was enacted and how the Centers for Medicare & Medicaid Services (CMS) implemented the rule. The Sunshine Act sets forth the requirements for medication and medical device companies to inform CMS about payments or financial transactions made to doctors and teaching hospitals.

This article discusses the administrative and legal issues involved with creating and maintaining a nationwide public reporting system based on the Sunshine Rule. The article also talks about how reporting is likely to affect provider, patient, and industry behavior. The Sunshine rule is more formally called, “The Physician Payments Sunshine Act. (PPSA).”

An illustrative example follows the discussion.

The administrative and legal issues of CMS’s 2014 Sunshine Rule

According to Health Affairs, the Sunshine Rule’s reporting requirements will be managed through an Open Payments System. Manufacturers and physicians have expressed concerns about the reporting duties and the difficulties involved with fixing inaccurate reports. CMS, according to Health Affairs, estimates that the reporting costs will be $260 nationwide in the first year and about $180 million in the second year of the Sunshine Rule.

Manufacturers and Group Purchasing Organizations (GPOs) will pay most of the costs. Doctors will have some costs too – to verify the reports and correct any mistakes. Doctors are very concerned about the procedures and costs of disputing reported payments. The payments can lead to inquiries about whether the doctors violated Stark Law or the Anti-Kickback Statutes. Doctors may also worry that any reported payment affects their credibility – because the payments may imply the doctors preferred the manufacturers over the patients. Many medical associations and societies drafted a letter to CMS detailing these concerns,

“arguing that the physician registration process was too complex and that the timeline for dispute was too condensed to allow physicians to properly address inaccurate information.”

These groups also challenged CMS’s proposal to remove the continuing medical education (CME) exemption, arguing that it would be too difficult to ensure that a manufacturer does not learn the names of particular event speakers once that event has taken place.

Another concern is how the PPSA aligns with current state laws.

“While the act generally preempts existing state laws where they require reporting the same information by the same entities, the scope of exceptions to this preemption is unclear, and the act does not preempt all state-level reporting requirements.”

To illustrate the concerns, a few states require that manufacturers’ payment reports include payments made to nurse practitioners and physician assistants, not just the doctors. Some states have different data formatting requirements which can create duplicate work.

How will the information obtained through public reporting affect manufacturers, physicians, and patients?

Health Affairs states that there are concerns about how the data will be used, how it will be interpreted, and how the data might affect medical research, individual behaviors, or “policy makers’ approaches to regulating physician-industry relationships.” Manufacturers and doctors are also concerned about how patients will interpret the publicly reported payment data.

In another letter to CMS, three trade organizations (AdvMed, BIO, and PhRMA) stated that the organizations haven’t had a chance to review or consult with CMS on how the context of the payments will be explained to the public. The three trade organizations

“argue that without clear communication about the purpose and context of these transfers, it may be difficult to distinguish payments that inappropriately influence prescribing from payments made for services that are helpful for innovation or clinical practice.”

Some doctors have raised concerns that “determining “appropriate” physician-industry interaction is not always easy to establish and may vary according to specialty fields or practice settings.” Physicians are concerned how trying to avoid the appearance of a conflict of interest that might be reported in the CMS database might limit their interactions with manufacturers of medications and medical devices, which could affect the ability of the physicians to learn about beneficial drugs and devices or to participate in clinical research.

How will the PPSA affect manufacturers? Manufacturers of medications and medical devices may be more careful about what incentives are offered to physicians and also to other healthcare providers such as nurse practitioners, medical residents, and physician assistants. For example, according to Health Affairs, some pharmaceutical companies have already changed whether the companies will offer speaker fees and in what amounts. The manufacturers may increase their “direct-to-consumer advertising, as well as increased marketing to payers (which often act as the gatekeepers for prescription drug use).”

“Companies are also increasingly relying on clinical research professionals (known as ‘medical scientific liaisons’), who often have an advanced medical, pharmacy, or science degree, to market their products to a broad range of audiences, including health care professionals, patient associations, academic institutions, and other stakeholders.”

The initial CMS reporting year raised some of the above questions and many technical challenges too. Even the proponents of the Sunshine Rule acknowledge that the program itself is not sufficient to address financial conflicts of interest. “Physicians and research centers will also need a reliable framework for determining what kinds of relationships are appropriate, useful, and beneficial.”

An illustrative example of how the Sunshine Act works

Johns Hopkins Medicine discussed how the Sunshine Act is affecting their physicians and certain advanced practice providers. According to Johns Hopkins, “a physician is defined as an M.D., D.O., D.D./D.D.M., D.D.S., D.P.M., O.D. and D.C.P. who is licensed in any state in the U.S., whether or not they are practicing.”

Beginning in 2021, the payments by manufacturers will include more than just physician and teaching hospital payments. Payments to “advanced practice providers” will also be required to be reported. Advanced practice providers include “physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists (including anesthesiologist assistants) and certified nurse midwives.”

The Sunshine Act affects doctors and

“advanced practice providers who consult, serve on scientific advisory boards, or engage in other compensated activity in a personal capacity for manufacturers of drugs, devices or biologics.”

Johns Hopkins states that doctors and advanced practice providers do have the right to review, and when necessary, dispute the reported payments. The individual physicians and advanced practice providers must review whether the reported data is accurate and must submit their own reports. The health provider’s employer is not generally responsible for the review.

Physicians can view their previously published data by searching for their names using the Open Payments website search tool.

According to Johns Hopkins, the following dates (most of which have already passed) are/were critical: The review and dispute period for 2021 reports started on April 1 and closed on May 15, 2022. Corrections were required to be submitted by the manufacturer on May 30, 2022. The public should have access to the data on or about June 30, 2022. These timelines generally should apply for subsequent years.

The registration process to review and dispute reported payments.

Johns Hopkins states that in order to review and submit a dispute, a physician or advanced physician provider must register with the Open Payments system.

Registration is a two-step process. Individuals must first register in the CMS Enterprise Identity Management (EIDM) System and then register in the Open Payments system. There are password requirements.

Once CMS notifies a manufacturer of a dispute, the health provider should negotiate (we recommend with the help of an experienced healthcare lawyer) with the manufacturer. Information about the review and dispute process is available here.

Physicians and advanced practice providers should keep records of the payments the doctors and providers receive from manufacturers. Written records are much preferred over oral discussions.

Generally, Johns Hopkins states, “research payments are made to the institution and not to individual physician investigators.” Research payments are displayed in a dedicated section of the Open Payments database. The Sunshine Act requires that manufacturers identify up to five Principal Investigators in connection with research payments made to the institution. The definition of “principal investigator” may vary among manufacturers, and Johns Hopkins.

“Physicians designated as a Principal Investigator can only dispute their association with the payment. Other payment details must be disputed by the covered recipient of the payment.”

“Payments to physicians that are related to research but not covered by an institutional research agreement may still be attributed to physicians as personal payments (e.g., travel or medical writing and editing services).”

“Manufacturers must collect and provide information about indirect payments as well as payments made directly to physicians and advanced practice providers.”For example, if a physician is paid indirectly through a third party (e.g., a contract research organization, travel agency), the payment will be listed as a transfer from the manufacturer to the physician.”

“Payments to physicians for serving as speakers at accredited Continuing Medical Education activities are generally not included. This can vary depending on the specific details of the payment.”

Payments and transfers of value include:

  • Consulting fees
  • Compensation for speaking
  • Travel
  • Food
  • Entertainment
  • Gifts
  • Honoraria
  • Royalties
  • Education
  • Research
  • Current or prospective ownership or investment interest.

Beginning in 2021 payment and transfers of value will also include “debt forgiveness, long term medical supply or device loan, and acquisitions.”

Manufacturers report data about payments to teaching hospitals by the name of the hospital.

The Physician Payments Sunshine Act was enacted to help patients and others determine whether physicians have a conflict of interest with manufacturers of drugs and medical devices. Patients have the right to expect that the recommendations their doctors make are based on the best interests of the patient and not the financial wealth of the doctors. Doctors, in turn, have the right to challenge the payments the manufacturers report to the Centers for Medicare and Medicaid Services – especially since the reporting may raise Stark Law and Anti-Kickback Statute inquiries.


The CMS and HHA are proposing new rules, such as the Patients over Paperwork Initiative, where the focus of Stark and AKS will be on value-based arrangements


In today’s video, we discuss some exceptions to Stark Law, which deals with improper referrals by physicians and healthcare practitioners.


The DOJ reported several new cases in which health care companies and doctors agreed to pay millions to settle claims of healthcare fraud due to AKS and Stark violations.

Medical companies, doctors, and teaching hospitals should contact Cohen Healthcare Law Group, PC to review their duties and rights under the CMS Sunshine Act. Our experienced healthcare attorneys advise physicians and medical businesses about healthcare compliance laws and remedies.

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