The Sunshine Act and its Effects on Physicians and Continuing Education


Over the past two decades, there has been a growing movement within medical schools to eliminate the perceived undue influence of pharmaceutical companies on medical students and faculty through such “freebies” as pens, stethoscopes, medical books and other small items. Most medical schools now completely prohibit any donated materials or contact with students and most faculty by manufacturer representatives. This trend has expanded to also affect residents in training and the teaching hospital environment where sponsored lunches during educational conferences are now becoming less frequent events. At the practicing physician level, large monetary kickbacks to physicians for using specific brands of orthopedic implants and cardiac stents, at times when not medically indicated, have made national headlines and prompted a public website listing individual physicians by name and the amount of money received from medical companies.1

The Institute of Medicine in 2009 issued a report which recommended broad public transparency for such financial relationships.2 With this background, it is perhaps not surprising that among the major fundamental changes to American healthcare that were included in the Patient Protection and Affordable Care Act (“ObamaCare”) new laws impose significant governmental regulations affecting interactions between all physicians and teaching hospitals with pharmaceutical and medical device manufacturers. The law of unintended consequences would suggest that these new rules will also have unforeseen and far-reaching implications, including how physicians and professional societies will provide continuing medical education and how this will ultimately affect treatment for patients with venous disease.

The Sunshine Act

Among the 1,024 pages of ObamaCare that was passed by Congress on March 23, 2010, there are seven pages encompassing Section 6002, “Transparency Reports and Reporting of Physician Ownership or Investment Interests,” subsequently known as the Sunshine Act.3 The final rule detailing and justifying these regulations encompassed 70 pages and was published three years later in the Federal Register.4 Data collection for the program officially began on August 1, 2013, and the first reports from manufacturers will be due on March 31, 2014. The official website for these regulations, named OpenPayments, was developed by the Centers for Medicare and Medicaid Services (CMS) and provides additional information as well as being the future internet portal for the public to access physicianspecific data.5 Such information is expected to become available no later than September 30, 2014.

The Act requires that any manufacturer which is operating in the United States selling a biological, prescribed drug, device, or medical supply, for which payment is available through Medicare, Medicaid or the Children’s Health Insurance Program, collect and report to CMS any payment or “other transfer of value” to a licensed nonresident physician or teaching hospital. To be reported, the payment needs to have a one-time value of $10 or more or have a cumulative yearly value of more than $100. The type of payment is all inclusive and covers cash, stocks, ownership options or in-kind items or services. The only exclusions are for product samples that are not intended to be sold and are specifically intended for patient use, educational materials that directly benefit patients or are intended for patient use, and the loan of a device for a short term trial period (not to exceed 90 days) to permit evaluation of the device. In addition, it needs to be reported whether it was given directly to the physician or indirectly through a hospital or medical school. It is interesting to note, however, that private hospitals are excluded and only teaching hospitals are affected by this law. Teaching hospitals are defined as those involved in government-supported medical education which receive payments for indirect (IME) or direct graduate medical education (GME) from Medicare.

The information to be reported, and subsequently made available to the public on the internet, will include:
(i) name of the physician
(ii) business address
(iii) their specialty
(iv) National Provider Identifier
(v) state licensure information
(vi) amount of the payment or other transfer of value
(vii) dates on which the payment was given
(viii) description of the form of the payment (cash, service, item)
(ix) nature of the payment (food, travel, entertainment, gift, honoraria, education, research)
(x) a description whether it was related to marketing, education, or research specific to a covered drug or device and the name of that product

Companies will be under significant financial and legal pressure to accurately report all such payments. Failure to inadvertently do so will result in a civil money penalty of between $1,000 to $10,000, for each payment. Knowingly not reporting such payments will result in at least $10,000, but not more than $100,000, for each payment.

The public website on which this information will be posted has been mandated to be searchable, in a format that is clear and understandable to the lay public, and is to be easily aggregated and downloaded. The website is likely to be similar to the independent ProPublica already available on the Internet.1

The estimated first year reporting and accounting costs for manufacturers is $193 million and $144 million yearly thereafter. The costs for physicians and teaching hospitals is estimated by CMS to be $59 million the first year and $34 million yearly. Including required infrastructure and third party support, national costs are calculated by CMS to total $269 million and $180 million the first and subsequent years, respectively.4 However, considering the inaccuracies of past governmental estimates of program costs, these may be very significantly underestimated.

Implications for Physicians and Professional Societies
The goal of the Sunshine Act, as expressed by CMS, is to mandate increased transparency regarding the extent and nature of relationships between physicians, teaching hospitals, and industry manufacturers that will permit patients to make better informed decisions when choosing health care professionals and making treatment decisions. One of the authors of the Act, Sen. Chuck Grassley (R-Iowa), stated that it was meant “to bring about accountability, and accountability will strengthen the credibility of medical research, the marketing of ideas, and the practice of medicine.”6 It is interesting to note, however, that no scientific studies have confirmed that such regulations have improved the quality of medical research or clinical outcomes in states that already have transparency laws in place (Vermont, Maine, California, Connecticut, Nevada, West Virginia, Massachusetts, and Minnesota).7

On the other hand, there is the very real potential for negative consequences for physicians, professional medical societies and ultimately patient care. For individual physicians, these regulations may well decrease the number and quality of interactions with manufacturers for fear of becoming publicly listed on the CMS website and being unfairly tainted with associational guilt. Even educational materials provided to physicians for their own education, but which do not directly benefit patients, are subject to the reporting requirements. Such decreased interactions may limit physicians’ knowledge of the appropriate use of new medications and products and thus slow the diffusion of leading edge treatments for our patients. Already many medical schools severely limit and regulate the relationships that their faculty maintains with industry. Particularly in surgery and the interventional specialties, physician collaboration is crucial for industry in their innovation and development of new products and services. Regardless of how it is being advertised to the public, the Sunshine Act will be a discouragement for such collaboration which has been critical in advancing modern American medicine.

A more immediate and visible effect of the Sunshine Act will be on continuing medical education (CME). Hospital, state and professional licensure requirements for physician CME are extensive and costly to fulfill. Providers of CME meetings and conferences find it increasingly time consuming and expensive to conform to accreditation requirements. Industry financial support for such activities has thus become even more important and now account for 27% of the $2.5 billion received each year.8 In order for industry not to report individual physicians, CME programs must meet the accreditation or certification requirements of several recognized organizations (such as the American Medical Association or the Accreditation Council for Continuing Medical Education), the manufacturer does not select the speakers nor does it provide the conference organizers with a set of individuals to be considered as speakers, and it does not directly pay the speakers. The conference organizers must therefore have full discretion over the CME programming. These requirements have already been utilized by most professional societies at their annual meetings and conferences and do not represent a dramatic change from good practices. Industry-supported meals for participants, unless provided in buffet style or box lunches for all attendees where specific participating individuals cannot be reliably identified, will be recorded and reported.

Additional support for professional societies and their activities, however, would now appear to require purely unrestricted donations that are to be used at the organization’s own discretion. In these instances, the organization may use these donations to make grants to physicians and those grants would not constitute even indirect payments because the manufacturer did not require or direct the organization to give the money to physicians and thus it would not be reportable. However, if money was given to a medical society earmarked for funding awards or grants for physicians, this would constitute indirect payments and would be subject to the reporting requirements. These requirements would therefore suggest that in the future industry provide more unrestricted funds to medical societies.

In the case of unaccredited and noncertified continuing education programs, when a manufacturer provides compensation to a physician serving as a speaker or faculty, regardless of whether the payment was provided directly or indirectly, this will need to be reported. Such reporting may cause hesitation in physician participation and lead to decreased quality and number of such meetings in the future.


For individual physicians who have any financial interactions with industry, it is advisable that they request a presubmission review of reports that will be submitted to CMS to allow them the opportunity to correct any inconsistencies. After March 31, 2014, they should review what has already been submitted to confirm its correctness. They will thereafter have 45 days to contest the information. Industry relations, by both professional societies and individual physicians, has now become more regulated and its dynamics will continue to change. The most likely scenario would appear to be the encouragement of greater use of unrestricted grants from industry to medical societies. This would continue critically needed support for CME activities and research without jeopardizing the professional reputation of individual physicians.


1. ProPublica. Dollars for Docs - How Industry Dollars Reach Your Doctors. Accessed January 5, 2013.
2. Lo B, Field M, eds. Conflict of Interest in Medical Research, Education, and Practice. Washington, DC: National Academies Press, 2009.
3. Public Law 111–148—March 23, 2010. U.S. Government Printing Office. Accessed January 5, 2013.
4. Centers for Medicare and Medicaid Services. Final Rule - TransparencyReports and Reporting of Physician Ownership or Investment Interests. Federal Register 78 (No. 27) / Friday, February 8, 2013. 9458-9528.
5. Centers for Medicare and Medicaid Services. Open Payments. Accessed January 5, 2013.
6. Grassley, Chuck. Memorandum - Physician Payments Sunshine Act Regulations Released. February 1, 2013.
7. Pham-Kanter G, Alexander C, Nair K. Effect of Physician Payment Disclosure Laws on Prescribing. Arch Int Med 172 (10):819 - 821, 2012.
8. Accreditation Council for Continuing Medical Education (ACCME). Annual report, 2012 (