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CME Payments Largely Remain Excluded From Sunshine Act Reporting

Written by:  Brian P. Dunphy

The Centers for Medicare & Medicaid Services (“CMS”) has finalized changes to a number of reporting requirements under the regulations implementing the Physician Payments Sunshine Act (“Final Rule”).  When CMS proposed several of these changes in July, my colleague discussed them in detail in an earlier post.  The changes will become effective for the 2016 reporting year (pharmaceutical and medical device manufacturers (“Manufacturers”) will submit reports to CMS covering 2016 in 2017).

The Final Rule includes four changes.  First, CMS eliminated a separate reporting exclusion for payments to physicians for speaking at accredited or certified continuing medical education (“CME”) programs.  Even though CMS eliminated this CME-specific exclusion, most of these CME payments will still not have to be reported.  CMS decided that, where a Manufacturer provides funding to a third-party CME provider for physicians to attend or to speak at a CME program, these payments are not reportable “indirect payments” if the Manufacturer does not “require, instruct, direct, or otherwise cause” the CME provider to direct the payment to a specific physician.  CMS further explained that a CME payment does not become reportable if the Manufacturer later learns the physician’s identity “because the payment or other transfer of value did not meet the definition of an indirect payment.”  With respect to tuition fees for physician attendees, CMS will issue “sub-regulatory guidance specifying [that] tuition fees provided to physician attendees that have been generally subsidized at continuing education events by manufacturers are not expected to be reported.”

Second, Manufacturers must report the marketed name and therapeutic area or product category of the covered drug, device, biological, or medical supply to which the payment or transfer of value was related (previously, Manufacturers of drug or biologicals had to report marketed names, and Manufacturers of devices or medical supplies had to report either the marketed name, product category, or therapeutic area).  For payments related to non-covered products, reporting the marketed name will remain optional.

Third, Manufacturers must report payments in the form of stocks, stock options, or any other ownership interest as distinct forms of payment under 42 C.F.R. § 403.904(d).  Previously, these distinct forms of payment were grouped together in a single “form of payment” category.

Finally, CMS eliminated the definition of “covered device” because it is duplicative of the definition of “covered drug, device, biological or medical supply.”

Although most of these four changes are not contentious, the proposed elimination of the reporting exclusion for certain CME payments proved controversial when the proposed Sunshine Act changes were announced in July 2014.  But with the interpretation that CMS adopted in the Final Rule, which will keep many CME payments from being reported, CME coalitions largely applauded the change.

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Brian P. Dunphy

Member / Co-Chair, Health Care Enforcement Defense Practice

Brian P. Dunphy is a member of the Health Care Enforcement & Investigations Group at Mintz. He defends clients facing government investigations and whistleblower complaints regarding alleged violations of the federal False Claims Act. Brian also handles commercial health care litigation.