A blog by attorneys for anyone interested in or affected by The Sunshine Act.

Definitions of Common Sunshine Act Terms

April 16, 2014
Ruselle W. Robinson

I thought it would be helpful to provide definitions of common Sunshine Act terms in a single list that you can refer to when reading future posts. I suggest that all physicians review, in particular, the definition of Nature of Payment Categories (No. 13) so that you have an understanding of the types of payments and transfers of value that must be reported to CMS.

1. Applicable Manufacturers

Applicable manufacturers are entities that operate in the United States and (1) are engaged in the production, preparation, propagation, compounding, or conversion of a covered drug, device, biological, or medical supply, but not if such covered drug, device, biological or medical supply is solely for use by or within the entity itself or by the entity’s own patients (this definition does not include distributors or wholesalers (including, but not limited to, repackagers, relabelers, and kit assemblers) that do not hold title to any covered drug, device, biological or medical supply); or (2) are entities under common ownership with an entity described in part (1) of this definition, which provide assistance or support to such entities with respect to the production, preparation, propagation, compounding, conversion, marketing, promotion, sale, or distribution of a covered drug, device, biological or medical supply.

2. Applicable Group Purchasing Organizations (GPOs)

Applicable group purchasing organizations (GPOs) are entities that operate in the United States and purchase, arrange for or negotiate the purchase of covered drugs, devices, biologicals, or medical supplies for a group of individuals or entities, but not solely for use by the entity itself.

3. Assistance and Support

Assistance and support means to provide a service or services needed to produce, prepare, propagate, compound, convert, market, promote, sell, or distribute a covered drug, device, biological, or medical supply.

4. Assumptions Document

Assumptions documents are documentations prepared by applicable manufacturers and applicable GPOs to explain the reasonable assumptions made and methodologies used when reporting payments or other transfers of value, or ownership or investment interests. The applicable manufacturers or applicable GPOs may choose, but are not required, to submit an assumptions document with their data submission. The assumptions documents are for CMS use and will not be made available to covered recipients, physician owners or investors, or the public.

5. Charitable Contribution

Charitable contribution includes, but is not limited to, to any payment or transfer of value made to a tax exempt organization under the Internal Revenue Code of 1986, which is not provided in exchange for any goods, items or services.

6. Clinical Investigation

Clinical investigation is any experiment involving one or more humans, or materials derived from humans, where drug, device, biological or medical supply is administered, dispensed or used.

7. Common Ownership

Common ownership is when the same individual, individuals, entity, or entities directly or indirectly own 5 percent or more of 2 entities. This includes, but is not limited to, parent corporations, direct and indirect subsidiaries, and brother or sister corporations.

8. Consolidated Report

A consolidated report is a report filed by an applicable manufacturer, which includes payments or other transfers of value to covered recipients, physician owners or investment interests for the applicable manufacturer filing and applicable manufacturers under common ownership.

9. Covered Drugs, Devices, Biologicals or Medical Supplies

Covered drugs, devices, biologicals or medical supplies are any drugs, devices, biological, or medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance (CHIP) program, either separately (such as through a fee schedule) or as part of a bundled payment (for example, under the hospital inpatient prospective payment system), and for drugs and biological require a prescription to be dispensed and for devices (including medical supplies which are devices), require premarket approval by or premarket notification to the U.S. Food and Drug Administration (FDA).

10. Covered Recipients

Covered recipients are any physicians who are not employees of the applicable manufacturer that is reporting the payment; or teaching hospitals that receive payment for Medicare direct graduate medical education (GME), inpatient prospective payment system (IPPS) indirect medical education (IME), or psychiatric hospital IME programs during the last calendar year for which such information is available.

11. Immediate Family Members

Immediate family members are:

  • spouses, spouses of grandparents, spouses of grandchildren
  • natural or adoptive parents, stepparents, parental in-laws, grandparents
  • children, stepchildren, grandchildren
  • siblings, stepsiblings, sibling in-laws

12. Indirect Payments or Other Transfers of Value

Indirect payments or other transfers of value refer to payments or other transfers of value made by an applicable manufacturer (or an applicable group purchasing organization) to a covered recipient (or a physician owner or investor) through a third party, where the applicable manufacturer (or applicable group purchasing organization) requires, instructs, directs, or otherwise causes the third party to provide the payment or transfer of value, in whole or in part, to a covered recipient(s) (or a physician owner or investor).

13. Nature of Payment Categories

Nature of payment categories are categories that must be used to describe why a payment or other transfer of value was made. The categories are:

  • Consulting fees
  • Compensation for services other than consulting, including serving as faculty or as a speaker at an event other than a continuing education program
  • Honoraria
  • Gifts
  • Entertainment
  • Food and beverage
  • Travel and lodging
  • Education
  • Research charitable contributions
  • Royalty or license
  • Current or prospective ownership or investment interest
  • Compensation for serving as faculty or as a speaker for an unaccredited and non-certified continuing education program
  • Compensation for serving as faculty or as a speaker for an accredited or certified continuing education program
  • Grants
  • Space rental or facility fees (teaching hospital only)

14. Operating in the United States

Operating in the United States means having a physical location in the United States or a U. S. territory, possession, or commonwealth; or otherwise conducting activities in the United States or in a U.S. territory, possession, or commonwealth, either directly or through a legally-authorized agent.

15. Ownership or Investment Interest

Ownership and investment interest includes, but is not limited to:

  • Stock,
  • Stock option(s) (other than those received as compensation, until they are exercised),
  • Partnership share(s),
  • Limited liability company membership(s),
  • Loans,
  • Bonds, or
  • Other financial instruments that are secured with an entity’s property or revenue or a portion of that property or revenue.

This may be direct or indirect and through debt, equity or other means. Please note that there are exceptions to the definition.

16. Payments or Other Transfer of Value

Payments or other transfers of value are anything of value given by an applicable manufacturer or applicable GPO to a covered recipient or physician owner/investor that does not fall within one of the excluded categories in the rule.

17. Physicians

Physicians are defined using the same meaning as in Section 1861 (r) of the Social Security Act. For the purposes of this program physicians are any of the following professionals that are legally authorized to practice:

  • Doctor of Medicine
  • Doctor of Osteopathy
  • Doctor of Dentistry
  • Doctor of Dental Surgery
  • Doctor of Podiatry
  • Doctor of Optometry
  • Doctor of Chiropractic Medicine

18. What are Pre-submission Reviews?

Pre-submission reviews allow physicians and teaching hospitals the opportunity to review the data before the applicable manufacturer or applicable GPO reports the data to CMS. Note, this is an optional process for applicable manufacturers and applicable GPOs.

19. Reporting Entities

Reporting entities are applicable manufacturers or applicable GPOs.

20. Research

Research is a systematic investigation to develop or contribute to generalized knowledge about public health, including behavioral and social-sciences research. This definition includes basic and applied research, and product development.

21. Small Payments or Other Transfers of Value

Small payments or other transfers of value are payments or other transfers of value less than $10 that do not need to be reported, except when the total annual (calendar year) value of payments or other transfers of value provided to a covered recipient exceeds $100. The values of $10 and $100 are specific to the 2013 reporting period and will be revised in future reporting periods. The 2014 values are $10.18 and $101.75, respectively.

22. Teaching Hospitals

Teaching hospitals are hospitals that receive payment for Medicare direct graduate medical education (GME), IPPS indirect medical education (IME), or psychiatric hospital IME programs during the last calendar year for which such information is available.

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