The Physician Payments Sunshine Act (Open Payments): 2026 Expense Reporting Compliance Guide

The Physician Payments Sunshine Act, enacted as Section 6002 of the Patient Protection and Affordable Care Act of 2010 and officially known as the Open Payments program, requires manufacturers of drugs, devices, biologics, and medical supplies to publicly report financial relationships with healthcare providers. This guide provides current compliance requirements as of 2026.

Document Status: Current as of January 2026 | Last Updated: January 6, 2026
Official Source: CMS Open Payments Program

Introduction:

Purpose

The Sunshine Act promotes transparency in financial relationships between healthcare providers and manufacturers of drugs, devices, biologics, and medical supplies. The goal is to:

• Increase public awareness of financial relationships
• Reduce potential conflicts of interest
• Support informed healthcare decision-making
• Provide data for research on healthcare quality and costs

Sunshine Act compliance software plays a critical role in helping life sciences companies meet federal and state reporting requirements tied to healthcare provider (HCP) spend. With the Physician Payments Sunshine Provisions included in health care reform legislation, the federal government joined six states in mandating the reporting of expenditures made by life science companies to HCP identified with National Provider Identifiers (NPI).

The Physician Payment Sunshine Provisions were included in the Patient Protection and Affordable Care Act of 2010 (H.R. 3590, section 6002), referred to throughout this document as the Sunshine Act. The legislation was signed into law on March 23, 2010. Beginning on January 1, 2012, all U.S. manufacturers of drug, device, biologics, and medical supplies covered under Medicare, Medicaid, or SCHIP were required to record all transfers of value on an annual basis.

This information must be submitted to the U.S. Department of Health and Human Services and is published annually on a public website as part of ongoing Sunshine Act reporting requirements. 

Implementation Timeline

• March 23, 2010: Act signed into law
• February 1, 2013: Final rule published
• August 1, 2013: Data collection began
• March 31, 2014: First annual reports submitted to CMS
• September 30, 2014: First public data release (covering 2013 data)
• 2021: Program expanded under SUPPORT Act
• 2022-2024: Multiple regulatory updates and refinements

Healthcare Provider Recipients and Reportable Activity

Face-to-face sales and promotional activities directed toward HCPs (commonly known as “detailing”) represent one of the largest marketing expenditures in the life sciences industry, second only to pharmaceutical samples.

Where a payment is related to marketing, education, or research specific to a covered drug, device, biologic, or medical supply, companies are required to report specific data under the Sunshine Act compliance rules.

Problem Statement

A company affected by the Sunshine Act is likely tracking spending associated with food, entertainment and gifts incurred in the direct marketing to HCPs as part of their expense reporting process.

The challenge arises when those expenses must be tracked and reported at the level of detail required by Sunshine Act compliance regulations.

The volume of transactions, the need to allocate costs across multiple recipients, and the complexity of state-specific rules make manual or loosely controlled processes risky. The potential for poor data quality, due to tracking many small transactions divided by a large list of recipients, can impact both operational efficiency and  compliance.

Clear, consistent, and auditable data is essential to assisting the healthcare industry in managing the burden of reporting posed by the Sunshine Act. 

Reportable transfers of value include:

• Direct compensation
• Food
• Entertainment
• Gifts
• Travel
• Consulting fees
• Honoraria
• Education
• Research
• Grants
• Charitable contributions
• Royalties or licenses
• Current or prospective ownership or investment interests
• Compensation for serving as a faculty member or as a speaker for a continuing medical education program
• Any other transfer of value as defined by the Secretary of Health and Human Service

Required recipient data includes:

• Name
• Business Name
• Address
• National Provider Identifier (NPI)
• Value of the payment or transfer of value
• Dates of the payments or transfers

Description of the form of payment or transfer of value 

Penalties for Non-Compliance

Civil Monetary Penalties (CMPs)

The Open Payments program has enforcement authority to impose significant penalties:

For Non-Knowing Violations:

• Up to $11,524 per violation (2024 amount)
• Maximum annual penalty: $184,397 per year (2024 amount)

For Knowing Violations:

• Up to $115,240 per violation (2024 amount)
• Maximum annual penalty: $1,152,400 per year (2024 amount)

Note: These amounts are adjusted annually for inflation under the Federal Civil Penalties Inflation Adjustment Act. Check current amounts at CMS Civil Monetary Penalties page.

What Constitutes a Violation?

• Failure to report a required payment or transfer of value
• Late reporting after March 31 deadline
• Inaccurate or incomplete reporting
• Failure to respond to CMS audit requests
• Knowing failure to report (higher penalties)

"Knowing" Violation Defined

A knowing violation occurs when an entity:

• Has actual knowledge of information
• Acts in deliberate ignorance of the truth or falsity
• Acts in reckless disregard of the truth or falsity

CMS Enforcement Actions to Date

As of 2024:

• CMS has imposed at least 3 publicly disclosed CMPs totaling $2.2 million
• CMS actively conducts audits of reporting entities
• Enforcement focus areas:
  • Complete and accurate physician identification
  • Proper categorization of payments
  • Timely submission
  • Response to audit requests

Additional Consequences

Beyond CMPs, non-compliance can result in:

• Reputational damage – public scrutiny of relationships
• State-level penalties – some states have additional disclosure laws
• Corporate Integrity Agreements (CIAs) – may require enhanced Sunshine Act compliance
• Audit triggers – non-compliance may trigger broader government investigations
• Publication delays denied – no longer allowed for general payments (2022 change)

Meeting New Legislative Requirements

Satisfying the provisions of the Sunshine Act has prompted life science companies to look at alternatives to current expense reporting processes. Manual reporting or systems that cannot support detailed, policy-driven tracking are insufficient for reliable Sunshine Act compliance.

Because data submitted to HHS must be electronic, searchable, and downloadable, Sunshine Act compliance software must support accuracy and control from the point of data entry forward. Proactive management of expense data allows organizations to control not only compliance outcomes, but also the effectiveness of their direct marketing operations.

Reporting Thresholds and Exclusions

Minimum Reporting Threshold (Adjusted Annually for Inflation)

For Calendar Year 2025:

• Individual payments less than $11.52 are exempt from reporting
• UNLESS aggregate payments to the same covered recipient exceed $115.17 in a calendar year
• Once the aggregate threshold is reached, ALL payments including those under $11.52 must be reported retroactively

For Calendar Year 2026:

• Check CMS Open Payments website for current inflation-adjusted amounts
• Typically updated each year in November/December

Exclusions from Reporting

The following are NOT required to be reported:

1. Product Samples – drugs or devices provided free of charge for patient use (not for office use)
2. Educational Materials – directly benefiting patients or intended for patient use (e.g., anatomical models used for patient education)
3. Short-Term Loans – equipment loans of 90 days or less in a calendar year (clarified 2022: 90 total days, not necessarily consecutive)
4. Discounts and Rebates – price reductions or rebates, but NOT items provided below cost
5. In-Kind Items for Charity Care – drugs or devices provided free for charity care or free to indigent patients
6. Dividend or Profit Distribution – from publicly traded securities, mutual funds, or retirement accounts
7. Payments for Services – where covered recipient is providing services in their capacity as a speaker at a non-medical continuing education program (specific conditions apply)
8. Products at Cost Price – items provided at or below manufacturer's cost with no profit margin

Research Payment Special Rules

Research payments have different reporting requirements:

• Reported separately from general payments
• May be delayed up to 4 years if ongoing research protocol
• Must include principal investigator information
• Must indicate if pre-market (investigational) research

DATABASICS’ Sunshine Act Compliance Software Solution

DATABASICS offers enhanced expense reporting functionality designed specifically to support Sunshine Act compliance and reporting. This functionality is part of the Expense reporting process for expenditures associated with direct marketing to healthcare providers.

The solution enables companies to track expenses at the level of detail required by federal law while also supporting additional state-specific rules and thresholds. DATABASICS’ policy  engine enforces compliance at the point of entry, helping users follow applicable rules before expenses are submitted.

Robust reporting and audit tools allow organizations to manage data by region, user, product, or customer, while maintaining full visibility into changes and approvals.

Examples of Specific Sunshine Act Business Scenarios Supported by DATABASICS Expense:

• Enforcement of state-level restrictions where gift giving is prohibited.
• Policy and reporting functionality supports law exemption expenses of less than $10 for reporting until the aggregate annual total per company (per covered recipient) reaches $100. At that point all payments (retroactively) must be disclosed. Note: As of 2021, the definition of covered recipients was expanded beyond physicians and teaching hospitals to include physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, and certified nurse-midwives.
• The application distinguishes between and validates attendees with NPIs versus other attendees, such as office staff.

Because it is vital for compliance to ensure reporting against unique Health Care Providers with NPIs, a standard DATABASICS implementation can be integrated with a database of HCPs, often held in a CRM system. Data can be aggregated across all transfers of value and reported centrally to HHS.

Solution Benefits

Simple Data Entry

The list of healthcare professionals (with their National Provider Identifier) can be loaded into DATABASICS. This allows the application to recognize the name, or other HCP attribute, as the end-user starts typing in a field, simplifying the entry and selection of attendees into predefined expense types. The application also maintains a local list for each individual user’s historical attendees, which can be imported to new expenses, further simplifying the process for the end-user.

Attendee Distinction

The application validates the attendees entered against the NPI master list. This validation assists in the accuracy of the data entered and helps distinguish these recipients from other staff in policy enforcement as well as reporting.

Rules and Policy Enforcement

Each customer can configure and enforce policies specific to their needs within the DATABASICS application. These rules may be governed by the policies of the company or by the state in which they do business as well as federal regulation.

Tailored Reporting

Customers can create and manage reports that fit the needs of the company, as well as meeting the requirements of state and federal governments. These reports include:

• Aggregate spend reporting
• Detail reporting by recipient or company
• Compliance and audit reporting

DATABASICS supports full integration with existing systems, facilitating valid and accurate data to support the process.

These include:

• Simple load specifications for the import of data into DATABASICS
• Tailored data output files to the customer’s back-end systems

Flexibility in Meeting Customer Specific Requirements

DATABASICS has a long history in meeting customers’ specific requirements to fulfill business and compliance needs.

This is particularly important in a legislative environment that continues to be developed both on a federal and state level.

Implementation

DATABASICS has delivered expense reporting solutions since 1996 and offers well-established roadmaps to implementing solutions based on customer requirements.

A typical Sunshine Act implementation integrates data from HR, ERP, CRM, credit card, and travel systems to support both reimbursement and compliance reporting.

Most implementations are completed within 6 to 12 weeks, depending on scope and complexity.

Common Scenarios and How to Report

Scenario 1: Physician Lunch Meeting

Situation: Sales representative takes physician to lunch to discuss new product. Meal costs $45.

Reporting Required: Yes

• Nature of Payment: Food and Beverage
• Amount: $45.00
• Form of Payment: In-kind
• Covered Drug/Device/Biological/Supply: [Product name]
• Related to Marketing: Yes

Scenario 2: Speaking Fee

Situation: Physician paid $2,500 to speak at company-sponsored dinner program. Travel and hotel also provided ($750).

Reporting Required: Yes - report as separate payments

• Payment 1:
  • Nature: Compensation for services other than consulting (speaking fee)
  • Amount: $2,500
  • Form: Cash or cash equivalent
• Payment 2:
  • Nature: Travel and lodging
  • Amount: $750
  • Form: In-kind

Scenario 3: Consulting Agreement

Situation: Physician serves on advisory board, receives $5,000 quarterly. Total annual = $20,000.

Reporting Required: Yes

• Report each payment separately (4 payments of $5,000 each)
• Nature of Payment: Consulting fee
• Form: Cash or cash equivalent
• Related to: [Check appropriate boxes]

Scenario 4: Product Samples

Situation: Provide $500 worth of drug samples to physician for patient use.

Reporting Required: No

• Exclusion applies: Product samples for patient use are excluded
• Documentation: Maintain records showing samples were for patient use

Summary

The volume of data and complexity associated with breaking down expenditure to the level of granularity required for Sunshine Act compliance makes manual reporting impractical for most life sciences organizations. State-specific rules, evolving regulations, and detailed reporting requirements add further challenges.

DATABASICS Expense helps organizations address these challenges by providing:

• Simple data entry: Allows the field representative to focus on their main objectives of creating awareness of their products, rather than administration.
• Locally managed, robust policy and reporting engines: Allows the life science company to meet complex and changing requirements from federal and state agencies, as well as internal requirements.
• Full data integration: Supporting compliance as well as operational requirements.

While Sunshine Act reporting is often viewed as a regulatory burden, the right sunshine act compliance software can also create opportunities to improve visibility, control costs, and operate more efficiently. DATABASICS enables life sciences companies to meet compliance requirements while supporting the effectiveness of their overall operations.