Vol. 78 Friday, 

No. 27 February 8, 2013 

Part II 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 402 and 403 

Medicare, Medicaid, Children’s Health Insurance Programs; Transparency 

Reports and Reporting of Physician Ownership or Investment Interests; 

Final Rule 


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9458 Federal Register / Vol. 78, No. 27 / Friday, February 8, 2013 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 402 and 403 

[CMS–5060–F] 

RIN 0938–AR33 

Medicare, Medicaid, Children’s Health 

Insurance Programs; Transparency 

Reports and Reporting of Physician 

Ownership or Investment Interests 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule will require 

applicable manufacturers of drugs, 

devices, biologicals, or medical supplies 

covered by Medicare, Medicaid or the 

Children’s Health Insurance Program 

(CHIP) to report annually to the 

Secretary certain payments or transfers 

of value provided to physicians or 

teaching hospitals (‘‘covered 

recipients’’). In addition, applicable 

manufacturers and applicable group 

purchasing organizations (GPOs) are 

required to report annually certain 

physician ownership or investment 

interests. The Secretary is required to 

publish applicable manufacturers’ and 

applicable GPOs’ submitted payment 

and ownership information on a public 

Web site. 

DATES: Effective date: These regulations 

are effective on April 9, 2013. 

Compliance date: Applicable 

manufacturers and applicable group 

purchasing organizations must begin to 

collect the required data on August 1, 

2013 and report the data to CMS by 

March 31, 2014. 

FOR FURTHER INFORMATION CONTACT: 

Erica Breese, (202) 260–6079. 

SUPPLEMENTARY INFORMATION: 

I. Executive Summary and Background 

A. Executive Summary for This Final 

Rule 

1. Purpose 

This final rule is necessary to 

implement the requirements in section 

6002 of the Affordable Care Act, which 

added section 1128G to the Social 

Security Act (the Act). That provision 

requires applicable manufacturers of 

drugs, devices, biologicals, or medical 

supplies covered under title XVIII of the 

Act (Medicare) or a State plan under 

title XIX (Medicaid) or XXI of the Act 

(the Children’s Health Insurance 

Program, or CHIP) to report annually to 

the Secretary certain payments or other 

transfers of value to physicians and 

teaching hospitals. Section 1128G of the 

Act also requires applicable 

manufacturers and applicable group 

purchasing organizations (GPOs) to 

report certain information regarding the 

ownership or investment interests held 

by physicians or the immediate family 

members of physicians in such entities. 

We believe that these provisions of 

the Act were modeled largely on the 

recommendations of the Medicare 

Payment Advisory Commission 

(MedPAC), which voted in 2009 to 

recommend Congressional enactment of 

a new regulatory program. In addition, 

the Institute of Medicine (IOM) 

recommended implementing a national 

disclosure program for payments to 

health care providers and prescribers in 

the 2009 report titled, ‘‘Conflict of 

Interest in Medical Research, Education 

and Practice.’’ Given these 

recommendations and other information 

on conflicts of interest that could affect 

treatment decisions, Congress enacted 

legislation establishing a national 

disclosure program with section 6002 of 

the Affordable Care Act. This final rule 

provides the implementing 

requirements for this program. 

2. Summary of the Major Provisions 

a. Transparency Reports 

This rule finalizes requirements for 

applicable manufacturers to annually 

report certain payments or other 

transfers of value to covered recipients. 

The rule provides definitions of 

numerous terms, such as applicable 

manufacturer, and covered drug, device, 

biological, and medical supply. In 

addition, the rule also clarifies how 

applicable manufacturers should report 

and characterize payments or other 

transfers of value, including rules for 

research payments, and indirect 

payments provided to a covered 

recipient through a third party. The rule 

also finalizes which payments or other 

transfers of value are excluded from the 

reporting requirements. 

In addition, the rule finalizes the 

requirements for applicable 

manufacturers and applicable GPOs to 

annually report information about 

certain ownership or investment 

interests held by physicians and the 

immediate family members of 

physicians in such entities, as well as 

payments and other transfers of value to 

such physicians. The rule details what 

constitutes an ownership or investment 

interest for purposes of the reporting 

requirements, and defines for whom 

they must be reported. The rule also 

clarifies the content for the ownership 

or investment interest report. 

b. Report Submission, Correction, and 

Publication 

The rule finalizes the processes and 

requirements for applicable 

manufacturers and applicable GPOs to 

submit their reports to CMS, including 

the specific data elements required to be 

included in the reports and the report 

format. The rule also details the 

processes for the review, dispute, and 

correction period when applicable 

manufacturers, applicable GPOs, 

covered recipients, and physician 

owners or investors are provided the 

opportunity to review, dispute, and 

propose corrections to reported 

payments or other transfers of value, or 

ownership or investment interests, 

attributed to them. In addition, the rule 

clarifies the information to be included 

on the publicly available Web site, as 

well as the usability of the public Web 

site. Finally, the rule includes details on 

the processes for reporting and 

publishing payments or other transfers 

of value which are eligible for delayed 

publication. 

c. Penalties 

The rule includes details regarding 

the statutorily authorized civil monetary 

penalties for failure to report payments 

or other transfers of value, or physician 

ownership or investment interests, 

including clarification of the instances 

when the penalties will be imposed. 

d. Annual Report 

The rule finalizes the details of the 

annual reports to Congress and the 

States. 

e. Relation to State Laws 

The rule clarifies the statutory 

requirements for the pre-emption of 

State laws. 

3. Summary of Costs and Benefits 

Based on the comments submitted, we 

anticipate that much of the total 

estimated burden of this final rule will 

fall on applicable manufacturers and 

applicable GPOs. We have estimated 

that the total cost of these provisions 

will be approximately $269 million in 

the first year and $180 million annually 

thereafter. We have no empirical ability 

to estimate the monetary benefits of this 

provision; however, there are 

nonmonetary benefits, which are 

difficult to quantify. Increased 

transparency regarding the extent and 

nature of relationships between 

physicians, teaching hospitals, and 

industry manufacturers will permit 

patients to make better informed 

decisions when choosing health care 

professionals and making treatment 

decisions, and deter inappropriate 


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financial relationships which can 

sometimes lead to increased health care 

costs. Additionally, increased 

transparency about the owners and 

investors in GPOs will allow purchasers 

to make better informed decisions and 

identify potential conflicts of interest 

with ordering physicians. 

B. Background 

1. Legislative Overview (Statutory 

Background) 

Section 6002 of the Affordable Care 

Act added section 1128G to the Act, 

which requires applicable 

manufacturers of drugs, devices, 

biologicals, or medical supplies covered 

under Medicare or a State plan under 

Medicaid or CHIP to report annually to 

the Secretary certain payments or other 

transfers of value to physicians and 

teaching hospitals. Section 1128G of the 

Act also requires applicable 

manufacturers and applicable GPOs to 

report certain information regarding the 

ownership or investment interests held 

by physicians or the immediate family 

members of physicians in such entities. 

Specifically, manufacturers of covered 

drugs, devices, biologicals, and medical 

supplies (applicable manufacturers) are 

required to submit on an annual basis 

the information required in section 

1128G(a)(1) of the Act about certain 

payments or other transfers of value 

made to physicians and teaching 

hospitals (collectively called covered 

recipients) during the course of the 

preceding calendar year. Similarly, 

section 1128G(a)(2) of the Act requires 

applicable manufacturers and 

applicable GPOs to disclose any 

ownership or investment interests in 

such entities held by physicians or their 

immediate family members, as well as 

information on any payments or other 

transfers of value provided to such 

physician owners or investors. 

Applicable manufacturers must report 

the required payment and other transfer 

of value information annually to the 

Secretary of the Department of Health 

and Human Services (HHS) (the 

Secretary) in an electronic format. The 

statute also provides that applicable 

manufacturers and applicable GPOs 

must report annually to the Secretary 

the required information about 

physician ownership and investment 

interests, including information on any 

payments or other transfers of value 

provided to physician owners or 

investors, in an electronic format by the 

same date. Applicable manufacturers 

and applicable GPOs are subject to civil 

monetary penalties (CMPs) for failing to 

comply with the reporting requirements 

of the statute. The Secretary is required 

by statute to publish the reported data 

on a public Web site. The data must be 

downloadable, easily searchable, and 

aggregated. In addition, we must submit 

annual reports to the Congress and each 

State summarizing the data reported. 

Finally, section 1128G of the Act 

generally preempts State laws that 

require disclosure of the same type of 

information by manufacturers. 

2. Transparency Overview 

We recognize that collaboration 

among physicians, teaching hospitals, 

and industry manufacturers contributes 

to the design and delivery of life-saving 

drugs and devices and we received 

many comments supporting this 

statement. However, as discussed in the 

proposed rule and in the public 

comments submitted, payments from 

manufacturers to physicians and 

teaching hospitals can also introduce 

conflicts of interest that may influence 

research, education, and clinical 

decision-making in ways that 

compromise clinical integrity and 

patient care, and may lead to increased 

health care costs. 

We recognize that disclosure alone is 

not sufficient to differentiate beneficial 

financial relationships from those that 

create conflict of interests or are 

otherwise improper. Moreover, financial 

ties alone do not signify an 

inappropriate relationship. However, 

transparency will shed light on the 

nature and extent of relationships, and 

will hopefully discourage the 

development of inappropriate 

relationships and help prevent the 

increased and potentially unnecessary 

health care costs that can arise from 

such conflicts. Given the intricacies of 

disclosure and the importance of 

discouraging inappropriate 

relationships without harming 

beneficial ones, we have worked closely 

with stakeholders to better understand 

the current scope of the interactions 

among physicians, teaching hospitals, 

and industry manufacturers. In addition 

to this feedback, we consulted with the 

HHS Inspector General, as required by 

the statute. Our conclusions and 

interpretations in the preamble are 

solely for purposes of this regulation 

and do not apply in other contexts. 

II. Provisions of the Proposed Rule and 

Analysis of and Responses to Public 

Comments 

In the December 19, 2011 proposed 

rule (76 FR 78742), we solicited public 

comment on a number of proposals 

regarding transparency reports and the 

reporting of physician ownership or 

investment interests. In response to our 

solicitation, we received approximately 

373 timely public comments. Most of 

the public comments addressed 

provisions included in the proposed 

rule. We received some comments that 

were outside the scope of the proposed 

rule and, therefore, will not be 

addressed in this final rule. Summaries 

of the public comments that are within 

the scope of the proposals and our 

responses to those comments are set 

forth in the various sections of this final 

rule under the appropriate headings. In 

this final rule, we have organized the 

document by presenting our proposals, 

summarizing and responding to the 

public comments for the proposal(s), 

and describing our final policy. 

The following sections outline the 

agency’s directives concerning 

implementation of section 1128G of the 

Act, including clarification of the terms 

and definitions used in the statute, as 

well as procedures for the submission, 

review, and publication of the reported 

data. For terms undefined by the statute, 

we have provided definitions where 

appropriate to provide additional 

clarity, as well as explanations of how 

we interpret such terms. During the 

public comment period, we received 

numerous comments on how to 

approach and structure the final rule, 

such as providing additional examples 

and memorializing intentions in the 

regulatory text. We appreciate the 

comments and have endeavored to 

develop a final rule that allows for 

reporting flexibility while also 

providing sufficient detail, clarity, and 

standardized processes, in order to 

better ensure the accuracy of the 

published data. Throughout the final 

rule, time periods referenced in days are 

considered to be calendar days, unless 

otherwise noted. 

A. Timing 

This final rule has not been published 

in time for applicable manufacturers 

and applicable GPOs to begin collecting 

the information required in section 

1128G of the Act on January 1, 2012, as 

provided in the statute. In the proposed 

rule, we indicated that we would not 

require applicable manufacturers and 

applicable GPOs to begin collecting the 

required information until after the 

publication of this final rule. We 

proposed a preparation period of 90 

days. Additionally, we considered 

requiring the collection of data for part 

of 2012, to be reported to CMS by the 

statutory date of March 31, 2013. We 

also stated that we were considering 

requiring the collection of data for part 

of 2012, to be reported to CMS by the 

statutory date of March 31, 2013, and 

requested comments on the feasibility of 

a partial year collection. 


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Comment: Many commenters were 

concerned with the length of time 

applicable manufacturers and 

applicable GPOs would be given 

following publication of the final rule 

before the data collection requirements 

begin. 

A number of these commenters 

suggested that the reporting 

requirements begin as quickly as 

possible following the publication of the 

final rule, in order to ensure that there 

is sufficient time for data to be collected 

for a partial year of 2012. These 

commenters recommended a 30-day 

preparation period. Conversely, many 

other commenters requested that the 

data collection requirement not begin 

until January 1, 2013, stating that the 

data collection requirement for 

collecting a partial year of data would 

be difficult and overly burdensome. 

Other commenters did not address the 

beginning date for data collection, but 

instead advocated for a longer 

preparation period than the proposed 90 

days. The majority of these commenters 

requested an 180-day preparation 

period, but a few suggested longer, with 

the longest being 15 months. Some 

commenters also requested that 

regardless of the timing, data collection 

should begin at the beginning of a 

quarter and also explained that making 

systems changes during the last quarter 

of a year would be difficult. 

Response: We appreciate these 

comments and agree that data collection 

needs to begin as soon as reasonably 

possible; however, to allow us time to 

address the important input we received 

from stakeholders during the 

rulemaking process, we announced in 

May 2012 that we would not require the 

collection of any data before January 1, 

2013. We are finalizing that the data 

collection requirement will begin on 

August 1, 2013, allowing about an 180- 

day preparation period. We believe that 

this is a sufficient amount of time for 

applicable manufacturers and 

applicable GPOs to prepare. 

Comment: A few commenters 

requested that CMS modify the 

reporting requirements for the first year. 

Some suggested easing the initial 

burden by phasing in reporting with a 

higher minimum dollar threshold, while 

others recommended collecting more 

data for 2012 by requiring retroactive 

reporting. 

Response: We appreciate these 

comments, but we do not believe that 

we have authority to amend the 

reporting requirements for the first year. 

In addition, we believe that changing 

the reporting requirements for a single 

year would be operationally difficult, 

since both CMS and applicable 

manufacturers and applicable GPOs 

would have to develop systems and 

then change them after the first year. 

The statute sets forth the minimum 

threshold for reportable payments and 

does not appear to provide any 

authority for us to change it. We believe 

that because the threshold is provided 

in the statute itself, applicable 

manufacturers were given adequate 

notice of the threshold amount and 

should be able to prepare for it. We are 

also concerned that changing the 

threshold for 1 year would be confusing 

to users. With regard to retroactive 

reporting, we similarly believe that we 

do not have the authority to require this 

and will not adopt that approach. 

After consideration of the public 

comments received and given the timing 

of the final rule, we are establishing that 

data collection will begin on August 1, 

2013 and must be reported to us by 

March 31, 2014. There will be no 

retroactive reporting. 

B. Transparency Reports 

Section 1128G(a) of the Act outlines 

the transparency reporting requirements 

and consists of two paragraphs. The 

first, section 1128G(a)(1) of the Act, 

outlines the required reports from 

applicable manufacturers on payments 

or other transfers of value to covered 

recipients. The second, section 

1128G(a)(2) of the Act, outlines the 

reporting requirements for applicable 

manufacturers and applicable GPOs 

concerning ownership and investment 

interests of physicians, and their 

immediate family members, as well as 

information on any payments or other 

transfers of value provided to such 

physician owners or investors. While 

there is some overlap between these 

submissions, we proposed that these 

two types of information be reported 

separately to ensure that the relevant 

reporting obligations of applicable 

manufacturers and applicable GPOs are 

clearly distinguished. We solicited 

comment on this general approach, but 

received no comments, so we are 

finalizing this provision as proposed. 

Additionally, we also want to 

emphasize that compliance with the 

reporting requirements of section 1128G 

of the Act does not exempt applicable 

manufacturers, applicable GPOs, 

covered recipients, physician owners or 

investors, immediate family members, 

other entities, and other persons from 

any potential liability associated with 

payments or other transfers of value, or 

ownership or investment interests (for 

example, potential liability under the 

Federal Anti-Kickback statute or the 

False Claims Act). However, we also 

want to make clear that the inclusion of 

a payment or other transfer of value, or 

ownership or investment interest on the 

public database does not mean that any 

of the parties involved were engaged in 

any wrongdoing or illegal conduct. 

1. Reports on Payments and Other 

Transfers of Value Under Section 

1128G(a)(1) of the Act 

a. Applicable Manufacturers 

While the term applicable 

manufacturer was defined in section 

1128G of the Act, we provided 

additional clarification in the proposed 

rule. In this section, we aim to even 

more clearly define the entities that will 

be required to report. 

(1) Definition of Applicable 

Manufacturer 

In the proposed rule we defined 

‘‘applicable manufacturer’’ for the 

purposes of this regulation as an entity 

that is— 

• Engaged in the production, 

preparation, propagation, compounding, 

or conversion of a covered drug, device, 

biological, or medical supply for sale or 

distribution in the United States, or in 

a territory, possession, or 

commonwealth of the United States; or 

• Under common ownership with an 

entity in the first paragraph of this 

definition, and which provides 

assistance or support to such entity with 

respect to the production, preparation, 

propagation, compounding, conversion, 

marketing, promotion, sale, or 

distribution of a covered drug, device, 

biological, or medical supply for sale or 

distribution in the United States, or in 

a territory, possession, or 

commonwealth of the United States. 

In defining applicable manufacturer, 

we interpreted the statutory phrase 

‘‘operating’’ in the United States, or in 

a territory, possession, or 

commonwealth of the United States in 

section 1128G(e)(2) of the Act, as ‘‘for 

sale or distribution’’ in the United 

States, or in a territory, possession, or 

commonwealth of the United States. 

Comment: Many commenters 

expressed concern with CMS’s 

interpretation of the phrase ‘‘applicable 

manufacturer.’’ Specifically, many 

commenters suggested that the phrase 

‘‘for sale or distribution’’ is overly broad 

and would apply to nearly any entity in 

the world involved in the 

manufacturing chain or marketing of a 

covered drug, device, biological, or 

medical supply (referred to generally for 

purposes of this rule as a ‘‘covered 

product’’) that is ultimately sold or 

distributed in the United States, even if 

such entity has no operations in the 

United States. These commenters 


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recommended that CMS retain the 

statutory language and define the phrase 

‘‘operating’’ in the United States as 

having a physical location in the United 

States or conducting business activities 

in the United States. Several 

commenters agreed with and supported 

the proposed definition. 

Response: We appreciate the 

comments and agree that the proposed 

definition may have inadvertently 

captured entities that operate wholly 

outside the United States, many of 

which may have little or no interaction 

with U.S. health care providers. We did 

not intend to capture foreign entities 

that may contribute to the 

manufacturing process of a covered 

product, but have no business presence 

in the United States. Accordingly, we 

have decided to revise the definition by 

retaining the statutory phrase operating 

in the United States, which we defined 

as having a physical location within the 

United States, or otherwise conducting 

activities within the United States or in 

a territory, possession, or 

commonwealth of the United States. We 

believe that any manufacturer, foreign 

or not, which operates in the United 

States (including by selling a product) 

must comply with the reporting 

requirements, regardless of where the 

product is physically manufactured. 

Therefore, under this final rule, entities 

based outside the United States that do 

have operations in the United States are 

subject to the reporting requirements. 

Additionally, we note that entities that 

have operations in the United States are 

not permitted to circumvent the 

reporting requirements by making 

payments to covered recipients 

indirectly through a foreign entity that 

has no operations in the United States. 

Such payments are considered to be 

made by the entity that is operating in 

the United States as an indirect payment 

or other transfer of value and must be 

reported as such, so long as the entity 

operating in the United States is aware 

of the identity of the covered recipients 

receiving the payments as required for 

all indirect payments or other transfers 

of value. 

Comment: Many commenters 

recommended additional limitations on 

the scope of the definition of applicable 

manufacturer. A few commenters 

suggested CMS limit the definition to 

manufacturers directly involved in 

manufacturing of the final products, and 

not entities that supply components and 

raw materials. In addition, many 

commenters stated that the definition 

should not include hospitals or other 

entities that produce covered products 

for sale to or use by their own patients 

only. A few commenters provided 

similar comments that entities that 

produce or compound products or tests 

should be exempt from the definition. 

For example, many pharmacies 

compound medications in small batches 

for individual patients at the direction 

of a prescribing physician. 

Response: We recognize that entities 

that only manufacture raw materials or 

components may differ from 

manufacturers of the final product, and 

we believe that the statutory framework 

already treats them differently. The 

definition of ‘‘applicable manufacturer’’ 

is dependent on the definition of 

‘‘covered drug, device, biological or 

medical supply.’’ Raw materials and 

components often do not meet the 

definition of covered drug, device, 

biological, or medical supply because 

payment is not available for them in 

their component form under Medicare, 

Medicaid or CHIP. Entities that only 

manufacture raw materials or 

components, which are not themselves 

covered products, will not be required 

to report unless they are under common 

ownership with an applicable 

manufacturer and assist such 

manufacturer with the production, 

preparation, propagation, compounding, 

conversion, marketing, promotion, sale, 

or distribution of a covered drug, 

device, biological, or medical supply. In 

the event a supplier of raw materials is 

under common ownership with an 

applicable manufacturer, it will be 

subject to the reporting requirements for 

entities under common ownership, 

including options for consolidated 

reporting with the applicable 

manufacturer. 

In addition, we agree with the 

comments regarding hospitals, 

pharmacies, and laboratories that 

produce or manufacture materials and 

products solely for their own use or use 

by their patients. We believe that it was 

not the intent of the statute to include 

these entities as applicable 

manufacturers, since they are not listed 

in the statute as manufacturers. Given 

these considerations, we have revised 

the definition of applicable 

manufacturer to exclude entities such as 

hospitals, hospital-based pharmacies 

and laboratories that manufacture a 

covered product solely for use by or 

within the entity itself or by an entity’s 

own patients. In addition, the definition 

of applicable manufacturer does not 

include pharmacies, including 

compounding pharmacies, that meet all 

of the following conditions: (1) Maintain 

establishments that comply with 

applicable local laws regulating the 

practice of pharmacy; (2) regularly 

engage in dispensing prescription drugs 

or devices upon prescriptions from 

licensed practitioners in the course of 

their professional practice; and (3) do 

not produce, prepare, propagate, 

compound, or convert drugs or devices 

for sale other than in the regular course 

of their business of dispensing or selling 

drugs or devices at retail to individual 

patients. 

Comment: Many commenters 

addressed whether distributors and 

wholesalers, including repackagers, 

relabelers, and kit assemblers, met the 

definition of applicable manufacturer. 

These entities were not specifically 

addressed in the proposed rule other 

than the recognition that there are other 

definitions of ‘‘manufacture,’’ 

‘‘manufacturer’’ and ‘‘manufacturing’’ 

with which industry may be familiar 

(such as those in 21 CFR 207.3, 21 CFR 

210.3(b)(12), 21 CFR 820.3(o), and 42 

U.S.C. 1396r–8(k)(5)). The commenters 

represented both sides—some advocated 

that these types of entities meet the 

definition, while others advocated that 

they do not. Some commenters noted 

that distributors and wholesalers 

purchase and often take the title to 

covered products and then sell them to 

providers. The distributor may or may 

not rebrand or repackage the product 

before resale. Commenters on both sides 

referred to other definitions of 

‘‘manufacturer’’ and ‘‘manufacture’’ 

both in the Affordable Care Act and 

elsewhere, some of which specifically 

reference distributors and some of 

which did not, similar to the statutory 

definition in section 1128G(e)(9) of the 

Act. The advocates for including 

distributors and wholesalers state that 

because these entities are involved in 

‘‘preparation’’ and ‘‘propagation’’ of 

covered products, they should be 

included based on the statutory 

definition. Conversely, other 

commenters stated that distributors and 

wholesalers stock multiple competing 

products, so they do not try to sway 

purchasing decisions in the same way as 

a manufacturer. 

Response: We agree that distributors 

and wholesalers (which include 

repackagers, relabelers, and kit 

assemblers) that hold the title to a 

covered drug, device, biological or 

medical supply meet the definition of 

an applicable manufacturer for the 

purpose of this rule. We believe that 

distributors that hold the title to a 

covered product are similar to 

applicable manufacturers since both 

hold title to the product at some point 

in the production and distribution 

cycle. These entities will be subject to 

the same requirements as all other 

applicable manufacturers, as described 

in more detail in this section. 

Wholesalers or distributors that do not 


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hold the title of a covered product will 

not be subject to the reporting 

requirements, unless they are under 

common ownership with an applicable 

manufacturer and provide assistance or 

support with respect to a covered drug, 

device, biological, or medical supply. 

Finally, an applicable manufacturer that 

has product(s) with titles held by 

distributors does not need to report 

payments or other transfers of value 

made by the distributor or wholesaler to 

covered recipients, since these will be 

reported by the distributor or 

wholesaler. However, in the event that 

the applicable manufacturer makes 

payments or other transfers of value 

related to the product independently 

from the distributor or wholesaler (or 

through the distributor or wholesaler as 

a third party), then the applicable 

manufacturer would have to report 

these payments or other transfers of 

value. 

(2) Limitations to the Definition of 

Applicable Manufacturer 

In the preamble to the proposed rule, 

we clarified that the applicable 

manufacturer definition included 

entities that hold Food and Drug 

Administration (FDA) approval, 

licensure, or clearance for a covered 

drug, device, biological, or medical 

supply, even if they contract out the 

actual physical manufacturing of the 

product to another entity. We 

interpreted these entities as being 

‘‘engaged in the production, 

preparation, propagation, compounding, 

or conversion of a covered drug, device, 

biological, or medical supply.’’ 

However, we did not address whether 

the entity manufacturing the product 

under contract is an applicable 

manufacturer. We also proposed that 

any manufacturer that meets the 

definition of applicable manufacturer by 

manufacturing at least one covered 

drug, device, biological or medical 

supply (as defined later in this section) 

would be considered an applicable 

manufacturer, even though it may also 

manufacture products that do not fall 

within that category. 

Comment: A few commenters 

requested clarification on the reporting 

requirements for situations when the 

license-holder is not the manufacturer 

or the manufacturing process is 

contracted out. These commenters 

recommended that if an entity, which 

manufactures a covered product under 

contract, but does not market or 

distribute the product and is not an 

applicable manufacturer otherwise, then 

the entity does not meet the definition 

and does not need to report. 

Response: We agree that additional 

clarification is necessary, although we 

recognize that it is difficult to anticipate 

all potential manufacturing 

arrangements. In general, we believe 

that our proposed position to require 

reporting by an entity that holds an FDA 

approval, licensure, or clearance for a 

covered product is appropriate. Such 

entities are clearly ‘‘engaged in the 

production, preparation, propagation, 

compounding, or conversion’’ of a 

covered product. We did not receive any 

comments on this and are finalizing it 

as proposed. For the contracted entity 

conducting the actual manufacturing, 

we believe that these entities fit into the 

definition of applicable manufacturer, 

since they are actually manufacturing a 

covered product and clearly are 

‘‘engaged in the production, 

preparation, propagation, compounding, 

or conversion’’ of a product. Therefore, 

we are finalizing that entities that 

manufacture any covered product are 

applicable manufacturers, even if the 

manufacturer does not hold the FDA 

approval, licensure, or clearance. While 

we recognize that such entities do not 

necessarily market the product, we 

believe it is clear that they do 

manufacture it. However, we also 

understand that these manufacturers’ 

business model may not be focused on 

covered products. Therefore, if an 

applicable manufacturer does not 

manufacture a covered drug, device, 

biological, or medical supply except 

pursuant to a written agreement to 

manufacture the covered product for 

another entity, does not hold the FDA 

approval, licensure or clearance for the 

product, and is not involved in the sale, 

marketing or distribution of the product, 

then the manufacturer is only required 

to report payments or other transfers of 

value related to the covered product. 

This is described in the regulatory text 

at § 403.904(b)(4). If an applicable 

manufacturer has this business 

arrangement for some products and also 

manufactures at least one covered 

product that does not meet these 

criteria, then the applicable 

manufacturer must report all payments 

or other transfers of value subject to the 

reporting requirements. We believe that 

this is consistent with our treatment of 

other manufacturers with business 

models that are not focused on covered 

products, as discussed in more detail in 

this section. Finally, no payment or 

other transfer of value should be 

reported more than one time by a single 

entity. 

Comment: Several commenters also 

discussed CMS’s proposed decision to 

require applicable manufacturers to 

report all payments or transfers of value 

to covered recipients rather than only 

payments related to covered drugs, 

devices, biologicals, and medical 

supplies. While a few commenters 

supported this proposal, others did not. 

Entities and organizations with only a 

small number of covered products 

believed that reporting all payments 

would be overly burdensome and 

recommended limiting the definition to 

manufacturers that obtain a certain 

percentage (generally 5 or 10 percent) of 

their sales or revenues from covered 

products. 

Response: We stand by our decision 

to require reporting of all payments or 

transfers of value to covered recipients 

rather than only payments related to 

covered drugs, devices, biologicals, and 

medical supplies and discuss this 

decision more fully in section II.B.1.b of 

this final rule. We do not believe that all 

payments or other transfers of value are 

related to particular covered products, 

so we do not want an applicable 

manufacturer to avoid reporting by 

representing certain payments or other 

transfers of value to covered recipients 

as being unrelated to covered products. 

However, we are sensitive to 

applicable manufacturers whose 

primary business focus is not the 

production of covered drugs, devices, 

biological or medical supplies, but may 

still produce one or a few covered 

products. We recognize that since so 

few of their products are covered, many 

of their competitors will not be subject 

to the reporting requirements, providing 

the competitors with a potential 

competitive advantage. Despite this 

recognition, we also do not believe that 

these entities should be exempt from all 

reporting, since other manufacturers of 

the same covered products with a 

different business model would be 

subject to reporting. We recognize that 

these applicable manufacturers could 

also classify payments or other transfers 

of value as unrelated to a covered drug, 

device, biological or medical supply in 

order to try to avoid the reporting 

requirements; however, we believe the 

burden on these applicable 

manufacturers of reporting all 

interactions related to all products (not 

just covered drugs, devices, biologicals, 

or medical supplies) outweighs this 

concern. Therefore, we have clarified 

the agency’s position in § 403.904(b)(1) 

to allow applicable manufacturers with 

less than 10 percent of total (gross) 

revenues from covered drugs, devices, 

biologicals or medical supplies during 

the previous fiscal year to report only 

payments or other transfers of value 

specifically related to covered drugs, 

devices, biologicals or medical supplies. 


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The 10-percent threshold should be 

calculated based on the company’s total 

(gross) annual revenue. Applicable 

manufacturers with less than 10 percent 

of total (gross) revenue from covered 

products during the previous year that 

have payments or other transfers of 

value to report must register with CMS 

and must attest that less than 10 percent 

of total (gross) revenues are from 

covered products, along with their 

attestation of the submitted data. We 

selected a 10-percent threshold based on 

the public comments that we received 

suggesting a range from 5 to 10 percent; 

we chose the higher percentage in order 

to reduce the reporting burden on a 

greater number of entities. 

Comment: A few commenters also 

requested additional clarification on 

when an entity with no covered 

products becomes an applicable 

manufacturer because payment becomes 

available for one of the company’s 

products under Medicare, Medicaid or 

CHIP (for example, because a 

manufacturer’s only product received 

FDA approval). Most of the commenters 

simply requested clarification, since this 

was not addressed in the proposed rule. 

However, a commenter suggested that 

CMS should allow new applicable 

manufacturers a grace period (for 

example, 180 days) to allow the 

manufacturer time to prepare to comply 

with the data collection requirements. 

Response: We agree that we should 

provide clarification on when a product 

becomes ‘‘covered’’ and, thus, when an 

applicable manufacturer who did not 

previously have any other covered 

products becomes subject to the data 

collection and reporting requirements 

under this rule. We will allow the 

applicable manufacturer a grace period 

of 180 days following a product 

becoming ‘‘covered’’ to begin complying 

with the data collection and reporting 

requirements. We believe this is 

appropriate because it is the same 

preparation period allowed after the 

publication of the final rule, allowing all 

new applicable manufacturers the same 

time to prepare for complying with the 

data collection and reporting 

requirements. 

(3) Common Ownership 

The definition of applicable 

manufacturer includes entities under 

common ownership with an applicable 

manufacturer. We proposed to define 

‘‘common ownership’’ as when the same 

individual, individuals, entity, or 

entities, directly or indirectly, own any 

portion of two or more entities. This 

would apply to a range of corporate 

arrangements, including, but not limited 

to, parent companies and subsidiaries 

and brother/sister corporations. In 

addition, we also included an alternate 

interpretation that would limit the 

common ownership definition to 

circumstances where the same 

individual, individuals, entity, or 

entities own 5 percent or more of total 

ownership in two or more entities. This 

would be subject to the same 

requirements as the definition described 

previously, but would only apply to 

common interests of 5 percent or more. 

Regarding how applicable 

manufacturers under common 

ownership will submit reports, we 

proposed that if two or more entities 

individually met the proposed 

definition of an applicable manufacturer 

under paragraph (1) of the definition, 

the entities should report separately 

under section 1128G of the Act. 

However, if only one company under 

common ownership met the proposed 

definition of applicable manufacturer 

under paragraph (1) of the proposed 

definition, and the other company is 

required to report under paragraph (2) of 

the definition, then the affected entities 

can choose whether or not to report 

together. Additionally, we proposed that 

a payment or other transfer of value 

provided to a covered recipient in 

accordance with a joint venture or other 

cooperative agreement between two or 

more applicable manufacturers must be 

reported in the name of the applicable 

manufacturer that actually furnished the 

payment or other transfer of value to the 

covered recipient, unless the terms of a 

written agreement between the 

applicable manufacturers specifically 

require otherwise, so long as the 

agreement requires that all payments or 

other transfers of value in accordance 

with the arrangement are reported by 

one of the applicable manufacturers. 

Comment: Many commenters did not 

support the agency’s definition of 

common ownership. These commenters 

generally recommended that a threshold 

greater than the proposed alternative of 

5 percent be applied to determine 

common ownership. The commenters 

that support a higher threshold 

generally advocated for a ‘‘common 

control’’ standard, which is traditionally 

a greater ownership percentage of 50 to 

80 percent, rather than an affiliate 

status, which is generally around 5 

percent. Conversely, some commenters 

supported the proposed definition, as 

well as the 5 percent alternative. 

Response: We appreciate the 

comments and have decided to finalize 

the 5-percent ownership threshold for 

common ownership. We recognize that 

this is a lower threshold than many of 

the commenters recommended; 

however, we believe this is appropriate. 

We believe that had Congress intended 

to establish a ‘‘common control’’ 

standard, it would have used that term, 

rather than ‘‘common ownership.’’ 

Similarly, a 5-percent threshold for 

common ownership is used elsewhere 

in the Act, in other CMS regulations, 

and is one with which entities are 

familiar. For example, section 1124(a)(3) 

of the Act defines the term ‘‘person with 

an ownership or control interest,’’ in 

part, as a person who has a direct or 

indirect ownership interest in an entity 

of at least 5 percent. We also believe 

that clarifying when an entity under 

common ownership has to report (as 

explained in this section) will help 

reduce the number of entities under 

common ownership reporting. 

Comment: Many commenters also 

requested additional clarification on 

how the agency was interpreting 

‘‘assistance and support’’ for entities 

under common ownership, since only 

entities under common ownership 

which provide ‘‘assistance and support’’ 

for the listed manufacturing activities 

need to report. These commenters 

varied in their suggestions, but most 

advocated a narrow interpretation, such 

as only those involved in sales and 

marketing or those entities integral or 

necessary to the manufacturing process. 

In addition, some commenters 

questioned whether separate operating 

divisions, which are not related to 

covered products, such as the animal 

health division or over-the-counter 

drugs division, need to report. The 

commenters advocated that reporting of 

these divisions would be confusing, 

since they are unrelated to covered 

products. 

Response: We appreciate these 

comments and agree that we should 

provide greater clarification to help 

identify the entities under common 

ownership which are required to report. 

We define ‘‘assistance and support’’ as 

being necessary or integral to the 

production, preparation, propagation, 

compounding, conversion, marketing, 

promotion, sale, or distribution of a 

covered product. For example, an entity 

under common ownership which 

produces the active ingredient for a 

covered drug and provides it to the 

applicable manufacturer for inclusion in 

the final product would be considered 

necessary to the manufacturing of that 

product, since the applicable 

manufacturer could not produce the 

drug without the active ingredient. 

Conversely, an entity under common 

ownership that only aids the applicable 

manufacturer with human resources 

administrative functions would not be 

deemed necessary or integral to the 

production, preparation, propagation, 


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compounding, conversion, marketing, 

promotion, sale, or distribution of 

covered products, since human 

resources functions are not directly 

involved with any of these 

manufacturing processes. 

In general, we believe that all 

payments or other transfers of value 

related to covered products should be 

reported, but that we should minimize 

the reporting of payments or other 

transfers of value unrelated to covered 

products. The final rule does not require 

entities under common ownership to 

report when they are not necessary or 

integral to manufacturing, and are not 

applicable manufacturers in and of 

themselves. However, an indirect 

payment or other transfer of value made 

to a covered recipient through an entity 

under common ownership that is not 

necessary or integral to the 

manufacturing process must still be 

reported as required for indirect 

payments or other transfers of value. In 

addition, we believe that entities under 

common ownership that are necessary 

or integral to the production, 

preparation, propagation, compounding, 

conversion, marketing, promotion, sale 

or distribution of a covered product 

should not have to report all payments 

or other transfers of value that the 

entities provide to covered recipients, 

and § 403.904(b)(2) of this final rule 

states that they only need to report 

payments or other transfers of value that 

are related to covered products. 

Finally, with regard to applicable 

manufacturers that have separate 

operating divisions that only produce 

non-covered products and do not meet 

the definition of providing ‘‘assistance 

and support,’’ we believe that such 

divisions only need to report payments 

or other transfers of value that are 

related to a covered drug, device, 

biological or medical supply as stated in 

§ 403.904(b)(3). We believe that the vast 

majority of payments or other transfers 

of value will not be related to covered 

products. To prevent applicable 

manufacturers from diverting payments 

through these divisions in order to 

avoid the reporting requirements, we are 

finalizing that all payments or other 

transfers of value made by these 

divisions that are related to covered 

products must be reported. This 

includes payments or other transfers of 

value made directly by the operating 

division, as well as payments or other 

transfers of value made indirectly by the 

applicable manufacturer through the 

separate operating division, as the latter 

payments are required to be reported as 

indirect payments or other transfers of 

value. 

Comment: Many commenters 

advocated that CMS should allow 

entities more flexibility to submit 

consolidated reports, regardless of 

whether an entity meets the definition 

of applicable manufacturer under 

paragraph 1 or 2 of the proposed 

definition and at the company or 

operating division level. These 

commenters explained that 

manufacturers may have complicated 

corporate structures and reporting 

systems and suggested that the agency 

provide additional flexibility in 

reporting. Additionally, the commenters 

noted that consumers may not be 

familiar with the names of 

manufacturers’ smaller divisions and, 

therefore, publication of the data under 

the names of the smaller divisions could 

limit the usefulness of the published 

data to consumers. Other commenters 

agreed with increased flexibility, but 

advocated that the reports should 

clearly state what entities are included 

in the report, including reporting which 

payments were made by which entity. 

Response: We agree that entities 

should have more flexibility to report 

together or separately. Therefore, we 

clarified in § 403.908(d) that applicable 

manufacturers under paragraph 1 of the 

definition that are under common 

ownership with separate entities that 

are also applicable manufacturers under 

paragraph 1 may, but are not required 

to, file a consolidated report for all of 

the entities. Additionally, as we stated 

in the proposed rule, applicable 

manufacturers under paragraph 1 of the 

definition of applicable manufacturer 

and an entity (or entities) under 

common ownership with such 

manufacturer under paragraph 2 of the 

definition also may, but are not required 

to, file a consolidated report. We believe 

that this will make reporting less 

burdensome to entities and will provide 

more clarity to consumers. However, we 

are concerned that it will not be clear 

to CMS or consumers which companies 

are under common ownership and are 

either reporting together or separately. 

Therefore, if multiple applicable 

manufacturers (under paragraph 1 and/ 

or 2 of the definition) submit a 

consolidated report, we are requiring 

that the report must provide information 

specified by CMS to identify each 

applicable manufacturer and entity (or 

entities) under common ownership that 

the report covers. Additionally, 

applicable manufacturers submitting 

consolidated reports must specify on an 

individual payment line which entity 

made which discrete payment or other 

transfer of value. We believe this 

method is more useful for consumers 

since it clarifies the specific entity 

making the payment. We also believe 

that this method provides significantly 

more clarity for covered recipients when 

reviewing their payments or other 

transfers of value, allowing them to 

better review the information submitted 

on their behalf. Regardless of whether 

applicable manufacturers file separate 

or consolidated reports, 

§ 403.908(d)(1)(iv) and (d)(2)(ii) clarify 

that in no case shall a single payment 

or other transfer of value be reported 

more than once by multiple applicable 

manufacturers (under common 

ownership or not). Each transaction 

between an applicable manufacturer 

and a covered recipient must be 

reported only one time. Also, to support 

our ability to improve identity and data 

matching, regardless of whether 

applicable manufacturers file separate 

or consolidated reports, all covered 

recipients included in the report must 

be individually, uniquely and 

consistently identified. The same 

individual, if present on multiple 

payment lines within the same report, 

must have the same unique identifiers 

for all occurrences within the report. 

For example, the same name and 

National Provider Identifier (NPI) (as 

required to be reported in this final rule) 

should be used consistently for all 

payment lines and any subsequent 

updates for the same individual. 

Finally, we did not receive any 

comments on our proposed reporting 

method for joint ventures and copromotions, so we have finalized these 

provisions as proposed, which required 

reporting by the applicable 

manufacturer that actually made the 

payment or other transfer of value 

(unless decided by the parties to report 

differently) and that the payment or 

other transfer of value was only reported 

once. 

In sum, after consideration of the 

public comments received, we are 

revising the interpretation of what it 

means that an entity is ‘‘operating in’’ 

the United States. We are finalizing the 

position that applicable manufacturers 

must report all payments or other 

transfers of value, but clarifying that 

manufacturers with less than 10 percent 

of their gross revenue coming from 

covered products only have to report 

payments related to covered products. 

In addition, we are also finalizing the 

definition of common ownership to 

require a threshold of 5 percent or more 

common ownership interest and 

providing additional clarification on the 

requirements for reporting by entities 

under common ownership. Finally, we 

are allowing additional flexibility for 


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applicable manufacturers (under 

paragraph 1 and/or 2 of the definition) 

to report separately or together 

depending on their internal structure. 

b. Covered Drug, Device, Biological, or 

Medical Supply 

The data collection and reporting 

requirements are limited to applicable 

manufacturers of a ‘‘covered drug, 

device, biological, or medical supply.’’ 

The phrase ‘‘covered drug, device, 

biological, or medical supply’’ is 

defined in section 1128G(e)(5) of the Act 

as any drug, biological product, device, 

or medical supply for which payment is 

‘‘available’’ under Medicare, Medicaid, 

or CHIP. Because there are numerous 

payment mechanisms in Medicare, 

Medicaid and CHIP, we proposed that 

drugs, devices, biologicals, or medical 

supplies for which payment is available 

through a composite payment rate, as 

well as those reimbursed separately, are 

considered to be covered products 

under section 1128G of the Act. We 

were particularly concerned about 

inadvertently excluding items, such as 

implantable devices, for which payment 

may be available only as part of a 

bundled payment. 

We proposed to define ‘‘covered drug, 

device, biological, or medical supply’’ 

as: any drug, device, biological, or 

medical supply for which payment is 

available under Title XVIII of the Act or 

under a State plan under Title XIX or 

XXI (or a waiver of such plan), either 

separately, as part of a fee schedule 

payment, or as part of a composite 

payment rate (for example, the hospital 

inpatient prospective payment system 

or the hospital outpatient prospective 

payment system). 

The proposed definition included two 

exceptions to limit the entities 

reporting. We proposed to limit drugs 

and biologicals in the definition of 

‘‘covered drug, device, biological, and 

medical supply,’’ to drugs and 

biologicals that, by law, require a 

prescription to be dispensed, thus 

excluding drugs and biologicals that are 

considered ‘‘over-the-counter’’ (OTC). 

Similarly, we proposed an additional 

limitation to the definition as it pertains 

to devices and medical supplies, which 

would limit them to those devices 

(including medical supplies that are 

devices) that, by law, require premarket 

approval by or notification to FDA. This 

would exclude many Class I devices and 

certain Class II devices, which are 

exempt from premarket notification 

requirements under 21 U.S.C. 360(l) or 

(m), such as tongue depressors and 

elastic bandages. 

Beyond coverage, the proposed rule 

also discussed what payments or other 

transfers of value must be reported. In 

the proposed rule, we specifically stated 

that manufacturers who manufacture 

both non-covered products (such as 

OTC drugs) and at least one product 

that falls within the definition of a 

covered drug, device, biological or 

medical supply would be required to 

report all payments or transfers of value 

to covered recipients required by 

section 1128G of the Act (whether or not 

associated with a covered drug, device, 

biological or medical supply). 

Comment: Many commenters 

inquired about the definition of covered 

drug, device, biological, or medical 

supply. Many commenters supported 

the proposed definition, particularly the 

proposed limitations, which did not 

receive any opposition. However, a few 

commenters sought clarification on how 

the two parts of the definition work 

together. These commenters sought 

clarification, for example, on whether a 

drug or biological that requires a 

prescription to be dispensed or a device 

that requires premarket approval or 

clearance, but for which payment is not 

available under Medicare, Medicaid or 

CHIP, would be a covered product. 

Response: We are pleased with the 

support for the proposed definition, 

including the limitations, and have 

finalized them. In addition, we agree 

with the commenters regarding a need 

for clarification concerning the 

relationship between the parts of the 

definition. We had intended the 

interpretation of the definition to 

require that a product must meet both 

parts of the definition in order to be 

considered covered. In order to make 

this more clear, we have revised the 

definition to clearly state that a covered 

drug, device, biological or medical 

supply is one for which payment is 

available under Medicare, Medicaid or 

CHIP and which, requires a prescription 

to be dispensed (in the case of a drug 

or biological) or premarket approval by 

or notification to the FDA (in the case 

of a device or a medical supply that is 

a device). For example, a device which 

is of a type that requires premarket 

notification, but for which payment is 

not available under Medicare, Medicaid, 

or CHIP, would not be a covered device 

under the program. Finally, we do not 

intend to capture all items that require 

FDA premarket approval or premarket 

notification and for which payment is 

available under Medicare, Medicaid, or 

CHIP; rather, we only intend to include 

items that meet these criteria and that 

are devices (or medical supplies that are 

devices). For example, the definition is 

not intended to include products that 

require premarket approval or 

premarket notification, but that are 

regulated by the FDA solely as a food. 

Comment: Many commenters 

requested additional clarification and 

details concerning the meaning of 

payment being ‘‘available’’ under 

Medicare, Medicaid or CHIP. Some 

commenters inquired whether the 

availability of payment referred only to 

those items that have been approved or 

cleared by FDA. Other commenters 

suggested that the definition should 

only include payments for products 

which are reimbursed separately, and 

not through a bundled payment. Finally, 

a few commenters inquired whether the 

proposed definition referred to payment 

availability on a single basis (for 

example, as a result of an appeal) or if 

payment was regularly available. 

Response: We agree with the 

comments that additional clarification 

of the meaning of ‘‘availability’’ of 

payment would be useful. The statute 

provides that in order to be a covered 

product, payment must be available 

under Medicare, Medicaid or CHIP. 

While the statute does not discuss FDA 

approval, clearance or notification, most 

products for which payment is available 

under Medicare, Medicaid or CHIP will 

have received FDA approval or 

clearance. However, we note that there 

may be exceptions. For example, 

payment may be available under 

Medicare for certain investigative 

devices that receive an investigational 

device exemption (IDE) from the FDA 

and are classified as a Category B 

device, in accordance with 42 CFR part 

405 Subpart B. In addition, payment 

may be available under Medicaid for 

certain drug products described in 

section 1927(k)(2) of the Act, that have 

not been approved by the FDA, but were 

commercially used or sold in the United 

States before the date of the enactment 

of the Drug Amendments of 1962 (or 

which are identical, similar, or related 

within the meaning of 21 CFR 

310.6(b)(1) to such drugs) and have not 

been the subject of a final determination 

by the Secretary that they are a ‘‘new 

drug.’’ While we understand that a 

bright line test would be useful, limiting 

covered products to those that have 

received FDA approval or clearance (or 

for which notification has been 

provided to the FDA) would not be 

comprehensive. We believe that 

manufacturers are generally aware when 

payment is available for their drugs, 

devices, biologicals, or medical supplies 

under a Federal health care program. 

In addition, we do not agree with the 

suggestions to interpret payment 

availability as being limited to those 

provided separately, rather than through 

a bundled payment. We recognize that 


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1List of exempt products: http:// 

www.accessdata.fda.gov/scripts/cdrh/cfdocs/cfpcd/ 

315.cfm . 

it is not always clear whether a product 

is paid through a bundle, making it 

difficult to establish whether payment is 

available. We also recognize that this 

expands the number of products 

meeting the definition of covered drug, 

device, biological or medical supply. 

However, bundled payments constitute 

a significant portion of Medicare 

reimbursement and excluding products 

that are reimbursed only as part of 

bundled payments would exclude 

manufacturers of products who have 

historically had significant relationships 

with physicians and teaching hospitals. 

For example, we believe it would be 

inappropriate to exclude implanted 

devices that are reimbursed through the 

hospital inpatient prospective payment 

system (IPPS) or the outpatient 

prospective payment system (OPPS), as 

well as chronic kidney disease drugs 

and products reimbursed through the 

end stage renal disease (ESRD) bundled 

payment system. As a result, the final 

rule adopts the proposal to include 

products which are reimbursed 

separately or as part of a bundled 

payment. We note that because there 

was some confusion about the phrase 

‘‘composite payment rate’’ in the 

proposed rule, we have replaced it with 

the phrase ‘‘bundled payment’’ and 

continue to interpret that as meaning 

IPPS, OPPS, and other prospective 

payment systems. 

Comment: Many commenters also 

requested clarification on what products 

constituted a device or medical supply. 

The proposed rule did not define these 

terms, so commenters provided 

recommendations for ways to clarify the 

terms, such as limiting them to product 

classes or providing definitions. 

Additionally, commenters questioned 

whether specific products would or 

would not be considered a ‘‘device’’ or 

‘‘medical supply’’ for the purposes of 

the reporting requirements. 

Response: We appreciate the 

comments and note that covered devices 

and medical supplies are limited to 

those devices and medical supplies for 

which payment is available under 

Medicare, Medicaid or CHIP, and are of 

the type that require premarket 

notification to or premarket approval by 

the FDA. We believe that this provides 

applicable manufacturers with a clear 

sense of the devices and medical 

supplies that constitute covered devices 

and medicals supplies, as well as those 

that do not. For example, FDA defines 

the devices (including certain medical 

supplies) that are exempted from the 

premarket notification requirements. 

This information can be found in 21 

CFR parts 862 through 892 and is 

publicly available on the FDA’s Web 

site.1

Comment: A few commenters 

suggested that reporting on all payments 

or other transfers of value, including 

those related to products under 

development, is too broad. These 

commenters recommended that only 

payments or other transfers of value 

related to covered products should be 

reported. Similarly, other commenters 

requested that payments or other 

transfers of value for certain products, 

such as veterinary drugs, be excluded 

since the relationships related to such 

products are not intended to be 

included by the statute. 

Response: As noted previously, we 

are finalizing the proposal that, in most 

circumstances, applicable 

manufacturers must report payments or 

other transfers of value to covered 

recipients regardless of whether they are 

related to a covered product. We believe 

that not all payments or other transfers 

of value will be related to specific drugs, 

devices, biologicals, or medical 

supplies, but they nevertheless 

represent a financial relationship 

between an applicable manufacturer 

and a covered recipient that has the 

potential to affect medical judgment and 

must be reported under the 

requirements in section 1128G of the 

Act. Additionally, we are concerned 

that limiting the reporting requirements 

to payments or other transfers of value 

related to covered products would 

create loopholes that would allow 

entities to avoid reporting of certain 

payments or other transfers of value. 

However, we do understand that 

payments related to products that will 

never become covered by Medicare, 

Medicaid or CHIP (such as animal 

health products) may unnecessarily 

increase the scope of reporting. 

Therefore, we have limited the reporting 

requirements to address this situation, 

as well as other situations described 

previously in the discussion of the 

limitations to the definition of 

‘‘applicable manufacturer,’’ where 

requiring an applicable manufacturer to 

report payments related to non-covered 

products would be unnecessarily 

burdensome and not particularly useful 

to the public. We are finalizing that 

separate divisions that manufacture 

only non-covered products do not need 

to report payments or other transfers of 

values unless the payments or other 

transfers of value are in fact related to 

covered products (see the applicable 

manufacturer and payments or other 

transfers of value sections of this final 

rule). Similarly, we do not intend to 

capture payments made to a veterinary 

school that may be associated with a 

teaching hospital. 

c. Covered Recipients 

Under section 1128G(a)(1) of the Act, 

applicable manufacturers are required to 

disclose certain payments or other 

transfers of value made to covered 

recipients, or to entities or individuals 

at the request of, or designated on behalf 

of, a covered recipient. Section 

1128G(e)(6) of the Act defines ‘‘covered 

recipient’’ as: (1) a physician, other than 

a physician who is an employee of an 

applicable manufacturer; or (2) a 

teaching hospital. As required by 

section 1128G(e)(11) of the Act, we 

proposed to define ‘‘physician’’ as 

having the meaning set forth in section 

1861(r) of the Act, which includes 

doctors of medicine and osteopathy, 

dentists, podiatrists, optometrists, and 

chiropractors, who are legally 

authorized to practice by the State in 

which they practice. 

The statute excludes from the 

definition of covered recipient a 

physician who is an employee of the 

applicable manufacturer, as defined in 

section 1877(h)(2) of the Act. Section 

1877(h)(2) defines ‘‘employee’’ as an 

individual who would be considered to 

be an employee of an entity under the 

usual common law rules applicable in 

determining the employer-employee 

relationship (as applied for purposes of 

section 3121(d)(2) of the Internal 

Revenue Code of 1986). We note that 

these common law rules are discussed 

in 20 CFR 404.1007 and 26 CFR 

31.3121(d) through 1(c). 

Finally, we proposed to define the 

term ‘‘teaching hospital’’ by linking it to 

Medicare graduate medical education 

(GME). The proposed rule defined 

teaching hospital as any institution that 

received payments under section 

1886(d)(5)(B) of the Act (indirect 

medical education (IME)); section 

1886(h) of the Act (direct GME); or 

section 1886(s) of the Act (psychiatric 

hospital IME) during the most recent 

year for which such information is 

available. 

Comment: Many commenters 

recommended changes to the proposed 

definition of physician. Some 

commenters requested that CMS expand 

the definition of physician to include 

other entities with prescribing 

privileges. Other commenters inquired 

about whether residents would be 

considered physicians. Some 

commenters requested that the 

definition exclude physicians who are 

not actively engaged in (or who do not 


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‘‘perform’’) the practice of medicine, 

which would include physicians not 

acting solely within their role as a 

physician, as well as medical 

researchers. They refer to the phrase in 

the statutory definition that a physician 

is an individual licensed in the State ‘‘in 

which he performs such function or 

action.’’ Other commenters 

recommended that the reporting 

requirements should be limited to 

physicians enrolled in Medicare, 

Medicaid or CHIP, on the basis of recent 

reimbursement or expected 

reimbursement. Finally, a few 

commenters recommended that CMS 

establish an ‘‘opt-out’’ function for 

physicians to declare that they have 

opted out, and no payments would 

appear on the public Web site attributed 

to them. 

Response: We appreciate the 

comments, but we will not expand the 

definition to include other provider 

types nor will we limit the definition to 

exclude those clearly intended in the 

statutory definition. The statute defines 

the term ‘‘physician’’ as having the same 

meaning as in section 1861(r) of the Act. 

We recognize that, as a result, we will 

not be able to fully capture financial 

relationships between industry and 

prescribers, specifically non-physician 

prescribers such as nurse practitioners. 

However, to the extent that applicable 

manufacturers make payments or other 

transfers of value to non-physician 

prescribers to be passed through to a 

physician, they would be indirect 

payments to the physician and would 

have to be reported under the name of 

the physician. 

Additionally, we believe that the 

definition hinges on whether a 

physician is ‘‘legally authorized’’ to 

practice, so all physicians (including all 

providers types listed in the statutory 

definition) that have a current license to 

practice will be considered covered 

recipients. By holding a current license 

to practice, the physician is legally 

authorized to practice regardless of the 

extent to which they do so. 

Payments or other transfers of value to 

residents (including residents in 

medicine, osteopathy, dentistry, 

podiatry, optometry and chiropractic) 

will not be required to be reported for 

purposes of this regulation. We 

recognize that some States require or 

allow residents to obtain licenses to 

practice, whereas other States do not 

require or allow residents to obtain 

them. We do not want to treat residents 

differently depending on their State of 

residency by requiring reporting on 

payments to residents in only those 

States that require or allow residents to 

have a license. Moreover, we believe it 

will be difficult for us to accurately 

identify residents and ensure that 

payments or other transfers of value are 

attributed across applicable 

manufacturers appropriately because 

many of them do not have a NPI and/ 

or State professional license number 

(used for physician identification, 

discussed later in this section). Due to 

the operational and data accuracy 

concerns regarding aggregation of 

payments or other transfers of value to 

residents, many of whom have neither 

an NPI nor a State professional license 

number, applicable manufacturers will 

not be required to report such payments 

or other transfers of value. 

With regard to the comment that the 

term ‘‘physician’’ should be limited to 

those enrolled in Medicare, we believe 

such an interpretation would be 

contrary to the language of the statute. 

In contrast to the statutory requirement 

that products are limited to those for 

which payment is available under 

Medicare, Medicaid or CHIP, the statute 

did not indicate that physician covered 

recipients be limited to those enrolled 

in Medicare, Medicaid or CHIP. 

Finally, while we appreciate the 

interest in allowing physicians the 

opportunity to ‘‘opt-out’’ of the 

reporting requirements, we do not 

believe it would be possible to 

implement a system of this kind. We 

believe it would be overly burdensome 

for both CMS and applicable 

manufacturers to track who has opted 

out and ensure that no payments or 

other transfers of value are made to 

those individuals. Additionally, we 

would need to create a system to 

reconcile any payments reported as 

having been made to physicians stating 

that they have opted out. We believe 

that a physician who wants to opt out 

should simply refuse all payments or 

other transfers of value from 

manufacturers, and will, accordingly, 

not be included on the public Web site 

(unless they hold ownership or 

investment interests in an applicable 

manufacturer or applicable GPO). 

Comment: Many commenters 

addressed the exclusion for employees 

of applicable manufacturers from the 

definition of physician covered 

recipient. A few commenters 

recommended revising the definition to 

ensure that only ‘‘bona fide’’ employee 

relationships are excluded from 

reporting, similar to the language in the 

employee exception in the AntiKickback Statute in section 

1128(b)(3)(B) of the Act and the 

corresponding HHS OIG regulation at 42 

CFR 1001.952(i). Other commenters 

questioned whether employees of agents 

of the applicable manufacturer would be 

included in the exception. The 

commenters also noted that the 

language in the proposed rule indicated 

that the exception included physicians 

employed by an applicable 

manufacturer, so it was not limited to 

employees of the applicable 

manufacturer making and reporting the 

payment or other transfer of value. In 

addition to these more general 

definitional comments, we also received 

numerous comments recommending 

other situations (such as physicians who 

serve as medical directors or retirees) 

that should be included in the employee 

exception. 

Response: We appreciate the 

comments and have clarified the 

definition of covered recipient to ensure 

that only bona fide employment 

relationships are included in the 

employee exclusion. We are concerned 

that in the absence of this clarification, 

applicable manufacturers could 

circumvent the reporting requirements 

by styling a physician as an ‘‘employee’’ 

and not reporting payments made to 

such a physician. Additionally, we did 

not intend to allow the exception for 

employees to include physician 

employees at any applicable 

manufacturer, rather than only the 

reporting applicable manufacturer itself. 

The proposed rule incorrectly quoted 

the statute, which in section 

1128G(e)(6)(B) of the Act states that the 

term covered recipient ‘‘does not 

include a physician who is an employee 

of the applicable manufacturer.’’ For the 

final rule, we have reverted to the 

statutory language. Additionally, 

regarding employees of agents of the 

applicable manufacturer, we do not 

intend these individuals to be included 

in the exception, since they are not 

employees of the applicable 

manufacturer. However, as discussed in 

the section on indirect payments 

(section II.B.1.k of this final rule), we do 

not believe that payments or other 

transfers of value to legal agents of an 

applicable manufacturer that happen to 

have physicians on staff constitutes a 

payment or other transfer of value for 

the purposes of this rule. 

We appreciate the comments 

regarding other situations that 

commenters would like to see included 

in the employee exclusion, such as an 

applicable manufacturer’s board 

members and medical directors. 

However, we believe that whether such 

individuals fall within the statutory 

definition of employee in section 

1877(h)(2) of the Act, which defines 

employee by referencing common law 

rules used to determine the employeremployee relationship for Internal 

Revenue Service purposes, will require 


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2NPI Registry can be found at: https:// 

nppes.cms.hhs.gov/NPPES/NPIRegistryHome.do. 

3 Database can be downloaded at http:// 

nppes.viva-it.com/NPI_Files.html. 

a case-specific analysis. Therefore, we 

are not able to adopt a bright-line policy 

that all board members or medical 

directors are (or are not) bona fide 

employees for purposes of the reporting 

exclusion. 

Similarly, with regard to the 

comments suggesting that prospective 

employees and retirees should treated as 

employees for purposes of being 

excluded from the reporting 

requirements, we believe that whether 

such individuals fall within the 

statutory definition of employee in 

section 1877(h)(2) of the Act will 

require a case-specific analysis. 

Therefore, we are unable to state that 

payments to such physicians, such as 

recruiting costs paid to prospective 

employees, do not need to be reported. 

Comment: We received significant 

support for our proposed definition of 

teaching hospital. However, some 

commenters recommended that CMS 

clarify that payments or other transfers 

of value to non-healthcare departments 

at universities affiliated with teaching 

hospitals should not be included in the 

reporting requirements. 

Response: We have decided to finalize 

the proposed definition. As explained in 

the proposed rule, we recognize that 

this definition may not capture 

hospitals with accredited medical 

residency programs that do not receive 

IME or direct GME payments; however, 

we are unable to include these hospitals 

since we cannot readily identify them 

based on Medicare payment data. 

Finally, we do agree; payments to nonhealthcare departments of universities 

affiliated with teaching hospitals should 

not be included in reporting 

requirements. However, any payments 

or other transfers of value made through 

these departments to a covered recipient 

as indirect payments or other transfers 

of value must be reported as required for 

indirect payments. 

d. Identification of Covered Recipients 

In order to accurately identify and 

distinguish covered recipients, section 

1128G(a)(1) of the Act requires that 

applicable manufacturers report the 

covered recipient’s name and business 

address, and for physician covered 

recipients, the physician’s NPI, and 

specialty. The collection of this 

information is necessary for applicable 

manufacturers, in order to distinguish 

individual covered recipients when 

reporting to CMS, and for CMS, in order 

to be able to aggregate the data. This 

section outlines the comments received 

regarding identification of both 

physician and teaching hospital covered 

recipients. 

(1) Identification of Physicians 

Section 1128G of the Act requires that 

applicable manufacturers report a 

physician covered recipient’s name, 

business address, NPI and specialty. 

This information will be used to 

distinguish physicians and allow us to 

match physicians across applicable 

manufacturers. We proposed that 

applicable manufacturers use the 

National Plan & Provider Enumeration 

System (NPPES), which we currently 

maintain and update on the public Web 

site, to assist with identifying physician 

covered recipients. The NPPES Web site 

includes a database of physician NPIs 

and has an NPI Registry function that 

allows applicable manufacturers to look 

up individual physician’s NPIs.2 The 

full database can be downloaded from 

the CMS Web site.3 We proposed that if 

the physician NPI was not available in 

NPPES, the applicable manufacturer 

would be responsible for obtaining the 

physician’s individual NPI directly from 

the physician, if the physician has an 

NPI. Other than NPI, in the proposed 

rule, we considered whether we should 

require, under the discretion granted in 

section 1128G(a)(1)(A)(viii) of the Act, 

that applicable manufacturers report 

another unique identifier, such as State 

professional license number, for 

physicians who are identified, but do 

not have an NPI. 

Comment: A number of commenters 

provided input on the processes and 

requirements for applicable 

manufacturers to report the NPI for a 

physician. Some commenters noted that 

reporting a physician covered 

recipient’s NPI is complicated, since not 

all physicians have an NPI and 

manufacturers typically do not collect 

such information. Additionally, a few 

commenters did not support the 

requirement that applicable 

manufacturers must obtain an NPI from 

a physician, if it was not readily 

available in the NPPES database. They 

explained it would be difficult to obtain 

and questioned how an applicable 

manufacturer would really know if a 

physician did not have an NPI. Some 

other commenters requested 

clarification that if an applicable 

manufacturer cannot identify an NPI for 

a physician then the NPI field can be 

left blank. Beyond determining a 

physician’s NPI, a few commenters 

recommended that CMS clarify that 

physicians are not required to provide 

their NPI when requested and that 

applicable manufacturers should state 

that it will not be made public. Finally, 

some commenters recommended that 

CMS should require physicians to 

obtain NPIs to ensure that all physicians 

have one. 

Response: We appreciate the 

comments, but want to reiterate that 

reporting a physician covered 

recipient’s NPI is a statutory 

requirement, so the agency does not 

have flexibility to waive the 

requirement. Similarly, we do not 

believe that section 1128G of the Act 

provides the agency with authority to 

require all physicians to obtain an NPI. 

We agree that it may be difficult for an 

applicable manufacturer to definitively 

know whether a physician does not 

have an NPI; however we believe it is 

reasonable for the applicable 

manufacturer to bear responsibility for 

determining a physician covered 

recipient’s NPI (or lack thereof). 

Applicable manufacturers should be 

able to demonstrate that they made a 

good faith effort to obtain an NPI for the 

physician. We believe that a good faith 

effort includes, but is not limited to, 

specifically requesting an NPI from the 

physician, checking the NPPES 

database, and calling the NPPES help 

desk. This statute does not impose 

requirements on covered recipients, so 

we do not believe we can require 

physicians to disclose their NPI to 

applicable manufacturers when 

requested; however, we strongly 

encourage physicians to provide this 

information because it is essential for 

matching payments or other transfers of 

value to physicians accurately. We 

believe it is in the best interest of all 

parties (applicable manufacturers, 

physician covered recipients, 

consumers and others) that payments be 

attributed to the correct physician, and 

we hope that physicians will be willing 

to provide their NPI to applicable 

manufacturers to make this possible, 

especially since their NPI will not be 

made public on the public Web site. If, 

after a good faith effort, the applicable 

manufacturer cannot determine an NPI 

for a physician covered recipient, or a 

physician does not have an NPI, we 

agree with the commenters and have 

finalized that the NPI field may be left 

blank to indicate that the applicable 

manufacturer could not identify an NPI 

for the physician covered recipient. 

However, if we determine that a 

physician covered recipient does have 

an NPI, we may inform the applicable 

manufacturer and require the applicable 

manufacturer to re-submit the data 

including the NPI and re-attest to the 

updated data. Additionally, not 

reporting an NPI for physician covered 


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recipients that do have an NPI will be 

considered inaccurate reporting, which 

may be subject to penalties. Finally, we 

want to reiterate that only one 

individual NPI (not a group NPI) may be 

reported for each physician, and that 

applicable manufacturers should use the 

NPI listed in NPPES, if a dispute arises. 

Also as required by statute, physiciancovered recipient’s NPIs will not be 

included on the public Web site. 

Comment: Some commenters 

discussed the proposal to allow 

reporting of an alternative identifier for 

physicians without an NPI. Many of 

these commenters supported reporting a 

State professional license number as an 

alternative to an NPI. Conversely, a few 

advocated that CMS not require an 

additional alternative unique identifier, 

whether it is a State professional license 

number or another identifier. Some 

commenters that supported State 

professional license number 

recommended that CMS should allow 

State professional license number 

instead of NPI at the discretion of the 

applicable manufacturer, since they 

believe it is could be burdensome for 

the applicable manufacturer to find the 

NPI. 

Response: We agree that obtaining a 

unique identifier is particularly 

important for physicians who do not 

have an NPI or for whom an NPI cannot 

be reasonably identified. Without this 

information, it will be difficult for us to 

ensure that payments are attributed to 

the appropriate physician and to 

aggregate payments accurately. We 

believe that the more unique identifiers 

supplied for a physician covered 

recipient, the more accurate the data 

will be, since they are essential for us 

to appropriately match data about the 

same physician within and across 

reports, and publish data appropriately 

on the public Web site. Therefore, 

pursuant to the discretion granted in 

section 1128G(a)(1)(A)(viii) of the Act, 

we will finalize that applicable 

manufacturers must report the State(s) 

and appropriate State professional 

license number(s) for at least one (but 

multiple will be accepted) State where 

the physician maintains a license for all 

physician covered recipients, regardless 

of whether the applicable manufacturer 

has identified an NPI for the physician 

covered recipient or not. While this is 

slightly broader than what was 

proposed in the proposed rule, we 

believe (based on the comments) that 

reporting applicable State professional 

license numbers for all physician 

covered recipients, rather than only the 

subset that do not have NPIs, will 

significantly improve data accuracy and 

will not represent a significant 

additional burden on applicable 

manufacturers. Many commenters 

indicated that applicable manufacturers 

maintain this information already. 

Moreover, we believe that any 

additional burden associated with 

collecting and reporting physicians’ 

State professional license numbers will 

be outweighed by the increased 

accuracy of the data attributing 

payments or other transfers of value to 

physician covered recipients. 

Comment: Many commenters 

discussed the proposal that applicable 

manufacturers use NPPES to identify 

physician covered recipients. Many 

commenters did not support requiring 

applicable manufacturers to use the 

information listed in NPPES, rather than 

what was in their internal files, 

particularly for specialty and business 

address. The commenters explained that 

the data in NPPES is not as accurate in 

some cases, as their internal databases 

and information. Similarly, some 

commenters did not believe it made 

sense to report information from NPPES 

back to CMS. Many commenters also 

discussed how applicable 

manufacturers should use NPPES. These 

commenters inquired whether there 

would be point in time (such as 90 days 

before the reporting year) when the NPIs 

in the database would be finalized and 

no longer changed, and whether 

manufacturers could rely on it. A few 

commenters recommended that 

applicable manufacturers should be 

notified of changes in NPPES. For 

example, a commenter advocated that 

CMS should keep past ‘‘versions’’ of 

NPPES in case of an audit. In addition, 

some commenters stated that NPPES is 

not user friendly and CMS should be 

responsible for improving it. Finally, a 

few commenters requested that CMS 

create a list of physician covered 

recipients rather than using NPPES. 

Response: We appreciate the 

comments on NPPES and note that we 

did not intend to require applicable 

manufacturers to specifically or solely 

use NPPES in order to obtain the NPI of 

a covered recipient. Applicable 

manufacturers may obtain physician 

NPI information (or any other 

information) in any manner they see fit, 

as long as they report NPIs accurately as 

required. This may include matching 

NPIs obtained elsewhere with the NPIs 

provided in NPPES. The NPPES 

database is continually updated, so it is 

difficult to set a point in time to freeze 

the database for a reporting year or 

notify applicable manufacturers of all 

changes. Applicable manufacturers may 

rely on NPI information in NPPES as of 

90 days before the beginning of the 

reporting year. 

However, just because an NPI is not 

listed in NPPES does not mean that the 

applicable manufacturer does not need 

to make a good faith effort to obtain the 

NPI or that the payment should not be 

reported. While it is not possible to keep 

past ‘‘versions’’ of NPPES due to the 

continual updates, we would like to 

point out that each provider entry is 

date stamped to include the date the 

entry was created, as well as the date of 

each update, which will help establish 

the information available at a particular 

time. Beyond the specific concerns 

regarding using NPPES, we understand 

that NPPES is not perfect, but the 

agency is working to improve it. In 

addition, we do not believe it is 

appropriate for us to create a new 

system specifically for this program, as 

it would be duplicative and 

unnecessary. 

Finally, while we are sensitive to the 

request for a physician covered 

recipient list, we do not believe it is a 

viable option. Any list of physicians 

would be created based on NPPES, since 

it is the most comprehensive database 

available. However, as stated in this 

section, NPPES is not complete since 

not all physicians meeting the definition 

of covered recipient have an NPI. We 

also do not want the reporting 

requirements to be based on a list, 

which will be difficult to maintain and 

invariably include mistakes and 

inaccuracies. Instead, the statute that 

requires reporting of payments to 

physicians who meet the statutory 

definition. We believe applicable 

manufacturers are in the best position to 

identify the individuals with whom 

they have financial relationships who 

meet this definition. 

(2) Identification of Teaching Hospitals 

Regarding the identification of 

teaching hospitals, we proposed to 

publish a list of hospital covered 

recipients (that is, those hospitals that 

received Medicare direct GME or IME 

payments during the last calendar year 

for which such information is available) 

on the CMS Web site once per year. We 

proposed to do so since it may not be 

immediately apparent to applicable 

manufacturers whether a particular 

hospital meets our definition of a 

teaching hospital, and there is no 

currently published database that 

includes this information. We proposed 

that the list of teaching hospital covered 

recipients should include the name and 

address of each teaching hospital. 

Comment: Many commenters 

supported CMS’s proposal to publish a 

list of teaching hospitals, but 

recommended that the agency provide 

additional details regarding the list. The 


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commenters suggested that CMS publish 

the list prior to the beginning of the 

reporting year and ensure that 

applicable manufacturers will be able to 

download the list. The majority of these 

commenters recommended that the list 

be published 90 days before the end of 

the year, but the comments varied. 

Additionally, some commenters 

requested that CMS clarify that 

applicable manufacturers could rely on 

the teaching hospital list for the entire 

year and that entities not included on 

the list would not be covered recipients 

for the whole data collection year. They 

also advocated that the list should 

remove hospitals classified in error. 

Finally, a few commenters also 

requested that the list contain additional 

information to help clarify corporate 

identities (such as inclusion of a tax 

identification number (TIN) or an 

OSCAR number), as well as an 

institutional contact or officer for all 

hospitals. 

Response: We agree that the teaching 

hospital list will be useful for applicable 

manufacturers and appreciate the 

comments making suggestions for how 

to improve the list. We will publish the 

list once annually and make it available 

publicly and for download at least 90 

days before the beginning of the 

reporting year, or for the first reporting 

year, at least 90 days prior to the start 

of data collection. Applicable 

manufacturers can rely on the list for 

the entirety of the data collection year. 

The list will include all hospitals that 

CMS had recorded as receiving a 

payment under one of the defined 

Medicare direct GME or IME programs. 

The list will include hospital TINs to 

provide more specific information on 

hospitals with complex corporate 

identities. Finally, we will not include 

an institutional contact, since we do not 

have this information readily available 

and do not believe it is integral to the 

success of the program. 

e. Payments or Other Transfers of Value 

Section 1128G(a)(1)(A) of the Act 

requires that applicable manufacturers 

report a ‘‘payment or other transfer of 

value’’ made to a covered recipient or 

‘‘to an entity or individual at the request 

of or designated on behalf of a covered 

recipient.’’ Under Section 

1128G(a)(1)(B), if an applicable 

manufacturer makes a payment or other 

transfer of value to an entity or 

individual at the request of or 

designated on behalf of a covered 

recipient, the applicable manufacturer 

must disclose the payment or other 

transfer of value under the name of the 

covered recipient. Section 

1128G(e)(10)(A) of the statute defines 

‘‘payment or other transfer of value’’ 

broadly as ‘‘a transfer of anything of 

value.’’ 

We would like to clarify that we 

interpret payments or other transfers of 

value to an entity or individual at the 

request of or designated on behalf of a 

covered recipient to refer to a situation 

in which an entity or individual 

receives and keeps the payment that 

was made on behalf of (or at the request 

of) the covered recipient and the 

covered recipient does not receive the 

payment or other transfer of value. 

Rather, the covered recipient directs the 

payment or other transfer of value and 

does not receive the payment 

personally. Such payments or other 

transfers of value to third party 

recipients are somewhat different than 

indirect payments to a covered recipient 

made through a third party (discussed 

in section II.B.1.k. of this final rule). 

Indirect payments or other transfers of 

value are made to an entity or 

individual (that is, a third party) to be 

passed through to a covered recipient. 

In the case of indirect payments or other 

transfers of value, we believe that the 

applicable manufacturer will generally 

direct the payment path. 

We proposed that payments or 

transfers of value made to an individual 

or entity at the request of or designated 

on behalf of a covered recipient 

included payments or other transfers of 

value provided to a physician (or 

physicians) through a physician group 

or practice. We proposed that payments 

or other transfers of value provided 

through a group or practice should be 

reported individually under the name(s) 

of the physician covered recipient(s). 

When reporting payments or other 

transfers of value made at the request of, 

or designated on behalf of a covered 

recipient, we proposed that applicable 

manufacturers should report the 

payment or other transfers of value in 

the name of the covered recipient, but 

include the entity or individual that 

received the payment at the request of 

or designated on behalf of the covered 

recipient. We believed that reporting the 

entity or individual paid would 

maximize transparency about the details 

of the payment or other transfer of 

value, by allowing end users to discern 

whether a covered recipient actually 

received the payment, and if not, where 

the payment went. Additionally, we 

proposed that we did not believe it was 

feasible to provide a review period for 

these entities before the data is made 

public. Instead, we explained that 

review by the covered recipient was 

sufficient. 

Comment: Many commenters 

requested additional information on 

how to determine the amount and value 

of a payment or other transfer of value 

since neither the statute nor the 

proposed rule provided much guidance. 

While some commenters recommended 

specific options, such as interpreting 

value as discernible economic value on 

the open market, the majority advocated 

that the applicable manufacturers be 

allowed flexibility to determine whether 

a payment or other transfer of value has 

a cognizable economic value, and if so, 

to allow flexibility to determine such 

value. Several commenters also 

recommended that if a payment or other 

transfer of value does not have a 

measurable economic value to a covered 

recipient, then it does not need to be 

reported. In addition, a few commenters 

requested clarification on how to handle 

tax and other additional payments, such 

as shipping. Finally, a few commenters 

recommended that CMS clarify that 

goods purchased for market value 

should not be reportable. 

Response: We appreciate the 

comments and agree that more 

information will be useful for applicable 

manufacturers. In general, for purposes 

of this rule only, we interpret value 

similarly to many comments as the 

discernible economic value on the open 

market in the United States. However, 

we agree and support that applicable 

manufacturers should be allowed 

flexibility to determine value, so we do 

not plan to create numerous rules for 

calculating value. We have outlined a 

few guidelines to help manufacturers. 

First, payments or other transfers of 

value that do not have a ‘‘discernible’’ 

economic value for the covered 

recipient specifically, but nevertheless 

have a discernible economic value 

generally must be reported. For 

example, an applicable manufacturer 

may provide a physician with a 

textbook that the physician already 

owns. Since it is a duplicate, it may not 

have a value to the physician; however, 

the textbook does have an economic 

value, so it must be reported. Second, 

even if a covered recipient does not 

formally request the payment or other 

transfer of value, it still must be 

reported. Similarly, when calculating 

value we believe that all aspects of a 

payment or transfer of value, such as tax 

or shipping, should be included in the 

reported value. Finally, all applicable 

manufacturers must make a reasonable, 

good faith effort to determine the value 

of a payment or other transfer of value. 

The methodology used and assumptions 

made by the applicable manufacturer 

may be included in the applicable 

manufacturer’s voluntary assumptions 

document (discussed in section II.B.1.h. 


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of this final rule). Finally, we added the 

statutory definition of ‘‘payment or 

other transfer of value’’ to the regulatory 

text to ensure consistency with the 

statute. 

Comment: A few commenters stated 

that applicable manufacturers should 

not report payments or other transfers of 

value provided to a group practice as if 

the payment or other transfer of value 

had been provided to all members of the 

group. 

Response: We agree that payments or 

other transfers of value being provided 

to a specific physician through a group 

practice should not necessarily be 

attributed to all physicians in that 

group. However, we also do not want 

payments or other transfers of value to 

go unreported because they were 

provided to a group or practice rather 

than to a specific physician. This was 

the intent of our proposal for reporting 

payments to group practices. We have 

finalized that payments provided to a 

group or practice (or multiple covered 

recipients generally) should be 

attributed to the individual physician 

covered recipients who requested the 

payment, on whose behalf the payment 

was made, or who are intended to 

benefit from the payment or other 

transfer of value. This means that the 

payment or other transfer of value does 

not necessarily need to be reported in 

the name of all members of a practice. 

For example, if an applicable 

manufacturer donates a set of 

dermatology textbooks to a group 

practice, we believe that applicable 

manufacturers should attribute the 

transfer of value to only the 

dermatologists at the practice by 

dividing the cost equally across all 

dermatologists. We intend for applicable 

manufacturers to divide payments or 

other transfers of value in a manner that 

most fairly represents the situation. For 

example, many payments or other 

transfers of value may need to be 

divided evenly, whereas others may 

need to be divided in a different manner 

to represent who requested the 

payment, on whose behalf the payment 

was made, or who was intended to 

benefit from the payment or other 

transfer of value. We agree with the 

commenters that this approach 

attributes payments more fairly, since 

some physicians in a group practice 

may not make use of a payment or other 

transfer of value and may have concerns 

about such payments or other transfers 

of value being attributed to them. 

Comment: A few commenters 

requested clarification of the reporting 

requirements for payments or other 

transfers of value provided through a 

covered recipient to another covered 

recipient. We did not address this 

specific situation in the proposed rule. 

These commenters generally refer to a 

situation when a payment is provided to 

a physician covered recipient, but made 

through a teaching hospital covered 

recipient. 

Response: We appreciate the 

comments and agree that this is an area 

of potential confusion, so we believe 

that clarification is necessary. While the 

comments are generally limited to 

payments or other transfers of value to 

a physician through a teaching hospital, 

we provide clarification more generally. 

However, we recognize that the majority 

of payments to one covered recipient 

through another will likely involve a 

physician and teaching hospital. 

Payments provided to one covered 

recipient, but directed by the applicable 

manufacturer to another specific 

covered recipient should be reported in 

name of the covered recipient that 

ultimately received the payment 

because the intermediate covered 

recipient was merely passing through 

the payment. For example, if an 

applicable manufacturer provides a 

payment to a teaching hospital intended 

for a physician employee of the teaching 

hospital, then the payment should be 

reported in the name of the physician 

covered recipient, since that is who 

ultimately received the payment. In 

addition, a payment provided directly to 

a physician covered recipient should be 

reported in the name of the physician, 

regardless of whether the physician is 

an employee of a teaching hospital, 

since the payment was provided to the 

physician and not the teaching hospital. 

In order to prevent double counting, 

payments provided in these 

circumstances should not also be 

reported in the name of the intermediate 

covered recipient. If the payment or 

other transfer of value was not passed 

through in its entirety, then the 

applicable manufacturer should report 

separately the portion of the payment or 

other transfer of value retained by the 

teaching hospital covered recipient and 

the portion passed through to the 

physician covered recipient. If the 

payment or other transfer of value was 

not passed through at all, the applicable 

manufacturer should report it in its 

entirety in the name of the teaching 

hospital. We note that the rules 

regarding research-related payments 

made to teaching hospital covered 

recipients differ somewhat and are 

discussed further in the section on 

research herein. 

Comment: A few commenters 

recommended that CMS set a limit for 

the total amount a physician can receive 

annually. 

Response: This statute does not afford 

us the authority to limit the payments 

or other transfers of value made to 

covered recipients. The statute requires 

applicable manufacturers to report the 

relationships, but does not limit or ban 

them in any way. This is a transparency 

initiative, and inclusion on the public 

Web site does not indicate that the 

relationships are necessarily improper 

or illegal. 

Comment: There were a number of 

comments, some which supported 

reporting the name of the entity or 

individual that received the payment 

and others opposing this approach. 

However the most common suggestion 

was to only report the name of entities 

that receive the payment, rather than 

individuals, due to privacy concerns. 

Additionally, a few commenters stated 

that the applicable manufacturer may 

not know the amount if it was at the 

request or designated on behalf of a 

covered recipient. 

Response: We appreciate the 

comments and continue to believe that 

reporting the name of the entity which 

received the payment at the request of 

or designated on behalf of a covered 

recipient is beneficial. However, we 

agree that reporting the name of an 

individual that received the payment 

could be problematic. We will finalize 

that applicable manufacturers must 

report, in the name of the covered 

recipient, all payments or other transfers 

of value made at the request of or 

designated on behalf of a covered 

recipient, as well as the name of the 

entity that received the payment or 

other transfer of value. In the event that 

a payment was provided to an 

individual, at the request of or 

designated on behalf of a covered 

recipient, the individual’s name does 

not need to be reported. Instead, the 

applicable manufacturer should report 

simply ‘‘individual’’ in the field for 

entity paid. 

Finally, we do not agree with the 

comment that the applicable 

manufacturer may not know the amount 

of the payment. We believe that because 

the applicable manufacturer is making 

the payment, it should know the 

amount being provided. We believe 

regardless of what entity received the 

payment or other transfer of value, the 

details are available to the applicable 

manufacturer. 

Comment: Many commenters 

recommended that CMS should provide 

entities receiving payments or other 

transfers of value at the request of or 

designated on behalf of a covered 

recipient (as a third-party recipient) 

should have the opportunity to review 

and correct the information. However, 


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other commenters supported the CMS 

proposal. 

Response: While we appreciate the 

interest in allowing these entities the 

opportunity for review, dispute and 

proposing corrections, we do not believe 

there is a viable method for 

administering it. The agency will not 

have any information on the entities 

beyond their name, so we will not be 

able to match an entity across applicable 

manufacturers. More importantly, since 

the entities will not be readily 

identifiable groups or individuals (such 

as physicians), the agency will have no 

means to validate the identity of an 

individual signing on to the Web site 

and stating that he or she is from a 

specific entity. Additionally, we believe 

a covered recipient will be able to 

review these payments or other transfers 

of value sufficiently since they should 

be aware of the payment or other 

transfer of value made at their request 

or designated on their behalf. As 

explained in this section, we have 

decided to only require reporting and 

publication of the name of entities (and 

not individuals) that received payments 

or other transfers of value at the request 

of or designated on behalf of covered 

recipients. We believe this should 

alleviate some of the concerns regarding 

review and correction because personal 

payments to an individual will not be 

made public on the Web site. Given 

these considerations, we will finalize 

that review and correction for entities 

which receive a payment at the request 

of or designated on behalf of a covered 

recipient will be done by the covered 

recipient, rather than the entity. 

Comment: Numerous commenters 

noted various situations when a 

payment or other transfer of value may 

be at the request of or designated on 

behalf of a covered recipient. In some 

cases, a covered recipient may direct the 

payment elsewhere; conversely, in 

others, the covered recipient may 

simply waive the payment and the 

applicable manufacturer provides it to a 

third-party recipient of their choosing. 

In addition, there are also models when 

a covered recipient does not have any 

claim to the payment and it is 

automatically provided elsewhere (such 

as a charity) on his/her behalf. The 

commenters recommended various 

methods to report these situations, 

including categorizing some as nonreportable. 

Response: We appreciate these 

comments and recognize that there are 

various circumstances where a payment 

will be made at the request of or on 

behalf of a covered recipient, which will 

all be slightly different. In general, we 

do not believe it will be possible to 

create rules for each situation. Instead, 

we are providing the following general 

guidelines and information on how we 

intend to interpret the phrases ‘‘at the 

request of’’ and ‘‘designated on behalf 

of.’’ 

If a covered recipient directs that an 

applicable manufacturer provide a 

payment or other transfer of value to a 

specific entity or individual, rather than 

receiving it personally, then the 

payment is being made ‘‘at the request’’ 

of such covered recipient and must be 

reported as described in this section 

(under the name of the covered 

recipient, but also including the name of 

the entity paid or ‘‘individual,’’ in the 

case of an individual). For example, in 

the event that a covered recipient 

directs an applicable manufacturer to 

donate a payment or other transfer of 

value—to which he would have 

otherwise been entitled—to a particular 

charity, the applicable manufacturer 

must report the payment in the name of 

the covered recipient and provide the 

name of the charity that received the 

payment at the covered recipient’s 

request. However, if a covered recipient 

decides to neither accept the payment or 

other transfer of value nor request that 

it be directed to another individual or 

entity, then the payment or other 

transfer of value that was offered by the 

applicable manufacturer does not need 

to be reported. In this situation, there is 

nothing to report because no reportable 

payment or other transfer of value was 

made to a covered recipient or to an 

individual or entity at the request of or 

designated on behalf of a covered 

recipient. 

In addition, we interpret ‘‘designated 

on behalf of a covered recipient’’ as 

when a covered recipient does not 

receive a payment or other transfer of 

value, but the applicable manufacturer 

provides the payment or other transfer 

of value to another entity or individual 

in the name of the covered recipient. 

For example, a covered recipient may 

waive his payment, and the applicable 

manufacturer nevertheless donates the 

payment to a charity ‘‘on behalf of’’ the 

covered recipient. We recognize that 

this could result in a covered recipient 

who waived a payment nevertheless 

having a payment reported in his or her 

name; therefore, we encourage covered 

recipients to make very clear to 

applicable manufacturers whether they 

would like their waived fee to be paid 

to another individual or entity— 

After consideration of the public 

comments received, we are finalizing 

that reporting of payments or other 

transfers of value at the request of or 

designated on behalf of a covered 

recipient should be reported, but should 

include the name of the entity paid or 

that another individual received the 

payment. The covered recipient will 

have the opportunity to review and 

correct the payment on behalf of the 

entity or individual that received the 

payment. 

f. Payment and Other Transfer of Value 

Report Content 

The specific categories of information 

required to be reported for each 

payment or other transfer of value 

provided to a covered recipient are set 

forth in section 1128G(a)(1)(A) of the 

Act. In the proposed rule, we provided 

explanations and details on how we 

proposed that applicable manufacturers 

report some of this information to CMS. 

This section outlines the comments we 

received on the data elements. 

(1) Name 

We proposed that applicable 

manufacturers should report the first 

name, last name, and middle initial for 

physician covered recipients. 

Comment: A few commenters stated 

that not all physicians have middle 

names and not all existing systems 

include middle name or initial, so they 

recommended middle initial not be 

reported. 

Response: We appreciate the 

comments, but believe that given the 

number of physicians with the same 

first and last name, reporting a middle 

initial will be important when 

identifying and distinguishing 

physician covered recipients and 

aggregating payments across applicable 

manufacturers. While we recognize that 

not all physicians have middle names, 

we believe that this information should 

be reported whenever possible. As 

required in § 403.904(c)(1), applicable 

manufacturers must report the middle 

initial of a physician covered recipient 

as listed in NPPES, but will not be 

penalized for leaving the field blank if 

it is not available in NPPES or if the 

physician does not have a middle name. 

Additionally, as stated previously, we 

hope that applicable manufacturers 

provide as much identifying detail as 

possible on physician covered 

recipients to ensure we can attribute 

payments appropriately. In order to 

ensure that physician covered recipients 

are appropriately matched across 

applicable manufacturers and to their 

own data during the review and 

correction period, we will require 

applicable manufacturers to report a 

physician covered recipient’s name as 

listed in NPPES. 


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4Health care provider taxonomy codes are 

available through a link on the NPPES Web site: 

https://nppes.cms.hhs.gov/NPPES/ 

StaticForward.do?forward=static.instructions. 

(2) Business Address 

We proposed that applicable 

manufacturers should report the full 

street address. For teaching hospital 

covered recipients, we proposed using 

only the address included in the CMSpublished list of teaching hospitals. For 

physician covered recipients, we 

proposed that applicable manufacturers 

report the physician’s primary practice 

location address, since this is more 

easily recognizable to end users of the 

data. 

Comment: A few commenters 

recommended that CMS allow 

applicable manufacturers to use the 

address kept on file for a physician 

covered recipient, rather than the 

address in NPPES, since the address on 

file may be more accurate than the 

NPPES address. Regarding NPPES, a few 

commenters also suggested that CMS 

should require physicians to keep their 

address updated. Some commenters 

recommended reporting the address 

used for correspondence, rather than 

business location. Finally, a few 

commenters discussed that providing 

the full street address for the business 

address field for each payment or other 

transfer of value will increase the data 

elements significantly. 

Response: We appreciate the 

comments. We agree that (unlike with a 

physician covered recipient’s name) 

applicable manufacturers do not need to 

use NPPES when reporting addresses. In 

the proposed rule, we simply wanted to 

be clear that it was available and 

explain what field to use, if an 

applicable manufacturer chose to use 

NPPES. Regarding the requirement to 

keep addresses updated, we encourage 

physicians to keep their NPPES profiles 

updated, but we do not believe that we 

have the authority to force all 

physicians to do so. 

We also have finalized our proposal to 

require the primary practice location 

address to be reported as the business 

address. We realize that a physician can 

be associated with multiple addresses, 

but we believe that primary practice 

location is the most recognizable to 

consumers. However, we understand 

that it may be difficult for an applicable 

manufacturer to know which address 

represents the primary practice location, 

so we plan to not penalize applicable 

manufacturers for providing the 

incorrect address, as long as applicable 

manufacturer reports a legitimate 

business address for the covered 

recipient. 

Finally, we appreciate the comment 

that the reporting of a full street address 

(as opposed to a portion of the address, 

such as City and State) will require a 

significant amount of data to be 

submitted. We agree that we want to 

minimize the data submitted; however, 

we believe that full street address is 

important since in large urban areas 

there may be multiple physicians with 

the same name in the same city, so we 

will continue to require reporting of full 

street business address. 

(3) Specialty and NPI 

In the proposed rule, we stated that, 

as required by the statute, applicable 

manufacturers are required to report the 

specialty and NPI for physician covered 

recipients. We suggested that applicable 

manufacturers use the ‘‘provider 

taxonomy’’ field when reporting 

physician specialty. We proposed that 

applicable manufacturers only report a 

single specialty and use only the 

specialties available for the ‘‘provider 

taxonomy’’ field in NPPES. More details 

on these terms are available online.4 For 

NPI, we proposed that applicable 

manufacturers report the physician’s 

individual NPI, rather than any group 

NPI, with which the physician may be 

associated. 

Comment: Many commenters 

addressed the requirements for 

reporting physician specialty and NPI. 

Some commenters recommended that 

applicable manufacturers be able to use 

their own internal files for reporting 

specialty, rather than NPPES. They were 

concerned that specialty in NPPES may 

not be accurate and could lead to 

concerns about off-label marketing. 

Regarding the NPPES list, a few 

commenters recommended that CMS 

include the nine recognized American 

Dental Association (ADA) specialties. 

Some commenters also requested 

clarification on whether applicable 

manufacturers should report both the 

specialty name and the associated 

NPPES code. In addition, a few 

commenters recommended that CMS 

allow methods for an applicable 

manufacturer to provide more context 

regarding physician specialty, such as 

reporting multiple specialties with one 

listed as primary or allowing a 

statement justifying specialty choice. 

Response: We appreciate the 

comments and agree that applicable 

manufacturers may use their internal 

information when reporting specialty. 

However, the NPPES ‘‘provider 

taxonomy’’ list (as referenced 

previously) should be used as the list of 

accepted specialties since consistency 

in the names of reported specialties is 

important for facilitating aggregation of 

the data. We note that the NPPES list 

does include the nine recognized ADA 

specialties. When reporting specialty, 

applicable manufacturers should list 

both the specialty name and code to 

ensure consistency. 

Additionally, we do not believe 

applicable manufacturers need to 

provide more information when 

reporting physician covered recipient 

specialty. We believe that a single 

specialty should be sufficient and that 

allowing applicable manufacturers to 

provide a justification of physician 

specialty would be too much 

information to be beneficial. 

(4) Date of Payment 

In the proposed rule, we required 

applicable manufacturers to provide the 

date on which a payment or transfer of 

value was provided to the covered 

recipient. We recognized that some 

payments or other transfers of value 

might be provided over multiple dates, 

such as a consulting agreement with 

monthly payments. We proposed that 

applicable manufacturers use their 

discretion as to whether to report the 

total payment on the date of the first 

payment as a single line item, or to 

report each individual payment as a 

separate line item. 

Comment: Many commenters 

supported the proposed requirements 

for reporting the date(s) of payment. 

These comments appreciated the 

flexibility since applicable 

manufacturers may use different 

tracking systems. However, some 

commenters requested additional 

flexibility on how to report the payment 

date. For example, some commenters 

suggested that applicable manufacturers 

should have flexibility, depending on 

their individual systems, to report the 

date a flight actually occurred or the 

date the trip was booked, as long as this 

information is reported consistently 

within a category. Additionally, the 

commenters recommended that CMS 

clarify how to report payments which 

may happen across a reporting year. 

Response: We appreciate the 

comments and have finalized the 

proposal that applicable manufacturers 

have the flexibility to report payments 

made over multiple dates either 

separately or as a single line item for the 

first payment date. In addition, we will 

allow flexibility for what specific date to 

report for a nature of payment category. 

We believe that the methodology 

employed should be consistent within a 

single nature of payment category. For 

example, for all flights, applicable 

manufacturers should report dates in a 

consistent manner (such as the flight 


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date or ticket purchase date). In 

addition, the aggregated payments 

should not cross years, so for payments 

which span multiple years, the amount 

paid in a given year must be reported for 

that reporting year. Similarly, the date 

of payment methodology should not be 

used to move payments from one 

reporting year to another. Applicable 

manufacturers are encouraged to 

include information on the methods 

they used for reporting date of payment 

or other transfer of value in their 

assumptions document. When reporting 

the date of payment for bundled small 

payments (as described in 

§ 403.904(i)(2)(iv)), applicable 

manufacturers should report the date of 

payment as the date of the first small 

payment or other transfer of value made 

to the covered recipient. 

(5) Context 

Comment: Some commenters 

recommended that CMS allow 

applicable manufacturers to voluntarily 

report contextual information about 

each payment or other transfer of value 

and make the information publicly 

available. CMS did not propose 

including this in the proposed rule. 

Response: We agree that information 

on the context of a payment or other 

transfer of value could be useful. We 

believe it could help the public better 

understand the relationships between 

the industry and covered recipients. In 

addition to consumers, we believe 

contextual information will be useful for 

covered recipients when reviewing the 

payments or other transfers of value. 

Hopefully, the context will provide 

information to help the covered 

recipient assess the accuracy of the 

payment. However, we do not want this 

information to overwhelm users or 

significantly increase the data reported, 

so will limit the amount of data that can 

be reported in that field. Section 

403.904(c)(12) allows applicable 

manufacturers to provide brief 

contextual information for each 

payment or other transfer of value, but 

does not require them to do so. 

(6) Related Covered Drug, Device, 

Biological or Medical Supply 

Section 1128G(a)(1)(A)(vii) of the Act 

requires applicable manufacturers to 

report the name of the covered drug, 

device, biological or medical supply 

associated with that payment, if the 

payment is related to ‘‘marketing, 

education, or research’’ of a particular 

covered drug, device, biological, or 

medical supply. We proposed that in 

cases when a payment or other transfer 

of value is reasonably associated with a 

specific drug, device, biological or 

medical supply, the name of the specific 

product must be reported. We realize 

that not every financial relationship 

between an applicable manufacturer 

and a covered recipient is explicitly 

linked to a particular covered drug, 

device, biological or medical supply, 

but many are, and we proposed that 

those must be reported. 

When reporting a related product, we 

proposed that applicable manufacturers 

could report only one covered drug, 

device, biological or medical supply as 

related to a payment or other transfer of 

value, even though there arguably may 

be multiple covered products related to 

the payment. However, we considered, 

as an alternative, allowing applicable 

manufacturers to report multiple 

covered drugs, devices, biologicals or 

medical supplies as related to a single 

payment or other transfer of value. We 

believed that reporting of multiple 

covered drugs, devices, biologicals, and 

medical supplies may be easier for 

applicable manufacturers since many 

financial relationships are not specific 

to one product only, but could make 

aggregating payments by product 

difficult. 

With regard to reporting a product 

name, we proposed that the applicable 

manufacturer should report the name 

under which the product is marketed, 

since this name is probably most 

recognizable to the consumer. In the 

event that a covered drug, device, 

biological or medical supply does not 

yet have a market name, we proposed 

the applicable manufacturer should 

report the scientific name. 

Comment: Many commenters 

questioned how and when to report an 

associated product. A number of these 

commenters discussed whether a 

product name should be reported for 

payments associated with non-covered 

products (such as pre-commercial or 

OTC drugs) and recommended only 

requiring reporting of a product when 

the payment is related to ‘‘marketing, 

education, or research.’’ Many 

commenters also recommended that 

CMS allow the reporting of ‘‘n/a’’ or 

‘‘none’’ in instances when a product is 

not associated or when associated with 

a non-covered product. Similarly, a few 

commenters recommended that 

applicable manufacturers should not 

have to report an associated product for 

research on a new indication of a 

covered product. 

A few commenters provided more 

specific requirements, such as only 

reporting a covered product for a 

payment or other transfer of value, 

when there is a written agreement or an 

understanding with the covered 

recipient that the product will be 

named. Similarly, some commenters 

suggested that CMS should allow 

flexibility to report business purpose, in 

addition to product family or a single 

product. 

Response: We appreciate the 

comments and agree that it is important 

to provide additional information on 

when and how a related product should 

be reported. Section 1128G(a)(1)(A)(vii) 

of the Act requires that ‘‘if a payment or 

other transfer of value is related to 

marketing, education, or research 

specific to a covered drug, device, 

biological, or medical supply,’’ 

applicable manufacturers must report 

the name of the covered product. We 

believe that many financial 

relationships between applicable 

manufacturers and covered recipients 

are related to marketing, education or 

research associated with a particular 

product, often a covered product. 

Therefore, we will finalize that 

applicable manufacturers must report a 

related product name for all payments 

or transfers of value, unless the payment 

or other transfer of value is not related 

to a covered product. However, we do 

not believe applicable manufacturers 

should be required to report the name 

of associated non-covered products, 

since this may be misleading to 

consumers and would provide 

information that is beyond the goal of 

the statute. However, we do believe it is 

useful to know the extent of payments 

or other transfers of value that are not 

associated with any product or not 

associated with a covered product. This 

distinction will not be possible if 

applicable manufacturers leave the 

associated products fields blank in cases 

when it is not applicable. Given this 

interest, the final rule directs applicable 

manufacturers to fill in associated 

product fields as appropriate. Instead, if 

the payment or other transfer of value is 

not related to at least one covered 

product, then applicable manufacturers 

should report ‘‘none.’’ Conversely, if the 

payment or other transfer of value is 

related to a specific product, which is 

not a covered product, then applicable 

manufacturers are to report ‘‘noncovered product.’’ Finally, if the 

payment or other transfer of value is 

related to at least one covered product, 

as well as at least one non-covered 

product, then applicable manufacturers 

must report the covered products by 

name (as required), and may include 

non-covered products in one of the 

fields for reporting associated product. 

Comment: Many comments addressed 

the number of associated products that 

may be reported for each payment or 

other transfer of value. Several 

commenters supported allowing 


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reporting of only a single product, 

whereas several others supported 

allowing applicable manufacturers to 

report multiple products as being 

associated with the a payment or other 

transfer of value. The commenters who 

advocated reporting multiple products 

explained that often a financial 

relationship is associated with multiple 

products, and it would be misleading to 

attribute it to a single product. 

Conversely, some commenters were 

sympathetic to the need to aggregate the 

payments or other transfers of value by 

product. As a compromise, some of 

these commenters suggested reporting a 

single product would be sufficient, as 

long as we allowed applicable 

manufacturers to report ‘‘multiple,’’ as 

well. Other commenters recommended 

that CMS allow reporting of up to five 

products. However, these comments 

cautioned that aggregation by product 

should not give the impression that 

there were multiple interactions. A 

commenter recommended requiring 

applicable manufacturers to report a 

percentage of the interaction to be 

attributed to each product listed. The 

comments also addressed what product 

name should be used. Many 

commenters advocated that applicable 

manufacturers should be allowed to 

report the product category or 

therapeutic area rather than the productspecific name. Many commenters 

recommending this method referenced 

implantable devices, since consumers 

may not know the specific name of the 

device that had been implanted during 

a medical procedure. Many devices are 

given a complex name and number 

combination, which consumers may not 

know. For example, a patient may be 

aware that she received a hip implant 

manufactured by company A, but may 

not know the specific model number of 

the implant. Similarly, some 

commenters recommended slight 

changes to the name required to be 

reported, such as using the 

clinicaltrials.gov name for drugs 

without a name or allowing reporting of 

the generic name. Finally, a few 

commenters suggested that we require 

reporting of National Drug Code (NDC), 

as well as brand and generic name. 

Response: We appreciate the 

comments and agree that reporting 

multiple products will likely improve 

the accuracy of the database in a way 

that is more beneficial than the 

difficulty in aggregating by product. 

Therefore, we will finalize that 

applicable manufacturers may report up 

to five related covered products for each 

interaction. If the interaction was 

related to more than five products, an 

applicable manufacturer should report 

the five products which were most 

closely related to the payment or other 

transfer of value. Additionally, when 

aggregating payments or other transfers 

of value by product, we will not 

represent a single interaction related to 

multiple products as multiple 

interactions. However, we do not agree 

that the applicable manufacturer should 

report the percentage of the interaction 

dedicated to each product. We believe 

this will be burdensome to the 

applicable manufacturers and would not 

be beneficial to consumers, since it will 

greatly increase the volume of the data. 

We also agree that we should allow 

greater flexibility in reporting the 

product name, particularly for devices 

where the product name is less 

recognizable to consumers. For drugs 

and biologicals, we are finalizing that 

applicable manufacturers must report 

the market name of the product and 

must include the NDC (if any). If a 

market name is not yet available, 

applicable manufacturers should use the 

name registered on clinicaltrials.gov. 

We believe that reporting the NDC will 

greatly help CMS aggregating the data 

by product. However, if there is no NDC 

available for a product, it does not have 

to be reported. For devices and medical 

supplies, § 403.904(c)(8)(ii) allows 

reporting of either the name under 

which the device or medical supply is 

marketed, or the therapeutic area or 

product category. We believe that 

reporting devices and medical supplies 

in this manner is appropriate, since 

device names are less known to 

consumers and a single product may 

actually be comprised of multiple 

devices. Conversely, we believe that the 

names of drugs and biologicals are more 

readily available to consumers, since 

they are often listed on a prescription. 

(7) Form of Payment and Nature of 

Payment 

The statute requires reporting on both 

the form of payment and the nature of 

payment for each payment or transfer of 

value made by an applicable 

manufacturer to a covered recipient. 

The statute provides a list of categories 

for both the form of payment and nature 

of payment and gives the Secretary 

discretion to add additional categories. 

Section 1128G(a)(1)(A)(v) of the Act 

includes the following form of payment 

categories: 

• Cash or a cash equivalent. 

• In-kind items or services. 

• Stock, a stock option, or any other 

ownership interest, dividend, profit, or 

other return on investment. 

• Any other form of payment or other 

transfer of value. 

Section 1128G(a)(1)(A)(vi) of the Act 

includes the following nature of 

payment categories: 

• Consulting fees. 

• Compensation for services other 

than consulting. 

• Honoraria. 

• Gift. 

• Entertainment. 

• Food. 

• Travel (including the specified 

destinations). 

• Education. 

• Research. 

• Charitable contribution. 

• Royalty or license. 

• Current or prospective ownership o 

investment interest. 

• Direct compensation for serving as 

faculty or as a speaker for a medical 

education program. 

• Grant. 

• Any other nature of the payment or 

other transfer of value. 

In this section, we discuss the general 

policies for reporting the form of 

payment and the nature of payment, 

rather than the specific categories, 

which will be discussed in sections 

II.B.1.g and h. of this final rule. 

In the proposed rule, we proposed 

that the categories within both the form 

of payment and the nature of payment 

should be defined as distinct from one 

another. Additionally, if a payment or 

other transfer of value for an activity is 

associated with multiple categories, 

such as travel to a meeting under a 

consulting contract, we proposed that 

the travel expenses should remain 

distinct from the consulting fee 

expenses and both categories would 

need to be reported to accurately 

describe the relationship. In these cases, 

we proposed that for each payment or 

other transfer of value reported, 

applicable manufacturers may only 

report a single nature of payment and a 

single form of payment. For example, if 

a physician received meals and travel in 

association with a consulting fee, we 

proposed that each segregable payment 

be reported separately in the 

appropriate category. The applicable 

manufacturer would have to report three 

separate line items, one for consulting 

fees, one for meals and one for travel. 

The amount of the payment would be 

based on the amount of the consulting 

fee, and the payments for the meals and 

travel. For lump sum payments or other 

transfers of value, we proposed that the 

applicable manufacturer break out the 

distinct parts of the payment that fall 

into multiple categories for both form of 

payment and nature of payment. We 

also solicited comment on an alternative 

approach of allowing a payment or other 

transfer of value for an activity that is 


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associated with multiple segregable 

categories to be reported as a single 

lump sum, rather than separately by 

each segregable category. 

Finally, in the proposed rule we also 

discussed the interpretations of various 

forms of payment and natures of 

payment categories. We did not define 

the categories individually and instead 

proposed that they would have their 

dictionary definitions. 

Comment: Many commenters 

addressed our proposed method for 

reporting form of payment and nature of 

payment. A number of these 

commenters supported our proposed 

method of reporting a single form of 

payment and a single nature of payment 

for each reported payment, whereas 

others supported the alternative of 

reporting multiple forms of payment 

and natures of payment for a single 

payment. The commenters supporting 

multiple forms of payment and natures 

of payment recommended that the 

applicable manufacturer should be 

allowed flexibility to report, but should 

explain their decisions and 

methodology for reporting form and 

nature of payment in the assumptions 

document. Additionally, a few 

commenters suggested that the 

applicable manufacturer should be 

allowed to report lump payments, but 

should be required to produce 

segregated payments in an audit. 

Finally, a few commenters 

recommended that CMS allow 

applicable manufacturers to report 

additional details beyond form of 

payment and nature of payment to allow 

end users to understand that not all 

reported relationships are payments. 

Response: We appreciate the 

comments and believe they provided 

important background on the processes 

of reporting. However, we have 

finalized these provisions as proposed. 

We believe that flexibility in the 

reporting requirements is important to 

aid applicable manufacturers with 

different systems. However, we believe 

that there should also be consistency in 

the way payments or other transfers of 

value are reported across applicable 

manufacturers, particularly when 

describing and classifying payments or 

other transfers of value. We believe that 

a single form of payment and a single 

nature of payment for each line item 

characterizes a payment or other 

transfer of value much differently than 

reporting multiple forms of payment 

and natures of payment for a lump sum 

payment. We are concerned that 

allowing this flexibility will be 

confusing to covered recipients and end 

users, since they will not be able to 

readily tell a specific applicable 

manufacturer’s method for reporting the 

payment or other transfer of value, since 

the assumptions document will not be 

made public. We also believe that a 

flexible method would create additional 

disputes because a covered recipient 

would not know what was included in 

a single line item, since some line items 

would be separated, whereas others 

would be aggregated. Additionally, a 

State with a similar reporting 

requirement for manufacturers that 

allows the reporting of secondary 

natures of payment stated in its public 

comment that reporting entities seldom 

use the secondary field, indicating that 

a single field should be sufficient. 

With regard to choosing the 

appropriate nature of payment, we agree 

that if a payment could fit within 

multiple possible categories, applicable 

manufacturers should have flexibility to 

select the category that best described 

the payment, in accordance with their 

own documented methodology. 

However, this should not be used to 

bundle payments of separate categories 

into a single payment. For example, a 

meal should be reported as a meal, even 

if associated with travel or a consulting 

contract. Additionally, serving as a 

faculty for a medical education program 

should be reported separately from a 

consulting contract, even if the medical 

education program speech was similar 

in content to the consulting services 

provided by the covered recipient. 

Comment: A number of commenters 

generally questioned the form of 

payment and nature of payment 

categories. Many commenters requested 

that CMS develop precise definitions, 

and a few commenters provided 

recommended definitions. However, in 

the event that the agency does retain the 

dictionary definitions, some 

commenters suggested that CMS should 

ensure that the dictionary definitions 

are sufficient to provide clarity. 

Additionally, a few commenters 

recommended that CMS publish and 

allow for Q&As to further clarify the 

categories. A few commenters provided 

additional categories for CMS to add, 

whereas others recommended methods 

for categorizing payments or other 

transfers of value to explain the details 

of the payment. For example, a 

commenter recommended that we create 

separate reporting categories for 

payments or other transfers of value 

made directly and indirectly. Finally, a 

few commenters recommended that we 

should consider form of payment as 

‘‘payment type’’ or the modality used to 

transfer value, whereas we should 

consider nature of payment as ‘‘payment 

nature’’ or the reason the payment was 

made. 

Response: We appreciate the 

comments and have carefully 

considered the best way to provide 

additional context to the categories. 

Given the very specific statutory 

requirements, we are unable to fully 

reconfigure the categories; while the 

Secretary is granted discretion to add 

forms of payment and natures of 

payment, she is not given discretion to 

remove or collapse them. However, we 

appreciate the clarification on form of 

payment being considered the modality 

used to transfer value and nature of 

payment being the reason the payment 

was made. We believe these 

classifications should help applicable 

manufacturers when assigning 

categories, and will help us provide 

more accurate guidance on the 

categories. 

In order to provide additional 

information we have provided general 

discussions and additional contextual 

information, particularly for the nature 

of payment categories, since we believe 

most comments were concerned with 

the nature of payment categories. We 

provide additional details in the 

following two sections of this final rule 

dedicated to form of payment and 

nature of payment. 

g. Form of Payment 

Section 1128G(a)(1)(A)(v) of the Act 

lists forms of payment that applicable 

manufacturers must use to describe 

payments or other transfers of value. 

Applicable manufacturers must assign 

each individual payment or other 

transfer of value, or separate parts of a 

payment, to one and only one of these 

categories. In the proposed rule, we did 

not add any forms of payment beyond 

those outlined in the statute because we 

believed what is provided in the statute 

was sufficient to describe payments and 

other transfers of value. Additionally, as 

explained, we proposed that each form 

of payment be defined by the term’s 

dictionary definition, since we believed 

that these terms are understandable as 

written. 

Comment: We received a few 

comments supporting the categories, as 

well as a few recommending small 

changes to the categories. A few 

commenters advocated adding a 

category for ‘‘grant’’ to make clear that 

it was not personal income. Another few 

commenters recommended separating 

stock, stock option, or any other 

investment interest from dividend, 

profit or other return on investment, 

since they are materially different. 

These commenters explained that 

stocks, stock options, and investment 

interests are different from dividends, 

profits, and return on investments 


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because the former are actively granted 

to a covered recipient while the latter 

are earned on existing investments. 

Finally, regarding the definitions, a few 

commenters suggested that CMS use 

standard legal definitions. 

Response: We appreciate the 

comments and agree that the forms of 

payment categories are sufficient. 

However, we do agree that the ‘‘stock, 

stock option, or any other ownership 

investment interest, dividend, profit or 

other return on investment’’ category 

should be divided into two categories. 

We agree that the categories are different 

and separating them would create 

additional specificity in the categories, 

without changing them significantly. 

Conversely, we do not agree that grant 

should be a form of payment. Instead, 

we believe ‘‘grant’’ should remain as a 

nature of payment (as included in the 

statute), since it best describes a reason 

a covered recipient might receive a 

payment. After consideration of the 

public comments received, we are 

finalizing the proposal to break the 

category of ‘‘stock, stock option, or any 

other ownership investment interest, 

dividend, profit or other return on 

investment’’ category into two 

categories, but otherwise will not be 

adding any additional categories to form 

of payment. We agree that stock, stock 

options, and other ownership 

investment interests are different than 

dividends, profits and other returns of 

investment, so separating these 

categories may provide additional 

clarity to consumers. We do not believe 

that this changes the way forms of 

payments will be reported, since the 

categories existed previously, we are 

simply providing more clarity and 

specificity to the categories. We believe 

the dictionary definitions are sufficient, 

particularly since these terms are 

generally understandable to consumers. 

h. Nature of Payment 

Section 1128G(a)(1)(A)(vi) of the Act 

lists the categories for the nature of 

payment or other transfer of value that 

applicable manufacturers must use to 

describe each payment. In the proposed 

rule, we encouraged applicable 

manufacturers to consider the purpose 

and the manner of the payment or other 

transfer of value; if a payment could 

conceivably fall into more than one 

category, we proposed that applicable 

manufacturers should make reasonable 

determinations about the nature of 

payment reported for the payment or 

transfer of value. Additionally, as 

explained, we believed that the nature 

of payment categories have meanings to 

the general public that are familiar to 

the industry and proposed defining each 

nature of payment category by its 

dictionary definition. 

Comment: Many commenters 

discussed the nature of payment 

categories, including our proposed 

method for defining the categories. A 

few commenters recommended that 

CMS provide more guidance on how 

these categories should be applied. For 

example, one commenter recommended 

that CMS rank the categories and if 

multiple categories could apply to a 

single payment or other transfer of 

value, the applicable manufacturer 

should report it in the ‘‘higher’’ ranked 

category. Another commenter requested 

that CMS break the categories into two 

groups: those made in exchange for 

value (such as services or intellectual 

property rights) and those made without 

any expectation of benefit. Beyond 

categorizing payments or other transfers 

of value, many commenters requested 

additional guidance on the definitions 

for the nature of payment categories. We 

also received a few recommendations 

for additional nature of payment 

categories. For example, a few 

commenters recommended including a 

category for agreements to appear as an 

‘‘author’’ of an industry ghost-written 

publication. Another commenter 

recommended that we include a 

category for space or facility fee for 

events at a teaching hospital. 

Response: We appreciate the 

comments. However, we believe that 

providing precise definitions for 

applicable manufacturers to use in 

categorizing nature of payments will be 

too restrictive. Applicable 

manufacturers are required to report all 

payments or other transfers of value, 

unless they specifically fall within an 

exception. The nature of payment 

categories are simply used to describe 

these payments or other transfers of 

value. We believe precise definitions 

could make these descriptors less useful 

and could make reporting more 

challenging for applicable 

manufacturers. For example, if a 

payment or other transfer of value that 

the applicable manufacturer generally 

would classify as a consulting fee does 

not meet our precise definition, the 

applicable manufacturer would be 

forced to report it in another category, 

which would likely be less accurate 

than the consulting fee category. The 

relationships between applicable 

manufacturers and covered recipients 

are extremely diverse; we are concerned 

that providing specific, narrow 

definitions would not encompass every 

situation, forcing applicable 

manufacturers to describe payments or 

other transfers of value by less specific 

categories that do not accurately 

describe the relationship. Additionally, 

since all payments or transfers of value 

must be reported, we do not believe we 

should rank the categories and indicate 

some as more desirable or beneficial 

than others. Instead, we believe that the 

nature of payment categories are 

descriptors and that applicable 

manufacturers should select the most 

appropriate description. However, we 

do understand the interest in 

consistency to enhance of the usefulness 

of the data, so we will provide some 

additional explanations for the 

categories. 

Finally, we appreciate the 

recommended additional categories. We 

have tried to limit the number of 

additional categories as much as 

possible, so we have only added 

categories for those recommendations 

that we believe cannot be described by 

existing nature of payment categories. 

For example, we believe that agreement 

to appear as an author of a ghostwritten 

article is an important relationship that 

should be reported, but believe there are 

sufficient existing nature of payment 

categories, such as compensation for 

services other than consulting, which 

can be used to describe the relationship. 

Conversely, regarding space rentals, we 

do agree that this represents a specific 

relationship between a covered 

recipient (likely a teaching hospital) and 

an applicable manufacturer that cannot 

be accurately described by the existing 

nature of payment categories. We 

understand that space rental or facility 

fees are commonly part of hosting an 

event at a hospital and believe that 

including them in another category 

would inflate the amount in that 

category. Similarly, the statutory nature 

of payment categories are mostly 

directed towards physician covered 

recipients, so it is important to consider 

the common relationships between 

teaching hospital covered recipients and 

applicable manufacturers. Given these 

considerations, we will add space rental 

and facilities fees as a nature of payment 

category under our authority in section 

1128G(a)(1)(A)(vi)(XV) of the Act, but 

will not add appearing as an author for 

a ghostwritten article. 

We are providing some additional 

explanation of the nature of payment 

categories to provide additional context. 

These explanations are not exhaustive 

(unless specified as such), but rather are 

intended to provide additional guidance 

to applicable manufacturers when they 

are categorizing payments. Additionally, 

we will discuss research in a separate 

section in light of the additional 

complexities in reporting researchrelated payments or other transfers of 


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value, which warrants additional 

consideration. 

(1) Charitable Contributions 

In the proposed rule, we stated that 

charitable contributions to, at the 

request of, or on behalf of covered 

recipients by applicable manufacturers 

must be reported. For purposes of the 

reporting requirement, a charitable 

contribution is any payment or transfer 

of value made to an organization with 

tax-exempt status under the Internal 

Revenue Code of 1986, but only if it is 

not more specifically described by one 

of the other nature or payment 

categories. We did not receive any 

comments on the definition of 

charitable contribution and intend to 

finalize it as proposed. 

Comment: Many commenters 

questioned how to report payments or 

other transfers of value for when a 

covered recipient (usually a physician) 

does not receive a payment personally 

and instead the payment is provided to 

a charity. In these situations, the 

covered recipient may or may not 

choose the charity and may be waiving 

his or her customary fee. 

Response: We appreciate the 

comments and understand these 

payments or other transfers of value can 

be complicated. We discussed general 

guidelines for reporting payments 

through another covered recipient in the 

payments or other transfer of value 

section of the final rule, but will provide 

additional detail in this section for 

situations when a payment or other 

transfer of value is directed to charity. 

We believe that the ‘‘charitable 

contribution’’ nature of payment 

category should be used only in 

situations when an applicable 

manufacturer makes a payment or other 

transfer of value to a charity on behalf 

of a covered recipient and not in 

exchange for any service or benefit. For 

example, in circumstances where a 

physician provides consulting services 

to an applicable manufacturer, but 

requests that his payment for the 

services be made to a charity, this 

would not be a charitable contribution 

for purposes of this rule because the 

payment was not provided by the 

applicable manufacturer as a charitable 

contribution, but rather as a directed 

consulting fee. This payment would be 

reported as a consulting fee with the 

physician as the covered recipient, but 

the entity paid would be the charity. 

Additionally, we note that in the 

cases of teaching hospital covered 

recipients that have tax-exempt status 

under the Internal Revenue Code of 

1986, payments or other transfers of 

value made to these organizations (other 

than payments or other transfers of 

value made for expected services or 

benefits, such as consulting services or 

rental of space in a hospital for an 

event) would be considered and 

reported as charitable contributions for 

purposes of this rule. 

(2) Food and Beverage 

When reporting food and beverage, 

we proposed that in group settings, such 

as the office of a group practice, where 

it is more difficult to keep track of 

which covered recipients actually 

partook in the food and beverage 

provided by an applicable 

manufacturer, the applicable 

manufacturer should report the cost per 

covered recipient receiving the meal 

even if the covered recipient does not 

actually partake of the meal. 

Comment: Numerous commenters 

questioned our proposed allocation 

method for food and beverage. The 

majority of commenters recommended 

that we revise our proposed allocation 

methodology, but we did receive some 

support for it. Many commenters 

recommended various options for 

dividing the cost of group meals; 

however, there were some common 

themes in the recommendations. The 

majority of these commenters 

recommended that applicable 

manufacturers should report the amount 

based on the cost per participant 

(including, for example, support staff 

members who are not covered 

recipients), rather than the cost per 

covered recipient. Many commenters 

also strongly recommended that we 

should not attribute meals to all covered 

recipients in a practice because it may 

be difficult for applicable manufacturers 

to identify all the physicians within a 

practice, and this methodology could 

implicate concerns of off-label 

marketing in large multispecialty 

practices. These commenters suggested 

that the cost of a meal should only be 

attributed to physicians who actually 

partook of the food. They suggested that 

it would not be unduly burdensome to 

keep track of which physicians actually 

participated in the meal. Some 

commenters also recommended that 

CMS allow applicable manufacturers 

flexibility in allocating the value of 

meals depending on their internal 

systems or that the value should be 

based on the amount actually received. 

Finally, a few commenters 

recommended that CMS provide 

covered recipients with the opportunity 

to ‘‘opt-out’’ of interactions with 

applicable manufacturers, including 

meals, and attest that they never partake 

in such meals. 

Beyond the allocation method, we 

received significant support for our 

proposal that applicable manufacturers 

do not need to report any offerings of 

buffet meals, snacks or coffee at booths 

at conferences or other similar events 

where it would be difficult for 

applicable manufacturers to definitively 

establish the identities of the 

individuals who accept the offerings. 

However, a few commenters also 

recommended that meals that are 

dropped off at a physician’s office 

should also be excluded, as well as 

meals when the attendees are outside 

the control of an applicable 

manufacturer. 

Response: We appreciate the 

comments and understand that 

reporting payments or other transfers of 

value that fall under the ‘‘food’’ nature 

of payment category is quite 

complicated, both in terms of 

calculating the value of the payments 

and determining who should be 

reported as having received payments. 

We believe that while reporting the 

transactions accurately is important, 

tracking exactly what a person ate or 

drank may not be practical for purposes 

of the reporting requirements. We have 

considered how to improve accuracy in 

reporting, while ensuring that the 

reporting requirements for this nature of 

payment are not overly burdensome. For 

meals in a group setting (other than 

buffet meals provided at conferences or 

other similar large-scale settings), we 

will require applicable manufacturers to 

report the per person cost (not the per 

covered recipient cost) of the food or 

beverage for each covered recipient who 

actually partakes in the meals (that is, 

actually ate or drank a portion of the 

offerings). In other words, applicable 

manufacturers should divide the total 

value of the food provided by the 

number of people who actually partook 

in the food and beverage including both 

covered recipients and non-covered 

recipients (such as support staff). If the 

per person cost exceeds the minimum 

threshold amount, then the applicable 

manufacturer must report the food or 

beverage as a payment or other transfer 

of value for each covered recipient who 

actually participated in the group meal 

by eating or drinking a food or beverage 

item. For example, a sales representative 

brings a catered lunch costing $165 to 

a 10-physician group practice. Six of the 

ten physicians and five support staff 

participate in the meal. Because the 

meal cost $15 per participant ($165/11 

participants = $15), the meal needs to be 

reported for the 6 physicians who 

participated in it. However, the meal 

does not need to be reported for the 4 


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other physicians in the group who did 

not participate in the meal (that is, did 

not eat or drink any of the offerings). 

Additionally, if the total cost of the meal 

was $100, making the cost per 

participant less than $10, then the meal 

would not have to be reported since it 

was below the minimum threshold. We 

decided to make this modification to the 

proposed rule because we agree with 

commenters that for the purposes of this 

rule this method will more accurately 

reflect the actual transaction, and will 

not unfairly attribute a payment to a 

physician who did not partake in it. 

Additionally, we believe this approach 

will reduce disputes between applicable 

manufacturers and physicians, since 

food-related payments or other transfers 

of value will not be attributed to 

physicians that did not actually receive 

them. Finally, this method does not 

require the reporting of meals eaten by 

support staff, for the purposes of this 

reporting requirement. However, we 

recognize that in other contexts, 

transfers of value to a physician’s office 

support staff (which may include meals) 

may constitute transfers of value to the 

physician. 

While we appreciate the importance 

of flexibility, we believe that we need to 

set out the attribution methodology in 

order to ensure as much consistency as 

possible. If we did not provide a 

methodology, it could result in very 

different amounts being reporting across 

applicable manufacturers and could 

lead to increased disputes since covered 

recipients would not know how a 

particular applicable manufacturer 

attributed the value of a meal. We 

believe that there must be some 

consistency across applicable 

manufacturers in this complicated area, 

so we have finalized the position that 

applicable manufacturers must report 

the cost per participant for covered 

recipients in attendance. 

Regarding meals that are dropped off 

at a covered recipient’s office (for 

example, by a sales representative) and 

other meals where the attendees are not 

controlled or selected by the applicable 

manufacturer, we believe that these 

situations nevertheless constitute 

payments or other transfers of value to 

a covered recipient, so they must be 

reported. Applicable manufacturers are 

responsible for keeping track of food 

and beverages provided to covered 

recipients and must use the same 

attribution method for all meals as 

described previously regardless of 

whether the manufacturer’s 

representative remained in the office for 

the entire meal. 

We also appreciate the comments 

regarding allowing covered recipients 

the opportunity to opt-out from 

receiving meals; however, we believe 

that this would be operationally 

difficult for CMS. We would need to 

track the covered recipients and would 

have to develop a method of arbitration 

if an applicable manufacturer reports a 

meal for a physician who has opted-out. 

We believe that covered recipients who 

do not want to receive meals simply 

should make clear to applicable 

manufacturers that they do not accept 

them. The finalized methodology will 

no longer attribute meals to physicians 

who do not attend the meal, so a 

physician who does not want to receive 

meals should not attend or accept them. 

Finally, we appreciate the support 

regarding offerings of buffet meals, 

snacks, or coffee at conferences or other 

large-scale events where it would be 

difficult for applicable manufacturers to 

definitively establish the identities of 

the physicians who partake in the food 

or beverage. Accordingly, we have 

finalized that food and beverage 

provided at conferences in settings 

where it would be difficult to establish 

the identities of people partaking in the 

food do not need to be reported. This 

applies to situations when an applicable 

manufacturer provides a large buffet 

meal, snacks or coffee which are made 

available to all conference attendees and 

where it would be difficult to establish 

the identities of the physicians who 

partook in the meal or snack. We do not 

intend this to apply to meals provided 

to select individual attendees at a 

conference where the sponsoring 

applicable manufacturer can establish 

identity of the attendees. 

(3) Direct Compensation for Serving as 

a Faculty or as a Speaker for a Medical 

Education Program 

In the proposed rule, we interpreted 

this category broadly to encompass all 

instances in which applicable 

manufacturers pay physicians to serve 

as speakers, and not just those situations 

involving ‘‘medical education 

programs.’’ We acknowledged that this 

interpretation does not allow for 

differentiation between continuing 

education accredited speaking 

engagements, and all other speaking 

engagements. 

Comment: Many comments addressed 

our proposed interpretation of this 

category, particularly regarding its 

relationship to accredited and/or 

certified continuing medical and dental 

education. 

A few commenters supported our 

interpretation to include all speaking 

engagements in one category; however, 

numerous others were concerned about 

payments for accredited and/or certified 

continuing education-related speaking 

engagements and recommended that 

they be treated differently than 

unaccredited and/or certified 

continuing education speaking 

engagements. Many of these 

commenters provided significant 

background information on accredited 

and certified continuing education. 

Accredited Continuing Medical 

Education (CME) refers to CME 

activities that have been deemed to meet 

the requirements and standards of a 

CME accrediting body, as authorized by 

the Accreditation Council for 

Continuing Medical Education 

(ACCME). Certified CME refers to CME 

activities that carry credit offered by the 

grantors of CME credit (the American 

Osteopathic Association (AOA), the 

American Academy of Family 

Physicians (AAFP), and the American 

Medical Association (AMA)). 

Continuing dental education is similarly 

accredited through the American Dental 

Association’s Continuing Education 

Recognition Program (ADA CERP). 

These commenters explained that 

accredited and certified continuing 

education speaker payments will 

generally not be made directly by an 

applicable manufacturer to a covered 

recipient, as this category suggests, due 

to the accreditation requirements. Some 

commenters suggested that these be 

reported in another ‘‘indirect’’ speaking 

engagement category. Conversely, other 

commenters recommended that this 

category be limited to accredited and 

certified continuing education 

payments, and that compensation for 

other speaking engagements should be 

described by other natures or payments. 

Response: We appreciate the 

comments and agree that it is important 

that CMS clarify this category. We 

understand the importance of 

continuing medical education and 

discuss the requirements for reporting it 

generally in section II.B.1.k. of the final 

rule, dedicated to indirect payments or 

other transfers of value. We agree that 

given the title of this nature of payment 

category, which was set out in the 

statute itself, it should not include 

compensation for accredited or certified 

continuing education payments. 

However, we do not believe that all 

payments to physicians for serving as 

speakers at an accredited or certified 

continuing education program should 

be granted a blanket exclusion (as 

discussed in the indirect payment 

section), so we have added an 

additional nature of payment category 

for serving as a faculty or speaker at an 

accredited or certified continuing 

education event, at § 403.904(e)(2)(xv). 

This category, named ‘‘compensation for 


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serving as faculty or as a speaker for an 

accredited or certified continuing 

education event,’’ includes all 

accredited or certified continuing 

education payments that are not 

excluded by the conditions set forth in 

§ 403.904(g)(1)(i) through (iii), and 

further discussed in section II.B.1.k. of 

this final rule. Additionally, we also 

renamed the category for direct 

compensation to include speaking 

engagements at unaccredited and noncertified continuing education events at 

§ 403.904(e)(xiv). We recognize that not 

all payments or other transfers of value 

related to unaccredited and noncertified continuing education will be 

provided directly. Therefore, we retitled 

the category as ‘‘compensation for 

serving as a faculty or as a speaker for 

an unaccredited and non-certified 

continuing education program.’’ This 

renamed category includes all other 

instances when an applicable 

manufacturer provides compensation to 

a covered recipient for serving as a 

speaker or faculty at an unaccredited 

and non-certified education event, 

regardless of whether the payment was 

provided directly or indirectly. Finally, 

the nature of payment category for 

‘‘compensation for services other than 

consulting’’ at § 403.904(e)(2)(ii) now 

explicitly includes payments or other 

transfers of value for speaking 

engagements that are not for continuing 

education. 

We believe this reporting strategy 

appropriately separates accredited and 

certified continuing education from 

unaccredited and non-certified 

continuing education, so that consumers 

can better understand the nature of the 

payment received by a covered 

recipient. Accredited and certified 

continuing education that complies 

with applicable standards of the 

accrediting and certifying entities 

generally includes safeguards designed 

to reduce industry influence, so we 

believe that, when reportable (that is, 

when the payments or transfers of value 

do not meet the conditions delineated at 

§ 403.904(g)(1)(i) through (iii)), 

payments or transfers of value made to 

support accredited and certified 

continuing medical education should 

remain in a distinct category from 

unaccredited or non-certified 

continuing education. We also believe 

that educational speaking engagements 

should be separated from all other 

speaking engagements, promotional or 

otherwise, to have separated them 

appropriately. Finally, we believe the 

renaming of the statutory nature of 

payment category for ‘‘direct 

compensation for serving as a faculty or 

as a speaker for a medical education 

program’’ to include indirect 

compensation as well, provides 

applicable manufacturers flexibility to 

describe payments or other transfers of 

value more accurately. 

(4) Other 

In the proposed rule, we added a 

nature of payment category, titled 

‘‘other,’’ to serve as a catch all for 

payments or other transfers of value that 

do not fit into one of the listed natures 

of payment. 

Comment: Many commenters 

recommended that CMS remove the 

proposed additional nature of payment 

category ‘‘other.’’ 

Response: We appreciate the 

comments and agree that an ‘‘other’’ 

category could dilute the usefulness of 

the nature of payment categories. 

Therefore, the final rule omits ‘‘other’’ 

category from the nature of payment 

categories at § 403.904(e). However, all 

payments or transfers of value from 

applicable manufacturers to covered 

recipients (other than those excluded 

under section 1128G(e)(10) of the Act) 

must be reported. Any payments or 

transfers of value that are not 

specifically excluded, must be reported 

and described based on the nature of 

payment categories included in the final 

rule. Applicable manufacturers are 

required to report each payment under 

the nature of payment category that 

most closely describes the payment; the 

absence of a nature of payment category 

that closely describes the payment does 

not constitute a basis for not reporting 

an otherwise reportable payment or 

other transfer of value. Failure to report 

such a payment may result in the 

imposition of a civil monetary penalty 

on the applicable manufacturer. 

(5) Other Nature of Payment Categories 

Although we did not address these 

categories in the proposed rule, we 

received comments requesting 

additional information on these 

categories and what CMS intends them 

to include. In the following sections, we 

have provided additional guidance on 

how we interpret the categories. Once 

again, this is not intended to define the 

categories, but rather to provide 

additional information for applicable 

manufacturers when considering the 

categories. 

(A) Consulting Fees 

This category is intended to include 

fees paid by an applicable manufacturer 

to a covered recipient for services 

traditionally viewed as consulting 

services. While we believe there is 

likely variation, we believe that 

consulting services are typically 

provided under a written agreement and 

in response to a legitimate need by the 

applicable manufacturer. Similarly, we 

believe there is often a connection 

between the competence of the covered 

recipient paid and the purpose of the 

arrangement, as well as a reasonable 

number of individuals hired to achieve 

the intended purpose. 

(B) Compensation for Services Other 

than Consulting 

This category is intended to capture 

compensation for activities or services 

that are not traditionally considered 

consulting services, but are provided by 

a covered recipient to an applicable 

manufacturer. As discussed in the 

section on direct compensation for 

serving as a faculty or as a speaker for 

a medical education program, this 

category should include payments or 

other transfers of value for speaking 

engagements that are not related to 

continuing education, such as 

promotional or marketing activities. 

(C) Honoraria 

We believe this category is similar to 

‘‘compensation for services other than 

consulting.’’ However, honoraria are 

distinguishable in that they are 

generally provided for services for 

which custom prohibits a price from 

being set. 

(D) Gift 

This category is a general category, 

which will often include anything 

provided to a covered recipient that 

does not fit into another category. For 

example, the provision of small trinkets 

(above the minimum threshold) would 

need to be reported as a ‘‘gift’’ since 

they are not included in any other 

category. However, provision of tickets 

to a professional sporting event should 

not be reported as a ‘‘gift’’ since this 

transaction is better described by the 

nature of payment category 

‘‘entertainment’’ even if the provision of 

the tickets was a gift. 

(E) Entertainment 

This category is intended to include, 

but is not limited to, attendance at 

recreational, cultural, sporting or other 

events that would generally have a cost. 

(F) Travel and Lodging 

This category includes travel, 

including any means of transportation, 

as well as lodging. As required in 

section 1128G(a)(1)(A)(vi)(VII) of the 

Act, the destination, including City, 

State and country must be reported. 


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(G) Education 

We believe this category generally 

includes payments or transfers of value 

for classes, activities, programs or 

events that involve the imparting or 

acquiring of particular knowledge or 

skills, such as those used for a 

profession. As stated in the section on 

indirect payments or other transfers of 

value, we do not intend to capture the 

attendees at accredited or certified 

continuing education events whose fees 

have been subsidized through the CME 

organization by an applicable 

manufacturer (as opposed to payments 

for speakers at such events); however, 

we believe that any travel or meals 

provided by an applicable manufacturer 

to specified covered recipients 

associated with these events must be 

reported under the appropriate nature of 

payment categories. 

(H) Royalty or License 

This category includes, but is not 

limited to, the right to use patents, 

copyrights, other intellectual property 

and trade secrets, including methods 

and processes. We believe this may be 

pursuant to a written agreement and 

could entail various payment schedules 

(such as scheduled or milestones 

methods). Applicable manufacturers 

may report total aggregated payment 

amounts for payments made under a 

single agreement, in order to consolidate 

reporting. 

(I) Current or Prospective Ownership or 

Investment Interests 

We believe this category includes 

ownership or investment interests 

currently held by the covered recipient, 

as well as ownership interests or 

investment that the covered recipient 

has not yet exercised. Details on current 

ownership or investment interests is 

discussed in the section of the final rule 

dedicated to reporting ownership or 

investment interests of physicians. 

(J) Grant 

This category generally refers to 

payments to covered recipients in 

support of a specific cause or activity. 

(6) Nature of Payment Categories 

Based on the comments, and the 

discussion and justifications included 

in this section, we will allow applicable 

manufacturers to report the following 

categories in the nature of payment field 

to describe payments or other transfers 

of value. However, as stated previously, 

all payments or other transfers of value 

must be reported, unless excluded, even 

if they do not explicitly fit into one of 

the outlined nature of payment 

categories. Applicable manufacturers 

must select the nature of payment 

category that best describes the payment 

or other transfer of value. The nature of 

payment categories in the final rule are 

as follows: 

• Consulting fee. 

• Compensation for services other 

than consulting, including serving as 

faculty or as a speaker at an event other 

than a continuing education program. 

• Honoraria. 

• Gift. 

• Entertainment. 

• Food and beverage. 

• Travel and lodging (including the 

specified destinations). 

• Education. 

• Research. 

• Charitable contribution. 

• 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. 

• Grant. 

• Space rental or facility fees. 

(7) Assumptions Document 

In order to monitor how applicable 

manufacturers were classifying 

payments or other transfer of value, we 

proposed that applicable manufacturers 

could submit along with their data a 

document describing the assumptions 

used when categorizing the natures of 

payments. We proposed that submission 

of the assumptions document would be 

voluntary and would not be made 

public. We explained that the 

documents could aid the agency in 

offering further guidance to applicable 

manufacturers regarding how natures of 

payment should be classified. 

Comment: A few commenters 

questioned the CMS proposal to allow 

applicable manufacturers to submit an 

assumptions document in order to 

ensure consistency in the reporting and 

selection of categories. Many of these 

commenters supported the submission 

of the assumptions document; however, 

the commenters varied as to whether the 

assumptions documents should be 

mandatory. Some commenters 

recommended that it be mandatory, 

while others supported that it be 

voluntary. Additionally, the 

commenters also both supported and 

opposed the proposal not to make the 

assumptions document public. A few 

commenters expressed that the 

assumptions documents should not be 

published on the public Web site and 

should also not be subject to a Freedom 

of Information Act (FOIA) request. 

Conversely, other commenters 

recommended that even if the 

assumptions documents were not made 

public, they should be available to 

covered recipients upon request to help 

mitigate disputes. 

Beyond the publication of the 

assumptions document, some 

commenters discussed the expected 

content for the assumptions document, 

as well as how CMS intends to use the 

documents. Regarding the content of the 

assumptions document, a few 

commenters recommended that 

applicable manufacturers may include 

other reporting assumptions and 

methodologies, beyond natures of 

payment, such as determining whether 

an interaction constitutes a payment or 

other transfer of value. Other 

commenters recommended that CMS 

create its own assumptions document 

for applicable manufacturers to use 

when characterizing payments or other 

transfers of value. Finally, a few 

commenters recommended that CMS 

clarify that it intends to review the 

submitted assumptions documents and 

does not plan to use them for purposes 

of prosecution for failure to report. 

Response: We appreciate the 

comments, and given the support for the 

assumptions document, we are 

finalizing the voluntary submission of 

an assumptions document in this final 

rule. As discussed in the section of the 

preamble to this final rule on payments 

or other transfers of value (section 

II.B.1.F. of this final rule), applicable 

manufacturers may include in the 

assumptions document assumptions 

and methodologies other than only 

those employed when classifying nature 

of payment categories. Furthermore, 

applicable GPOs reporting under section 

1128G(a)(2) of the Act may also submit 

an assumptions document. The 

assumptions document may include the 

applicable GPO’s assumptions when 

categorizing nature of payment 

categories for any information submitted 

on payments or other transfers of value 

provided to physician owners or 

investors (as required in section 

1128G(a)(2)(C) of the Act) or any other 

assumptions or methodologies the 

applicable GPO wishes to include. 

After review of the comments, we 

continue to believe that submission of 

the assumptions document should be 

voluntary and that the contents of the 

assumptions documents submitted 

should not be made public. We believe 

that they will likely contain significant 

detailed information, which will not 

necessarily be consumer friendly, so it 

could be overwhelming on the public 

Web site. We encourage applicable 


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manufacturers to be as clear and specific 

as possible with regard to the 

information submitted within the 

assumptions document. If a statement 

within the assumptions document 

pertains to a particular section of the 

report, applicable manufacturers should 

explicitly refer to that section in the 

assumptions document. Additionally, 

we do not believe that we should 

provide the assumptions documents to 

covered recipients. This would be 

difficult for the agency to track and 

would greatly reduce the confidentiality 

of the documents. Applicable 

manufacturers may provide their 

assumptions document to covered 

recipients upon the request of covered 

recipients independently from CMS. To 

the extent an assumptions document is 

requested under the FOIA, we would 

follow our predisclosure notification 

procedures at 45 CFR 5.65(d) and seek 

the submitter’s input on the 

applicability of FOIA Exemption 4, 

which protects trade secrets and 

commercial or financial information 

that is obtained from a person and is 

privileged or confidential. 

The agency intends to carefully 

review the assumptions documents to 

determine whether we need to publish 

more detailed guidance to assist 

applicable manufacturers in classifying 

the nature of payment categories, or 

other assumptions or methodologies 

included in the assumptions document. 

Additionally, we intend to provide 

assistance to applicable manufacturers 

to help classify payments or other 

transfers of value and hope that such 

guidance will be useful. Finally, we do 

not intend to use the assumptions 

document for prosecution, but 

acknowledge that the reporting based on 

the assumptions would be open to 

prosecution. Other HHS divisions, the 

Department of Justice (DOJ), or the 

Office of the Inspector General (OIG) 

could request access to the documents 

as part of an audit or investigation into 

an applicable manufacturer or 

applicable GPO. 

i. Research 

We received numerous comments on 

our proposed methods for reporting and 

presenting research-related payments. 

We recognize that reporting payments or 

other transfers of value for research 

activities is extremely complicated, 

since many research activities include 

large payment amounts which are 

spread across numerous activities and 

parties, and acknowledge that our 

proposed method did not fully address 

this complexity. We understand the 

need for a simple and clear reporting 

process, which allows the agency to 

accurately present research payments to 

consumers. We appreciate the 

comments and have revised the system 

to try to improve the process and ensure 

that the research is reported in a manner 

that most accurately describes the 

research relationship. A summary of the 

comments and our finalized process are 

outlined in this section. 

(1) Scope of Research 

In the proposed rule, we proposed to 

limit the research category to bona fide 

research activities, including clinical 

investigations that are subject to a 

written agreement or contract between 

the applicable manufacturer and the 

organization conducting the research 

and a research protocol. We based this 

criteria on the method used to identify 

payments eligible for delayed 

publication. 

Comment: We received a number of 

suggestions from commenters about 

which types of research payments 

should be reportable. Many commenters 

recommended including a definition of 

research and suggested many different 

definitions. Additionally, some 

commenters recommended that CMS 

provide information on what constitutes 

a research protocol or written 

agreement. These commenters stated 

that not all research has a ‘‘research 

protocol’’ and recommended that the 

agency interpret the term broadly or not 

require that one exist in order for a 

payment to be described as research. For 

example, clinical research for devices is 

often different from clinical drug 

research and does not require a research 

protocol. Finally, many commenters 

recommended that CMS exclude certain 

research-related payments from the 

reporting requirements altogether, such 

as payments related to pre-clinical 

research, indirect research, or research 

by Principal Investigators (PI) not 

practicing medicine, due to the 

importance of research-related 

relationships in developing new 

treatments and products. 

Additionally, a few comments 

addressed how to handle payments that 

could conceivably be related to 

research, but do not meet the definition 

of research. In the proposed rule, we 

solicited comments on the preferred 

method for these payments and the 

comments were mixed. Some 

recommended that CMS create another 

nature of payment category for these 

payments (such as one titled ‘‘other 

research’’); others recommended that 

CMS require applicable manufacturers 

to report the payment in another 

category. 

Response: We appreciate the 

comments and agree that we should 

provide additional information and 

clarification about what constitutes 

research and what research-related 

payments must be reported. Based on 

suggestions in the comments received, 

we have decided to define research 

based on the Public Health Service Act 

definition of research in 42 CFR 50.603; 

this definition defines research as: ‘‘a 

systematic investigation designed to 

develop or contribute to generalizable 

knowledge relating broadly to public 

health, including behavioral and socialsciences research. This term 

encompasses basic and applied research 

and product development.’’ We believe 

this definition includes pre-clinical 

research and FDA Phases I–IV research, 

as well as investigator-initiated 

investigations. We have finalized that 

payments reported as research should 

be made in connection with an activity 

that meets the definition. In addition, 

we agree that requiring both a written 

agreement or contract and a research 

protocol is limiting for some types 

research, so we are finalizing that if a 

payment falls within the nature of 

payment category for research, it only 

needs to be subject to a written 

agreement or contract or a research 

protocol. This may include an unbroken 

chain of agreements (instead of a single 

agreement between the applicable 

manufacturer and the covered recipient) 

which link the applicable manufacturer 

with the covered recipient because we 

understand that many applicable 

manufacturers use other entities such as 

contract research organizations (CROs) 

(as defined in 21 CFR 312.3(b)), or site 

management organizations (SMOs) to 

manage their clinical research activities. 

For example, agreements between an 

applicable manufacturer and a CRO, 

between a CRO and an SMO, and then 

between an SMO and a teaching 

hospital would be considered a 

continuous chain of agreements from 

the applicable manufacturer to a 

covered recipient and would be 

considered a research agreement. 

Regarding reporting of researchrelated payments which do not meet the 

definition of research, applicable 

manufacturers should report using the 

other categories available. We believe 

that the categories are sufficiently broad 

to provide applicable manufacturers 

options; for example, we believe the 

grant category could be used to 

sufficiently describe some of the 

transactions. 

We also seek to respond to comments 

about which research-related payments 

should be reportable. In general, we 

believe that any payments related to the 

definition of research discussed 

previously should be reportable. We 


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recognize that research is important and 

have allowed research to be reported in 

a manner that acknowledges its special 

role. Given this consideration, we do 

not believe we should further limit the 

scope of research payments to be 

reported. Many of the comments sought 

to limit the reporting of research related 

payment in significant ways, such as 

only reporting direct research. However, 

we believe Congress clearly intended 

research-related payments or other 

transfers of value to be included in the 

reporting requirements, based on the 

inclusion of ‘‘research’’ as a nature of 

payment, the statutory definition of 

‘‘clinical investigation,’’ and the 

procedures for delayed reporting for 

certain research-related payments or 

other transfers of value. We believe that 

excluding payments or other transfers of 

value related to clinical research or 

indirect research from the reporting 

requirements would be inconsistent 

with the intent of Congress. We do agree 

that pre-clinical research is slightly 

different, so we have outlined reporting 

requirements tailored to its unique 

structure which are discussed more in 

this section. 

Additionally, as explained in the 

section on covered recipients, we do not 

believe the statute limits the reporting 

requirements to licensed physicians 

who regularly treat patients, so we plan 

to require reporting of research 

payments to PIs who meet the definition 

of ‘‘physician,’’ even if they do not 

regularly treat patients. Finally, material 

transfers (such as provision of a protein) 

to a researcher for discovery 

collaboration does not need to be 

reported when not part of a commercial 

or marketing plan and precedes the 

development of a new product. We 

believe for the purposes of this 

regulation that due to the early stage of 

the research process, the transferred 

material does not have independent 

value. 

(2) Reporting Research Payments 

We also understand that research 

payments are unique and should be 

reported differently than other 

payments or other transfers of value. We 

proposed special rules to report research 

payments, including a rule to separate 

the classification of research payments 

to clarify whether the payment or other 

transfer of value went indirectly or 

directly to the covered recipient. When 

reporting payments or other transfers of 

value designated as research, we 

proposed that applicable manufacturers 

must report the payment or other 

transfer of value as either ‘‘indirect 

research’’ or ‘‘direct research.’’ 

Additionally, we proposed that the 

payment or other transfer of value 

(whether direct or indirect research) 

should be reported individually under 

the names and NPIs of physician 

covered recipients serving as principal 

investigators. For indirect payments, 

this included the physician covered 

recipient(s) serving as principal 

investigator(s) who would ultimately 

receive payments from the clinic, 

hospital, or other research institution, 

assuming the applicable manufacturer is 

aware of the identity of the principal 

investigator(s). Finally, we proposed 

that for both direct and indirect 

research, applicable manufacturers must 

report the entire payment amount for 

each research payment (whether to the 

covered recipient or research 

institution), rather than the specific 

amount that was provided to the 

covered recipient. 

Comment: A significant number of 

comments addressed the method 

proposed for reporting research 

payments. While there was some 

support for our proposed methods, the 

majority of the commenters did not 

support it and recommended a new 

method. Many commenters stated that 

allocating 100 percent of the research 

payment to the physician PI would be 

misleading, even if the payment amount 

was not aggregated into the physician’s 

total payments. Similarly, many 

commenters did not support reporting a 

single payment multiple times, which 

some commenters feared could lead to 

double counting of research payments. 

These commenters provided numerous 

recommendations for how to report and 

present research related payments. The 

most common recommendation was to 

report research in a separate reporting 

template, which would include a single 

line item for each payment. The 

payment would include both the entity 

paid (such as the research institution) 

and list the name of the principal 

investigator. There were some variations 

in the recommendations, including 

reporting only the amount the PI 

received and that the applicable 

manufacturer must control the selection 

of the PI; however, the majority of 

comments followed this basic process. 

A few commenters also requested that 

applicable manufacturers should be 

allowed to report context of research or 

additional information on the research 

payment. Finally, a few commenters 

recommended that research payments 

be presented separately on the public 

Web site to clearly delineate them as a 

research-related payment or other 

transfer of value. 

Response: We appreciate the 

comments and agree that reporting of 

research-related payments should be 

more representative of the actual 

payment stream for research. Applicable 

manufacturers must report researchrelated payments that ultimately are 

paid, in whole or in part, to a covered 

recipient (physician or teaching 

hospital). We have finalized that 

applicable manufacturers must report 

research payments separately in a 

different template, since we will be 

requiring the reporting of modified 

information. Applicable manufacturers 

will not be responsible for indicating 

whether a payment was direct or 

indirect. We have adopted a procedure 

similar to the process outlined in many 

of the comments, where a single 

research payment is reported once and 

includes the entity paid, as well as the 

name of the principal investigator(s). 

Applicable manufacturers must report 

each research payment once as a single 

interaction. They must report the name 

of the individual or entity (regardless of 

whether it is a covered recipient) that 

received the payment for the research 

services, as well as the principal 

investigator(s). When reporting the 

entity or individual that received the 

payment, we intend for the applicable 

manufacturer to report the entity or 

individual that received the payment, 

either directly from the applicable 

manufacturer or indirectly through a 

CRO or SMO. We believe that the 

recipient of the payment could include 

individual principal investigators, 

teaching hospitals, nonteaching 

hospitals or clinics. We intend for the 

principal investigator(s) to include the 

individual(s) conducting the research or 

providing the services on behalf of the 

research institution. 

As discussed regarding the reporting 

elements for all payments or other 

transfers of value, in order to better 

identify and match covered recipients, 

the same identifying information will be 

required to be reported for each PI 

meeting the definition of covered 

recipient. 

The applicable manufacturer shall be 

required to report the following for each 

research-related payment that ultimately 

is paid, in whole or in part, to a covered 

recipient (physician or teaching 

hospital): 

• Name of research institution/other 

entity or individual receiving payment 

(regardless of whether a covered 

recipient) 

++ If paid directly to a physician 

covered recipient, list the individual’s 

name, NPI, State professional license 

number(s) and associated State names 

for at least one State where the 

physician maintains a professional 

license, specialty, and primary business 

address of the physician(s). 


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++ If paid directly to a teaching 

hospital covered recipient, list name 

and primary business address of the 

teaching hospital. 

++ If paid to a non-covered recipient 

(such as a non-teaching hospital or 

clinic), list name and primary business 

address of the entity. 

• Total amount of research payment. 

• Name of study. 

• Name(s) of related covered drug, 

device, biological or medical supply 

(same requirements as for all payments 

or other transfers of value) and NDC (if 

any). 

• Principal investigator(s) (including 

name, NPI, State professional license 

number(s) and associated States for at 

least one State where the physician 

maintains a professional license, 

specialty, and primary business 

address); 

• Context of research (optional). 

• ClinicalTrials.gov identifier 

(optional). 

We believe reporting this information 

for each research payment will better 

capture the nature of the research 

relationship, creating a simpler 

reporting mechanism for the applicable 

manufacturers to report payments and 

allowing end users a more accurate 

understanding of the relationship. We 

believe the study name will provide 

information on the research topics, but 

we have also included an optional field 

allowing applicable manufacturers to 

provide additional contextual 

information on or the objectives of the 

research. We intend this to be used 

similarly to the additional context 

allowed for reporting all payments or 

other transfers of value. Additionally, 

we also will allow applicable 

manufacturers to provide the 

ClinicalTrials.gov Identifier to allow 

consumers the ability to obtain more 

information on the study from 

ClinicalTrials.gov. However, we 

recognize that not all research studies 

will be posted on ClinicalTrials.gov, so 

this category will be optional. Finally, 

this represents the information required 

to be reported for each research-related 

payment or other transfer of value, but 

the agency may identify other optional 

fields, such as information on 

publications related to the research, in 

order to provide additional information 

and background on the public Web site. 

For pre-clinical research, we finalize 

slightly modified reporting 

requirements since such early stage 

research is often not connected to a 

specific product. We intend pre-clinical 

research to include laboratory and 

animal research that is carried out prior 

to beginning any studies in humans, 

including FDA’s defined phases of 

investigation. For pre-clinical research, 

applicable manufacturers only have to 

report the name of the research 

institution, principal investigator(s) 

(including name, NPI, State professional 

license number(s), specialty and 

business address), and the total amount 

of the payment, so they do not need to 

report an associated product, or study 

name. 

We are also finalizing guidelines for 

what should be included in the total 

research payment amount. The amount 

should include the aggregated amount 

of any payments for services included in 

the written agreement/research protocol. 

We envision that this would include the 

costs associated with patient care, 

including diagnostics, exams, laboratory 

expenses, time spent by health care 

professionals treating the patient and 

managing the study, and the provision 

of study drugs, devices, biologicals, and 

medical supplies or other in-kind items. 

The payment amount should not 

include any payments for activities 

which are separate or segregable from 

the written agreement or research 

protocol or are paid through a method 

different than that of the research. For 

example, payments made directly to a 

physician for serving on a study steering 

committee or data monitoring 

committee that are not a part of the 

larger research payment should be 

reported separately. Payments for 

medical research writing and/or 

publication would be included in the 

research payment, if the activity was 

included in the written agreement or 

research protocol and paid as a part of 

the research payment. In addition to 

research payments, we also believe that 

meals and travel should be reported 

separately (under the food and travel 

nature of payment categories) unless 

included in written agreement or 

research protocol and paid for through 

the large research contract. 

We realize that reporting 

requirements for research will be 

somewhat different than the procedure 

outlined for other natures of payment, 

but we believe that this is appropriate 

for research-related payments or other 

transfers of value. As several comments 

pointed out, due to the flow of research 

payments from sponsor to research 

institution, an applicable manufacturer 

might not know the specific details or 

amounts of how the larger research 

payment was spent. We do not intend 

for applicable manufacturers to be 

required to itemize each research 

payment, since they are usually large 

payments obligated to general 

administration of the study and the 

applicable manufacturer may not be 

aware of the daily activities. 

Additionally, we do not require the 

reporting of payments to non-covered 

recipients that are not passed on to 

covered recipients. For example, if an 

applicable manufacturer paid separately 

for a non-covered recipient to travel to 

a meeting, then it would not need to be 

reported. However, if an applicable 

manufacturers paid separately for a 

covered recipient (regardless of whether 

the individual was a PI or not) to travel 

to a meeting, then the travel would have 

to be reported in the name of the 

covered recipient traveling. 

When reporting research payments, 

we also acknowledge that research 

payments are generally different than 

other payments and may not represent 

a payment to the covered recipient. For 

physician covered recipients whom are 

paid by a third party and not directly by 

the manufacturer, we will list research 

studies separately from all other 

payments provided to the covered 

recipient. For teaching hospitals, we 

will publish all research payments 

which went to the hospital as a research 

institution. These will be listed 

separately from other payments to the 

hospital, but will include both the study 

amount and study name. 

We believe that presenting research 

payments in this method reflects the 

fact that research payments are unique 

and do not necessarily represent a 

personal payment to physicians; 

however, it still allows for research 

payments to be reported as intended by 

Congress, but in a less burdensome way 

for applicable manufacturers. In light of 

the public comments received, we 

believe that the modifications represent 

a better, more accurate method of 

reporting research payments. 

j. Exclusions 

Section 1128G(e)(10) of the Act 

excludes specific types of payments or 

other transfers of value from the 

reporting requirements. 

Comment: We received numerous 

comments on the exclusions section of 

the proposed rule. Many of the 

comments focused on the statutory 

exclusions and the explanations CMS 

provided in the proposed rule. Beyond 

these comments, we also received 

numerous recommendations for 

additional exclusion categories to be 

included in the final rule. The 

recommended exclusions covered 

numerous specific relationships 

between applicable manufacturers and 

covered recipients, some related to 

healthcare, such as paying a physician 

at an on-site clinic, whereas others did 

not, such as campaign contributions to 

physicians running for political office. 


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Response: We appreciate these 

recommendations, but do not believe 

that we have the statutory authority to 

add exclusions beyond what was 

outlined in the statute. The statute 

expressly provides the Secretary 

discretion to require the reporting of 

additional information of payments or 

other transfers or value, and ownership 

or investment interests, but it does not 

provide a similar authority to add 

exclusion categories. We have finalized 

our policy that the exclusions will be 

defined by their dictionary definitions, 

but plan to provide additional 

clarification in response to the 

comments in this section. We believe 

that some of the recommended 

exclusions could be included in some of 

the statutory exclusions, so we have 

provided additional information to 

clarify our interpretation of these 

categories. 

(1) Existing Personal Relationships 

In the proposed rule we stated that we 

did not intend to require reporting of 

purely personal transfers of value (for 

example, if one spouse, who works for 

an applicable manufacturer, gives a 

present to the other spouse who is a 

covered recipient), and we solicited 

comments on this proposal. 

Comment: Many commenters 

supported our intention to exclude 

payments or other transfers of value 

between individuals who happen to 

have existing personal relationships and 

recommended that it be included as a 

listed exclusion. A few commenters also 

recommended specific requirements, 

such as to include relationships 

between family members, to limit to 

bona fide relationships or to mirror the 

Federal employee exemption. 

Response: We appreciate the 

comments and do not intend existing 

personal relationships to be reported, so 

we have finalized this provision in 

§ 403.904(i)(14). 

(2) Payments or Other Transfers of 

Value of Less Than $10 

Small payments or other transfers of 

value, which the statute defines as 

payments or other transfers of value less 

than $10, do not need to be reported, 

except when the total annual value of 

payments or other transfers of value 

provided to a covered recipient exceeds 

$100. As required by section 1128G of 

the Act, for subsequent calendar years, 

the dollar amounts specified will be 

increased by the same percentage as the 

percentage increase in the consumer 

price index (CPI) for all urban 

consumers (all items; U.S. city average) 

for the 12-month period ending with 

June of the previous year. In the 

proposed rule, we proposed that 

applicable manufacturers should not 

report to CMS any payments or other 

transfers of value less than $10 

individually and all small payments or 

transfers of value in the same nature of 

payment category should be reported as 

one total amount for that category. We 

believed this would simplify reporting 

for applicable manufacturers and 

prevent the reporting of payments less 

than $10 individually. Given the timing 

of this final rule, we have decided to 

begin increasing the de minimis 

thresholds for reporting in CY 2014, and 

retain the statutory de minimis 

thresholds ($10 and $100) for reporting 

in CY 2013. We believe this simplifies 

reporting for the first year of data 

collection by employing simple 

numbers as thresholds. Also because 

these were the statutory thresholds, we 

believe applicable manufacturers should 

be prepared to collect data and report 

using these thresholds for CY 2013. 

Comment: We received various 

comments on small payments or other 

transfers of value. Some commenters 

indicated that our proposed method for 

reporting small payments together might 

(for some applicable manufacturers) be 

more difficult than reporting small 

payments individually; these 

commenters recommended that CMS 

allow applicable manufacturers 

discretion in their reporting mechanism. 

Some commenters also recommended 

that CMS not change the thresholds 

within a single reporting year. Beyond 

comments on reporting of small 

payments, many commenters also 

addressed the small payment or transfer 

of value exclusion more generally. Many 

commenters questioned the thresholds 

and indicated that they were too low 

and recommended various higher 

thresholds. Similarly, some commenters 

recommended that CMS consider 

methods within the statutory 

requirements to reduce the number of 

small payments being reported. Finally, 

many commenters supported CMS’s 

proposal to not report food and 

beverages at conferences and indicated 

that CMS should extend this to other 

items provided at conferences (both 

above and below the $10 threshold). 

Response: We appreciate the 

comments and agree that applicable 

manufacturers should have discretion 

when reporting small payments. We had 

proposed requiring applicable 

manufacturers to bundle payments in 

order to reduce burden, but we do not 

want to require that method if some 

applicable manufacturers actually 

believe it to be more burdensome. 

Therefore, we will finalize that 

applicable manufacturers have 

flexibility in reporting small payments. 

They may either report them 

individually or bundled with other 

small payments or other transfers of 

value in the same nature of payment 

category, as long as applicable 

manufacturers are reporting consistently 

and clearly indicating the method they 

are using. Additionally, we agree that 

the de minimis thresholds should not 

change within a reporting year and will 

be constant for the entire year. For 

example, for the entirety of data 

collection in 2014, the thresholds will 

be those adjusted based on CPI 

published in June 2013. We will report 

the new de minimis value with the 

reporting template for the next reporting 

year. 

We appreciate the comments on the 

threshold for small payments and 

understand that they may be low for 

some stakeholders. Nevertheless, the 

thresholds were mandated by the 

statute, and we do not have discretion 

to change them. However, we recognize 

that we do not want the database to be 

overwhelmed by small payments. We 

have considered options for reducing 

the number of small payments, but we 

believe that we do not have authority to 

change the reporting requirements for 

small payments or other transfers of 

value. 

Regarding reporting of payment or 

other transfers of value at conferences or 

similar events, we appreciate the 

comments and have provided additional 

guidelines expanding on the proposed 

rule. In general, we will finalize that 

these guidelines will apply to 

conference and similar events, as well 

as events open to the public. We believe 

that at events open to the public, it will 

be extremely difficult for applicable 

manufacturer to identify physician 

covered recipients. Therefore, we will 

finalize that small incidental items that 

are under $10 (such as pens and note 

pads) that are provided at large-scale 

conferences and similar large-scale 

events will be exempted from the 

reporting requirements, including the 

need to track them for aggregation 

purposes. While these small payments 

are excluded by statute, the $100 

aggregate payment requirement 

generally requires the tracking of small 

payments in order to determine whether 

covered recipients received more than 

$100 annually. For these covered 

recipients, we believe it would be 

difficult for applicable manufacturers to 

track who receives these small items at 

conferences or similar events, due to the 

nature and disparate attendance at largescale conferences or similar events. 

Additionally, this method is consistent 

with our decision to not require 


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reporting of food and beverage at largescale conferences. We note that 

payments or other transfers of value of 

$10 or more (for calendar year (CY) 

2013) need to be tracked and reported 

even when provided at large-scale 

conferences or similar events. We 

believe that if an applicable 

manufacturer is handing out an item 

above the threshold, they should be able 

to track who received the payment since 

it is a more significant transfer. 

Finally, we will not be providing a 

standard template for reporting by 

entities that organize and oversee events 

and conferences. These event and 

conference vendors are not applicable 

manufacturers, so we do not believe we 

should have any contact with them or 

impose requirements on them. We 

recognize that applicable manufacturers 

and their vendors will need to devise 

business practices to meet the 

requirements; however, we believe that 

many of the interactions at large-scale 

conferences and similar events will not 

be reportable, so we do not believe this 

will be excessively burdensome. 

(3) Educational Materials That Directly 

Benefit Patients or are Intended For 

Patient Use 

In the proposed rule, we explained 

that this exclusion was limited to 

materials (including, but not limited to, 

written or electronic materials) and did 

not include services or other items. 

Additionally, we considered whether 

certain materials provided by applicable 

manufacturers to covered recipients for 

their own education, but which are not 

actually given to patients (for example, 

medical textbooks), should be 

interpreted as educational materials that 

‘‘directly benefit patients.’’ 

Comment: Many commenters 

addressed this exclusion, particularly 

questioning the meaning of ‘‘materials.’’ 

A few commenters stated that 

‘‘materials’’ should be interpreted more 

broadly to include ‘‘programs, services, 

and items’’ since many applicable 

manufacturers provide services and 

items to patients in order to support 

disease management or increase 

medication adherence. These items are 

generally provided to patients through 

covered recipients. Finally, a few 

commenters also asked for clarification 

on what form these materials needed to 

be in and whether overhead costs for 

educational materials, such as time and 

printing, were included in the 

exclusion. 

Response: We appreciate the 

comments and agree that ‘‘materials’’ 

should be interpreted somewhat more 

broadly for purposes of this exclusion. 

We understand that patient education is 

important and recognize that it may take 

a form other than written material, 

especially in the device context. For 

example, a device manufacturer may 

give a physician an anatomical model to 

help explain to patients how a 

procedure would work. We agree that 

such an item, which is given to 

physicians for the purpose of educating 

patients, falls within the exclusion. 

Similarly, if a manufacturer provides 

educational materials to a physician on 

a flash drive to be distributed to 

patients, the flash drive would also be 

included in the exclusion. However, if 

the drive was provided as a gift 

alongside the materials, then it would 

have to be reported, since it was 

secondary to the materials. Similarly, 

we believe that overhead expenses, such 

as printing and time, should be 

included in the exclusion as long as 

they are directly related to the 

development of the materials, which 

directly benefit patients or are intended 

for patient use. 

Comment: Numerous commenters 

questioned CMS’s interpretation of 

‘‘directly benefit patients or are 

intended for patient use.’’ These 

commenters had mixed reactions to 

CMS’s proposed interpretation. Some 

recommended that all materials 

provided to educate physicians (such as 

textbooks or journals) should be 

included in the exclusion, since 

educating the physician benefits 

patients. Others suggested that these 

should not be included, since they do 

not benefit patients directly. Some 

commenters also recommended that 

materials that are used ‘‘for or with’’ 

patients, but not taken home (such as 

anatomical models or wall charts) 

should be included in the exclusion 

because they are intended for patient 

use. Finally, a few commenters 

recommended that all materials 

intended for patients should be 

included in the exclusion. 

Response: We appreciate the 

comments and agree that additional 

clarification is required. We agree that 

items that are educational to covered 

recipients (such as medical textbooks 

and journal reprints), but are not 

intended for patient use are important 

for physicians; however, we do not 

believe that these materials fall within 

the statutory exclusion. Although these 

items may have downstream benefits for 

a patient, we believe they are not 

directly beneficial to patients, nor are 

they intended for patient use, as 

required by section 1128G(e)(10)(B)(iii) 

of the Act. Therefore, we will finalize 

that educational materials provided to 

covered recipients for their own 

education, but that do not ‘‘directly’’ 

benefit patients, do not fall within the 

exclusion and are therefore subject to 

the reporting requirements. Conversely, 

we have finalized that this exclusion 

does encompass materials, such as wall 

models and anatomical models which 

are ultimately intended to be used with 

a patient. In addition, we believe that 

pursuant to the statutory text, the 

exclusion is limited to educational 

materials only, and not marketing or 

promotional materials. 

(4) Discounts and Rebates 

Discounts and rebates for covered 

drugs, devices, biologicals, and medical 

supplies provided by applicable 

manufacturers to covered recipients are 

excluded from reporting under section 

1128G(e)(10)(B)(vii) of the Act. 

We did not receive any comments on 

this exclusion, so we have finalized it as 

proposed. 

(5) In-Kind Items for the Provision of 

Charity Care 

In the proposed rule, we defined ‘‘inkind items for the provision of charity 

care’’ as items provided to a covered 

recipient for one or more patients who 

cannot pay, where the covered recipient 

neither receives, nor expects to receive, 

payment because of the patient’s 

inability to pay. Any items provided by 

the applicable manufacturer to a 

covered recipient that meet the 

definition of in-kind items for the 

provision of charity care, are excluded 

from reporting. This does not include 

the provision of in-kind items to a 

covered recipient, even if the covered 

recipient is a charitable organization, for 

the care of all of the covered recipient’s 

patients (both those who can and cannot 

pay). If a payment or other transfer of 

value is not an in-kind item and/or not 

for the provision of charity care, as 

defined, then the payment must be 

reported as required under section 

1128G of the Act. 

Comment: Many commenters 

provided recommendations on the 

charity care exclusion. These comments 

fell in two categories: first, on the 

interpretation of a patient’s ability to 

pay, and second, on the interpretation of 

in-kind items. Regarding a patient’s 

ability to pay, the commenters generally 

supported the proposed interpretation, 

but recommended that CMS provide 

additional clarification that a patient’s 

ability to pay includes whether the 

patient can afford the copayment or 

coinsurance, but not the entire visit. 

Additionally, a few commenters 

recommended that ability to pay should 

be based on whether payment will be a 

significant burden to a patient. 

Regarding in-kind items, the 


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commenters discussed whether 

payments to a covered recipient and/or 

a third party should be excluded if used 

to support charities or other charitable 

activities, such as patient assistance 

programs. Finally, a few commenters 

advocated that this exclusion should be 

based on the mission of the organization 

receiving the items, rather than what 

actually happened to them, since it will 

be impossible for applicable 

manufacturers to track the uses of these 

items. 

Response: We appreciate the 

comments and agree that an analysis of 

a patient’s ability to pay should include 

whether the patient can afford his or her 

copayment or coinsurance and whether 

the patient has insurance to cover the 

care. We intend this exclusion to 

include in-kind items given to covered 

recipients to provide care to patients 

who are unable to pay, or for whom 

payment would be a significant 

hardship. 

Finally, we do not intend applicable 

manufacturers to be responsible for 

tracking each individual item provided 

to a covered recipient to ensure it is 

provided to a patient unable to pay. We 

believe it is sufficient for the applicable 

manufacturer and covered recipient to 

agree in writing that the covered 

recipient will use the in-kind items only 

for charity care. 

Secondly, we believe that the 

statutory text for this exclusion (section 

1128G(e)(10)(B)(viii) of the Act) clearly 

states that the exclusion should only 

apply to ‘‘in-kind items’’ and not all 

payments, so we have finalized that 

only in-kind items will be included in 

the exclusion, which does not include 

financial support for charitable covered 

recipients. However, we recognize that 

some payments made to charitable third 

parties may at some point indirectly 

benefit a covered recipient. We believe 

that these payments or other transfers of 

value should be reported based on the 

reporting requirements for indirect 

payments or other transfers of value. 

However, we believe that charitable 

contributions made directly to or 

intended for a covered recipient should 

be reported as a charitable contribution. 

(6) Product Samples 

Even though this exclusion was not 

specifically discussed in the proposed 

rule, we received comments on the 

exclusion for product samples from 

section 1128G(e)(10)(B)(ii) of the Act 

which states that ‘‘product samples that 

are not intended to be sold and are 

intended for patient use’’ are excluded 

from the reporting requirements. 

Comment: Many commenters 

recommend that CMS clarify the 

boundaries of the exclusion and 

interpret it widely to include samples 

beyond traditional drug samples, such 

as single use or disposable devices, 

demonstration devices, and evaluation 

equipment. A few commenters also 

recommended that the exclusion should 

include products used for research 

studies, as well as coupons and 

vouchers. Finally, a commenter stated 

that an applicable manufacturer may not 

know what actually happens to samples 

and should not be required to track 

them. 

Response: We appreciate the 

comments and agree that further 

clarification is necessary. We believe 

that the statutory text is clear that this 

exclusion applies to products intended 

for patient use; therefore, any drug, 

device, biological or medical supply 

provided as a sample to a covered 

recipient that is intended for use by 

patients will be included in the 

exclusion. Given this interpretation, as 

long as single use or disposable devices, 

demonstration devices or evaluation 

equipment provided to a covered 

recipient are intended for patient use, 

they will be included in the exclusion. 

Otherwise, we believe these items may 

be excluded from the reporting 

requirements under the exclusions for 

short term loans, as explained in that 

section. In addition, we believe that 

products used for research studies 

should be included as a part of the 

larger research payment. Regarding 

coupons and vouchers, we believe they 

fall within the exclusion, so we have 

finalized that all coupons and vouchers 

for the applicable manufacturer’s 

products that are intended for patient 

use to defray the costs of covered drugs, 

devices, biologicals or medical supplies 

will be included in this exclusion 

category. For the purposes of this rule, 

we believe such coupons and vouchers 

are materially similar to samples. 

Finally, we do not believe the 

applicable manufacturer should be 

responsible for tracking what actually 

happens to samples. Instead, we believe 

that as long as the applicable 

manufacturer and covered recipient 

agree in writing that the products will 

be provided to patients, which is 

commonplace in the industry, the 

provision of samples can be excluded. 

(7) Short Term Loans 

This exclusion was also not addressed 

in detail in the proposed rule; however 

we did receive some comments 

recommending clarifications. Section 

1128G(e)(10)(b)(iv) of the Act excludes 

‘‘the loan of a covered device for a shortterm trial period, not to exceed 90 days, 

to permit evaluation of the covered 

device by the covered recipient.’’ 

Comment: A few commenters 

recommended that we include loans of 

a broad range of devices (including 

medical supplies) such as both covered 

and non-covered devices, as well as a 

short-term supply of disposable devices. 

Additionally, some commenters 

requested clarification on the timing of 

the 90-day loan period and what to 

report if the loan goes beyond 90 days. 

We also received a comment to shorten 

the loan period to 60 days. 

Response: We appreciate the 

comments and agree that this exclusion 

can include a broad range of devices. 

We have finalized that this exclusion 

may include loans for covered devices, 

as well as those under development. We 

also have finalized that this will include 

a supply of disposable or single use 

devices (including medical supplies) 

intended to last for no more than 90 

days. We believe that these products 

should be treated similarly to nondisposable devices and, therefore, 

should be included in the exclusion. 

However, we do not believe that 

applicable manufacturers should be 

allowed to provide an unlimited supply 

of these products and still fall within 

the exclusion, so we are establishing a 

90-day supply as the limit. If an 

applicable manufacturer provides a 

specific disposable or single use device 

for more than 90 days (even if provided 

over multiple dates), the products 

provided beyond the 90-day supply will 

be subject to the reporting requirements. 

For a single product the total number 

of days for the loan should not exceed 

90 days for the entire year, regardless of 

whether the 90 days were consecutive. 

We believe that this aligns with the 

intention of the statute to limit the loan 

period to 90 days and not allow a new 

loan to start at the end of the previous 

loan period, thus avoiding the reporting 

requirements. In the event that the loan 

of a non-disposable device exceeds 90 

days (for the entire calendar year), the 

applicable manufacturer should start 

reporting as if the loan began on day 91. 

We do not believe that reporting the 

prior 90 days as a payment or other 

transfer of value would greatly increase 

the payment value which would be 

misleading to consumers. Additionally, 

if a device is purchased within 90 days, 

the applicable manufacturer does not 

need to report the loan since the loan 

was less than 90 days. The loan period 

is statutorily defined, so we do not have 

the authority to lower it, but appreciate 

the input that 90 days should be more 

than sufficient for the loan period. 


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(8) Contractual Warranty 

While this exclusion was not 

addressed in the proposed rule, we 

received a few comments on it. Section 

1128G(e)(10)(B)(v) excludes ‘‘items and 

services provided under a contractual 

warranty, including the replacement of 

a covered device, where he terms of the 

warranty are set forth in the purchase or 

lease agreement for the covered device.’’ 

Comment: Some commenters 

recommended that CMS allow the 

exclusion to extend to items and 

services provided under a contractual 

warranty, regardless of whether or not 

the warranty period had expired. These 

comments stated that often applicable 

manufacturers grant the terms of a 

warranty even after the period has 

expired. Additionally, a few 

commenters recommended that the 

exclusion should include other product 

contracts, such as product sale 

agreements, maintenance service 

agreements, and technical support 

agreements. Finally, a few commenters 

also recommended that replacement 

products as a part of a product recall 

should be included in this category. 

Response: We appreciate the 

comments and agree that it is not 

materially different for an applicable 

manufacturer to grant the terms of a 

contractual warranty before the period 

expires or afterwards. We have finalized 

that as long as the contract warranty 

specified the terms prior to expiration 

and the terms do not change, then the 

exclusions may extend to items and 

services provided outside the expiration 

period. We believe the exclusion should 

extend beyond the express time period 

of the warranty, since the warranty 

terms, and thus the relationship, are the 

same before or after the expiration 

period and it will be misleading to 

consumers to only include a portion of 

the relationships. 

In addition, we agree that there are 

numerous other contractual agreements 

that are similar to a warranty agreement, 

but are not specifically excluded. We 

believe that service or maintenance 

agreements are so similar to warranty 

agreements that it may be difficult to 

consumers and applicable 

manufacturers to meaningfully separate. 

We also believe the replacement 

products in the case of a product recall 

are materially similar and should be 

included. Given the similarities, we 

have finalized that items and services 

provided under a contractual service or 

maintenance agreement will also be 

subject to the exclusion. 

(9) Covered Recipient Acting as a 

Patient 

While this exclusion was not 

addressed specifically the proposed 

rule, we received a few comments on it. 

Section 1128G(e)(10)(B)(vi) of the Act 

excludes ‘‘a transfer or anything of value 

to a covered recipient when the covered 

recipient is a patient and not acting in 

the professional capacity of a covered 

recipient.’’ 

Comment: A few commenters 

recommended that CMS include in this 

exclusion situations when a covered 

recipient is a subject in a research study. 

Response: We appreciate the 

comments and agree that a covered 

recipients participating as a subject (and 

not in a professional capacity) in a 

research study is the same as being a 

patient and, should be included in the 

exclusion. 

(10) Provision of Healthcare 

Although the exclusion was not 

discussed in detail in the proposed rule, 

we did receive a few comments. Section 

1128G(e)(10)(B)(x) excludes ‘‘in the case 

of an applicable manufacturer who 

offers a self-insured plan, payments for 

the provision of health care to 

employees under the plan.’’ 

Comment: A few commenters 

recommended that CMS clarify that this 

exclusion includes the provision of 

health care to both covered recipients 

and their families covered under the 

self-insured plan. Similarly, received 

few commenters discussed other 

situations, outside a self-insured plan 

when an applicable manufacturer may 

reimburse a physician for provision of 

health care services to employees. 

Response: We appreciate the 

comments and agree that payments to 

covered recipients for services rendered 

to family members receiving care under 

a self-insured plan should also be 

excluded from the reporting 

requirements. Similarly, we believe that 

the provision of healthcare to employees 

should extend beyond that offered 

under a self-insured plan. We 

understand that applicable 

manufacturers, both self-insured and 

otherwise, may provide healthcare 

services to employees beyond 

traditional insurance. We believe that 

for the purposes of this exclusion there 

is little material difference between the 

provision of healthcare under a selfinsured plan and provision of 

healthcare outside a self-insured plan. 

We have finalized that this category 

encompasses other situations, beyond a 

self-insured plan, when an applicable 

manufacturer makes a payment to a 

covered recipient as part of healthcare 

services provided to the manufacturer’s 

employees or their family, such as at an 

on-site clinic or at a health fair. 

(11) Nonmedical Professional 

This exclusion was not specifically 

addressed in the proposed rule and we 

did not receive specific comments on it, 

and we have finalized it as proposed. 

Section 1128G(e)(10)(B)(xi) of the Act 

excludes ‘‘in the case of a covered 

recipient who is a licensed nonmedical 

professional, a transfer of anything of 

value to the covered recipient if the 

transfer is solely for the non-medical 

professional services of such licensed 

nonmedical professional.’’ 

(12) Civil or Criminal Action or 

Administrative Proceeding 

Although this exclusion was not 

specifically addressed in the proposed 

rule, we did receive a few comments on 

it. Section 1128G(e)(10)(B)(xii) of the 

Act excludes ‘‘in the case of a covered 

recipient who is a physician, a transfer 

of anything of value to the covered 

recipient if the transfer is payment 

solely for the services of a covered 

recipient with respect to a civil or 

criminal action or an administrative 

proceeding.’’ 

Comment: A few commenters 

recommended that CMS clarify the 

exclusion to include specific legal 

proceedings or arrangements, such as 

legal defense, prosecution, settlement or 

judgment of a civil or criminal action 

and arbitration or other legal action. 

Response: We appreciate the 

comments and agree that the agency can 

help clarify this exclusion. We will 

finalize that other specific legal 

relationships will be included in the 

exclusion. We believe that there are 

numerous legal proceedings that require 

physician involvement and we plan to 

exclude all of them, in order to allow for 

clear, consistent reporting requirements 

for applicable manufacturers, covered 

recipients, and consumers. 

k. Indirect Payments or Other Transfers 

of Value Through a Third Party 

Section 1128G(e)(10)(A) of the Act 

also excludes the reporting of payments 

or other transfers of value that an 

applicable manufacturer makes 

indirectly to a covered recipient through 

a third party where the applicable 

manufacturer is unaware of the identity 

of the covered recipient. However, any 

payment or other transfer of value 

provided to a covered recipient through 

a third party, whether or not the third 

party is under common ownership with 

an applicable manufacturer or operating 

in the U.S., must be reported if the 


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applicable manufacturer is aware of the 

covered recipient’s identity. 

In the proposed rule, we proposed 

that indirect payments are excludable 

when an applicable manufacturer is 

unaware of the identity of the covered 

recipient and explained that an 

applicable manufacturer is unaware of 

the identity if the applicable 

manufacturer does not know (as defined 

in § 403.902) the identity of the covered 

recipient. The definition of ‘‘know’’ in 

§ 403.902 provides that a person, with 

respect to information, has actual 

knowledge of the information, acts in 

deliberate ignorance of the information, 

or acts in reckless disregard of the truth 

or falsity of the information. This 

standard is consistent with the 

knowledge standard set forth in many 

laws, including the False Claims Act, 

and we believed it is one with which 

many applicable manufacturers are 

already familiar. 

Comment: Numerous commenters 

discussed when an applicable 

manufacturer should be required to 

report indirect payments to covered 

recipients made through a third party. 

Many commenters recommended 

additional interpretations to further 

clarify when an indirect payment is 

reportable. A few commenters 

recommended that all indirect payments 

should be excluded from the reporting 

requirements; however, some other 

commenters supported the reporting of 

indirect payments. Similarly, some 

commenters requested that payments or 

other transfers of value made through 

certain third parties, such as medical 

professional societies, be carved out of 

the third party reporting requirements 

such that payments to covered 

recipients made through these entities 

would not be reportable. 

Many commenters did not advocate 

excluding all indirect payments, but 

instead recommended ways to limit 

which indirect payments would be 

reported. One common recommendation 

was to limit the reporting of indirect 

payments to those under control of the 

applicable manufacturer. Commenters 

described this concept in various ways, 

but generally suggested that reporting 

should be limited to when an applicable 

manufacturer has control of the 

selection of the recipient of the 

payment, and not merely when they are 

aware of the covered recipient’s 

identity. 

Another common comment was that 

indirect payments or other transfers of 

value should only be reported if they are 

at the request of or designated on behalf 

of a covered recipient. These 

commenters stated that this was the 

statutory intent for reporting indirect 

payments given the language requiring 

reporting of payments made at the 

request of or designated on behalf of a 

covered recipient to a third party 

recipient. A subset of these commenters 

recommended that in order for a 

payment to be reportable, the applicable 

manufacturer must notify both the 

covered recipient and the third party 

that the payment will be reported and 

receive concurrence that it is accurate. 

Finally, a few commenters 

recommended that the applicable 

manufacturer must require, instruct or 

direct the third party to provide a 

payment or other transfer or value (or a 

portion of one) to a covered recipient(s). 

Response: We appreciate the 

comments and agree that CMS should 

consider ways to further clarify when an 

indirect payment or other transfer of 

value should be reported. In addition, 

we intend that this exclusion refers to 

both payments and other transfers of 

value, despite references in the 

proposed rule to only transfers of value. 

We do not agree that all indirect 

payments or other transfers of value 

should be excluded from the reporting 

requirements. Section 1128G(e)(10)(A) 

of the Act states that the exclusion of 

indirect payments or other transfers 

made through a third party is limited to 

situations ‘‘where the applicable 

manufacturer is unaware if the identity 

of the covered recipient.’’ This indicates 

that indirect payments or other transfers 

of value where the applicable 

manufacturer is aware of the identity of 

the covered recipient must be reported, 

and only those where the applicable 

manufacturer is unaware of the identity 

are excluded. Moreover, we believe that 

excluding from the reporting 

requirements all payments made 

through a third party would create a 

significant loophole by allowing 

manufacturers to funnel payments 

through a third party and not report 

them; such a loophole would 

significantly undermine the intent of the 

reporting requirements. Additionally, 

we do not believe that we have statutory 

authority to carve out otherwise 

reportable indirect payments made 

through particular third parties, such as 

medical professional societies. 

With regard to the recommendation 

that indirect payments should only be 

reported when under the control of the 

applicable manufacturer, we believe 

that controlling the selection of a 

recipient is different than being aware of 

the identity of the recipient. Congress 

based the exclusion on an applicable 

manufacturer being unaware of a 

covered recipient’s identity, not on the 

applicable manufacturer lacking control 

over the selection of the covered 

recipient. Accordingly, we do not 

believe that Congress intended lack of 

control to be the basis for the indirect 

payment exclusion. Additionally, we 

believe that receiving a payment or 

other transfers of value from an 

applicable manufacturer could lead to 

conflicts of interest, even in the event 

that the applicable manufacturer does 

not directly control the selection of the 

covered recipient. 

Similarly, we also do not believe that 

the statutory language suggests that 

indirect payments or other transfers of 

value are only reportable if they are 

made at the request of or designated on 

behalf of a covered recipient. The 

parenthetical reference in section 

1128G(a)(1)(A) of the Act refers to 

payments or other transfers of value 

made to an entity or individual other 

than a covered recipient on behalf of or 

at the request of a covered recipient. We 

believe this situation is different from 

one in which a payment is provided to 

a third party and passed through to a 

covered recipient, as referenced in the 

exclusion in section 1128G(e)(10)(A) of 

the Act. In situations where a covered 

recipient requests that a payment or 

other transfer of value be provided to a 

third party, and the third party in turn 

provides the payment or other transfer 

of value to the covered recipient, the 

payment must be reported under the 

name of the covered recipient. 

We agree with the comments that we 

should provide some guidance on when 

indirect payments must be reported. We 

understand that there are circumstances 

where an applicable manufacturer 

makes a payment to a third party, which 

will be passed indirectly to a covered 

recipient, unbeknownst to the 

applicable manufacturer. For example, 

an applicable manufacturer could make 

a payment to a consulting firm for 

professional services and the consulting 

firm incidentally employs a physician 

on the project. The applicable 

manufacturer’s payment was ultimately 

transmitted, at least in part, to a 

physician covered recipient, but not 

because the applicable manufacturer 

directed that the payment be made to a 

specific physician, or to any physician 

at all. We believe that in these 

situations, it would be misleading to 

require reporting of the relationship, 

since the applicable manufacturer did 

not intend or expect that a covered 

recipient would receive any portion of 

the payment or other transfer of value. 

In order to address this concern and 

clarify when an indirect payment must 

be reported, we have provided for the 

purposes of these regulations a 

definition of ‘‘indirect payments or 

other transfers of value’’ in § 403.902. 


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The definition states that an indirect 

payment or other transfer of value is one 

that an applicable manufacturer 

requires, instructs, or directs to be 

provided to a covered recipient, 

regardless of whether the applicable 

manufacturer specifies the specific 

covered recipient. For example, if an 

applicable manufacturer provided an 

unrestricted donation to a physician 

professional organization to use at the 

organization’s discretion, and the 

organization chose to use the donation 

to make grants to physicians, those 

grants would not constitute ‘‘indirect 

payments’’ because the applicable 

manufacturer did not require, instruct, 

or direct the organization to use the 

donation for grants to physicians. The 

physician professional association could 

have used the donation for another 

purpose at its discretion. In this 

situation, the applicable manufacturer 

would not be required to report the 

donation, even if a portion of the 

payment or other transfer of value was 

ultimately provided to a covered 

recipient as a grant (or some other type 

of payment or other transfer of value). 

However, if an applicable manufacturer 

gave money to a medical professional 

society earmarked for the purpose of 

funding awards or grants for physicians, 

the awards or grants would constitute 

indirect payments to covered recipients 

and would be subject to the reporting 

requirements. In another example, an 

applicable manufacturer may provide a 

general payment to a clinic for one of its 

employed physicians to review 

materials. In this case, the applicable 

manufacturer directed that the payment 

be provided to a physician covered 

recipient, so it would constitute an 

indirect payment and would be a 

reportable indirect payment or other 

transfer of value. 

Comment: A number of commenters 

recommended alternative definitions of 

‘‘aware.’’ For example, many 

commenters recommended that we use 

a standard of ‘‘actual knowledge’’ or 

‘‘constructive knowledge,’’ rather than 

the False Claims Act standard. 

Additionally, many commenters also 

discussed an applicable manufacturer’s 

affirmative duty to investigate the 

identities of covered recipients. The 

commenters suggested that applicable 

manufacturers should not have an 

affirmative duty to determine the 

identity of a covered recipient, but that 

the proposed definition of awareness 

meant that applicable manufacturers 

would have an affirmative duty. These 

commenters stated that an applicable 

manufacturer would be in reckless 

disregard, if it knew that a payment or 

other transfer of value went to a covered 

recipient, but did not specifically know 

the identity of the covered recipient. 

Similarly, some commenters also 

discussed the language in the proposed 

rule that attributes awareness of the 

identity of the covered recipient by an 

agent of the applicable manufacturer to 

the applicable manufacturer. 

Commenters both supported and 

opposed the proposal. Some of these 

commenters recommended that CMS 

provide additional information on how 

the agency interpreted ‘‘agent.’’ 

Finally, many commenters also 

recommended that CMS apply some sort 

of time restriction on the awareness 

requirement. The proposed rule did not 

specify whether there was a specific 

time period for awareness of the identity 

of the covered recipient, so the 

commenter requested clarification. 

Many of the commenters recommended 

that an applicable manufacturer must be 

aware of the identity of a covered 

recipient at the time of payment. 

Whereas, other comments provided 

slight variations, such as awareness at 

the time the payment is committed or 

agreed upon, but in general the majority 

of commenters focused on the time of 

payment. 

Response: We appreciate the 

comments on alternative interpretations 

of the statutory tem ‘‘unaware’’; 

however, we have decided to finalize 

our proposed definition that an 

applicable manufacturer is ‘‘unaware’’ if 

it does not know the identity of a 

covered recipient, and that ‘‘know’’ 

means that the manufacturer has actual 

knowledge of the identity or acts in 

deliberate ignorance or reckless 

disregard of the identity. We appreciate 

the concerns about the knowledge 

standard, but we are concerned that the 

actual knowledge standard suggested by 

several commenters is too limiting. An 

actual knowledge standard could 

potentially allow applicable 

manufacturers to direct payments to a 

limited category or subset of individuals 

and avoid the reporting requirements by 

not knowing the names of the specific 

covered recipients and claiming a lack 

of actual knowledge. We believe that by 

clarifying that applicable manufacturers 

must only report indirect payments or 

other transfers of value that they direct 

or instruct third parties to pay to 

covered recipients, we will address 

some of the commenters’ concerns about 

the broader knowledge standard. 

Therefore, if a payment meets the 

definition of an indirect payment or 

other transfer of value in § 403.902, then 

the payment can only be excluded from 

the reporting requirements if the 

applicable manufacturer did not 

‘‘know’’ the identity of the covered 

recipient, as defined in § 403.902. 

However, we want to clarify that, for 

purposes of this rule only, we will not 

consider an applicable manufacturer to 

be acting in deliberate ignorance or 

reckless disregard of a covered 

recipient’s identity in situations when 

the reason a payment or other transfer 

of value is being made through a third 

party is that the identity of the covered 

recipient remains anonymous. For 

example, an applicable manufacturer 

may hire a market research firm to 

conduct a double-blinded market 

research study, which includes paying 

physicians $50 for responding to a set 

of questions. The applicable 

manufacturer clearly intends a portion 

of the payment to be provided to 

physicians, but given that the reason for 

the third party’s involvement is 

specifically to maintain the anonymity 

of the respondents and sponsor, we do 

not intend this to be considered a 

reportable indirect payment or other 

transfer of value. 

We recognize that by finalizing the 

proposed definition, applicable 

manufacturers may still feel they have 

an affirmative duty to determine the 

identity of covered recipients. However, 

our intention with this definition is to 

prevent applicable manufacturers from 

directing payments to a discrete set of 

covered recipients whose identities the 

manufacturer may not actually know, 

but could easily ascertain. For example, 

we believe that a manufacturer that 

directs a third party to make payments 

to the top billing cardiologists in a 

certain city or the chiefs of staff of a 

certain class of hospitals should be 

required to report these payments, even 

though they do not have actual 

knowledge of the identities of such 

individuals. However, we do not require 

reporting of every payment that an 

applicable manufacturer makes through 

a third party that is ultimately provided 

to a covered recipient; rather, the intent 

is to require reporting of indirect 

payments where applicable 

manufacturers know or should know the 

identity of the covered recipients who 

receive them. 

We appreciate the comments 

regarding awareness of an agent of an 

applicable manufacturer of the identity 

of a covered recipient; however, we 

have finalized the requirements as 

proposed. We understand that 

awareness by an agent is somewhat 

different than awareness of the 

applicable manufacturer, but believe the 

reporting of indirect payments in this 

situation is warranted. Otherwise, 

applicable manufacturers could 

structure their business model, so that 


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payments are funneled through an agent 

that selects the recipients. However, we 

do not intend the concept of an agent of 

the applicable manufacturer to be 

merely any third party with a 

connection to the applicable 

manufacturer. Instead, we intend the 

term to refer to legal agents acting on 

behalf of the applicable manufacturer. 

Finally, we agree that applicable 

manufacturers should not be 

responsible for tracking and reporting 

indirect payments or other transfers of 

value indefinitely. However, we do not 

agree that the time period for awareness 

of the identity of the covered recipient 

should be limited to the time the 

applicable manufacturer made the 

payment to the third party. We are 

concerned that this would allow 

applicable manufacturers to funnel 

payments or other transfers of value to 

third parties, and thereafter direct them 

to specific covered recipients, thus 

potentially avoiding the reporting 

requirements. Additionally, we believe 

there are multiple dates which could be 

reported, such as the date the applicable 

manufacturer decides to make the 

payment, or the date the payment is sent 

to or received by the third party, making 

it difficult to standardize a policy. After 

reviewing the comments, we will 

finalize that for the purposes of this 

exclusion, an applicable manufacturer 

must be unaware of the identity of a 

covered recipient during the reporting 

year and the second quarter of the 

subsequent year following the transfer 

of the payment from the third party to 

the covered recipient. Therefore, if an 

applicable manufacturer becomes aware 

of the identity of a covered recipient on 

or before June 30th of the year following 

the year in which the payment is made 

by the third party to the covered 

recipient, then the payment or other 

transfer of value must be reported. For 

example, an applicable manufacturer 

makes a payment to a medical 

professional society in March 2013 with 

instructions to use the money to provide 

grants to physicians. This payment 

meets the definition of an indirect 

payment, since the applicable 

manufacturer earmarked the payment 

for the physician grants. The 

professional society selects and makes 

payments to the grantees in April 2013 

and alerts the sponsoring applicable 

manufacturer to the grant recipients in 

June 2013. Since the applicable 

manufacturer became aware of the 

identity of the covered recipients 

receiving the grants during the reporting 

year in which the payment was made, 

the payment or other transfer of value 

must be reported. Similarly, if the 

payment was made in November 2013, 

and the professional society provided 

the names of the grantees to the 

applicable manufacturer in April 2014, 

the payment would be reportable as part 

of the applicable manufacturer’s report 

for CY 2014. 

In determining this standard, we 

sought a definite time period, since the 

applicable manufacturer may not know 

the selection and payment process of 

the third party making the actual 

payment to the covered recipient. We 

also sought a uniform cut off point for 

all payments or other transfers of value 

in a reporting year, rather than a rolling 

time period, which would be based on 

the date of payment (such as 6 or 12 

months after the date of payment). We 

believe a rolling date would be difficult 

due to the reasons outlined previously 

regarding inconsistency in the date of 

payment, as well as due to operational 

difficulties for both CMS and applicable 

manufacturers to track the awareness 

standard for each payment or other 

transfer of value. In order to set a date 

which applied to an entire year, we 

needed to set a date beyond the end of 

the reporting calendar year (December 

31), which allows some time for indirect 

payments or other transfers of value 

made late in the year to be finalized. 

However, we did not want to set a time 

period which was too long and would 

require applicable manufacturers to 

report indirect payments that were 

made several years prior. We believe 

that two quarters beyond the end of the 

payment reporting year is sufficient for 

payments or other transfers of value 

made late in the year. 

Comment: Several commenters 

questioned the process for reporting 

indirect payments, which was not 

addressed in detail in the proposed rule. 

A few commenters suggested that 

applicable manufacturers should be 

required to label all payments as direct 

or indirect and report the entity paid. 

Similarly, some commenters 

recommended that CMS clarify the 

amount of information that a third party 

should be required to provide to 

applicable manufacturers regarding 

indirect payments or other transfer of 

value. These commenters expressed that 

it would be burdensome for third parties 

to provide detailed information to 

applicable manufacturers regarding the 

recipients of payments made using the 

manufacturer’s funding. Finally, a few 

commenters also inquired about the 

process for reporting payments when 

multiple applicable manufacturers 

contribute to a specific payment or other 

transfer of value. For example, multiple 

applicable manufacturers may fund a 

single speaker. 

Response: We appreciate the 

comments and agree that providing 

more detail is necessary. However, we 

do not believe it is necessary to 

significantly change the reporting 

requirements for indirect payments. 

Given the unfavorable comments 

submitted regarding the proposal to 

classify research payments as direct or 

indirect, we believe that it would be 

similarly confusing to classify all 

payments or other transfers of value as 

either direct or indirect. Additionally, 

we do not believe it is necessary or 

appropriate for CMS to provide any 

requirements on the information third 

parties should or should not report. 

Applicable manufacturers will need to 

work with the third parties through 

which they make payments to covered 

recipients to ensure that the third 

parties are taking the appropriate steps 

to track the indirect payments. We 

recognize that this will, in some cases, 

require the third parties to put in place 

new tracking systems, but we believe 

that in many cases, such tracking 

systems already exist. For example, we 

believe that physician professional 

societies generally keep track of the 

physicians to whom they provide 

industry-funded grants and may not 

need to put new accounting systems in 

place in order for applicable 

manufacturers to be able to comply with 

the reporting requirements of this rule. 

Finally, we seek to clarify the situation 

when multiple applicable 

manufacturers provide a payment or 

other transfer of value to a covered 

recipient through a third party. We 

intend to allow for flexibility because 

we want to ensure that no payment or 

other transfer of value is captured twice. 

Applicable manufacturers and third 

parties may work together to determine 

the best method for reporting the 

payment or other transfers of value, as 

long as the payment or other transfer of 

value gets reported. We believe 

payments or other transfers of value 

made through a third party to a covered 

recipient using funds from multiple 

applicable manufacturers will be 

limited, since the companies will be 

required to report only those payments 

or other transfers of value directed to 

covered recipients and not unrestricted, 

non-earmarked payments. 

Comment: Numerous commenters 

questioned the reporting on indirect 

payments or other transfers of value for 

education, particularly accredited or 

certified continuing education (both 

CME and continuing dental education). 

A large number of these commenters 

recommended that accredited or 

certified continuing education payments 


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to speakers (and payments for 

supporting materials) should not be 

reported because there are safeguards 

already in place, and they are not direct 

payments or other transfers of value to 

a covered recipient. Many of these 

commenters also stated that requiring 

that the reporting of payments or other 

transfers of value related to continuing 

education would be detrimental to 

continuing education and would reduce 

the funding for and attendance at 

continuing education programs. 

Additionally, some of these commenters 

also strongly indicated that they believe 

that Congress did not intend to require 

applicable manufacturers to report 

payments related to accredited or 

certified continuing education 

programs. However, we did receive 

some comments supporting the 

reporting of accredited or certified 

continuing education-related payments 

or other transfers of value, particularly 

when the sponsor provides suggestions 

to the CME vendor for potential faculty 

or speakers at a CME program. No 

commenters recommended that 

payments made to subsidize the costs of 

attendees of continuing education 

programs (as opposed to payments for 

faculty or speakers) should be reported. 

Beyond accredited or certified 

continuing education, these comments 

were mixed on whether unaccredited 

and non-certified speaking engagements 

should be reported. A few commenters 

also addressed other types of education, 

such as Risk Evaluation and Mitigation 

Strategies (REMS), suggesting that since 

they were required by FDA, sponsorship 

of REMS education should be exempted 

from the reporting requirements. 

Response: We appreciate the 

comments and agree that industry 

support for accredited or certified 

continuing education is a unique 

relationship. The accrediting and 

certifying bodies, including ACCME, 

AOA, AMA, AAFP, and ADA CERP, and 

the industry standards for commercial 

support, create important and necessary 

safeguards prohibiting the involvement 

of the sponsor in the educational 

content. However, we believe that even 

with this separation, the sponsor may 

still influence the selection of faculty by 

offering suggestions to the accredited or 

certified continuing education provider; 

although the continuing education 

provider may not be required to follow 

these suggestions, we believe that it may 

often be impossible to distinguish when 

a suggestion is influential and when it 

is not. 

We have finalized at § 403.904(g)(1) 

that an indirect payment made to a 

speaker at a continuing education 

program is not an indirect payment or 

other transfer of value for the purposes 

of this rule and, therefore, does not need 

to be reported, when all of the following 

conditions are met: (1) The program 

meets the accreditation or certification 

requirements and standards of the 

ACCME, AOA, AMA, AAFP or ADA 

CERP; (2) the applicable manufacturer 

does not select the covered recipient 

speaker nor does it provide the third 

party vendor with a distinct, identifiable 

set of individuals to be considered as 

speakers for the accredited or certified 

continuing education program; and (3) 

the applicable manufacturer does not 

directly pay the covered recipient 

speaker. We believe that when 

applicable manufacturers suggest 

speakers, they are directing or targeting 

their funding to the speakers, so these 

payments will be considered indirect 

payments for purposes of this rule. 

Conversely, when they do not suggest 

speakers, they are allowing the 

continuing education provider full 

discretion over the CME programming, 

so the payment or other transfer of value 

will not be considered an indirect 

payment for purposes of these reporting 

requirements. Additionally, since 

industry support of CME programs that 

meets all three requirements discussed 

previously will not be considered 

indirect payments or other transfers of 

value for the purposes of reporting, the 

awareness standards for indirect 

payments are not applicable to such 

support. We believe that this approach 

will greatly reduce the number of 

payments to speakers at accredited or 

certified continuing education programs 

that must be reported. Applicable 

manufacturers will not be responsible 

for reporting payments made to CME 

vendors that are used to subsidize 

attendees’ tuition fees for continuing 

education events. However, as 

explained in the discussion of the 

nature of payment categories, payments 

or other transfers of value associated 

with attendance of an event (such as 

travel and meals) must be reported as 

required. 

With regard to unaccredited and noncertified education, we believe that 

since this type of education program 

does not require the same safeguards as 

an accredited and certified program, 

payments or transfers of value should be 

reported as required for any other 

payment or other transfer of value. If the 

payment or other transfer of value is 

made indirectly, it will be subject to the 

same reporting requirements for all 

indirect payments. The details for how 

to report both accredited or certified, 

and unaccredited or non-certified 

continuing education payments or other 

transfers of value are discussed in 

section II.B.1.h. of this final rule, 

dedicated to nature of payment 

categories. 

Finally, we do not agree with 

comments that payments related to 

REMS with elements to assure safe use 

that require prescriber education should 

have a blanket exclusion from the 

reporting requirements. We recognize 

that REMS are required by FDA for 

some prescription drug products to 

ensure that the benefits of a drug 

outweigh the risks and that REMS often 

requires a sponsor to inform or educate 

health care providers about the risks 

associated with a product. However, we 

believe that payments made in 

connection with prescriber education 

required by REMS should be reportable 

on the same basis as other education 

payments. For example, if a sponsor 

directs the choice of a program speaker, 

or pays for covered recipients’ meals or 

transportation to a REMS educational 

program, such payments would be 

reportable. However, applicable 

manufacturers are not required to report 

the provision of written materials that 

have been approved by FDA for 

distribution to physicians, such as Dear 

Healthcare Provider letters. Other REMS 

educational materials may be excluded 

if they fall within the exclusion for 

materials intended for patient use 

described in § 403.904(i)(4). 

2. Reports on Physician Ownership and 

Investment Interests Under Section 

1128G(a)(2) of the Act 

Section 1128G(a)(2) of the Act 

requires applicable manufacturers, as 

well as applicable GPOs, to report to the 

Secretary, in electronic form, certain 

information concerning ownership and 

investment interests held by physicians 

or their immediate family members in 

such applicable manufacturers and 

applicable GPOs, and payments or other 

transfers of value to such physician 

owners or investors. In the proposed 

rule, we proposed that applicable GPOs 

were only required to report under 

section 1128G(a)(2) of the Act. 

Comment: A few commenters 

suggested that Congress intended 

applicable GPOs to report under section 

1128G(a)(1) of the Act, as well as under 

section 1128G(a)(2) of the Act. These 

commenters supported their 

interpretation with the introductory 

language of section 1128G(a)(2) stating 

that ‘‘[i]n addition to the requirement 

under paragraph (1)(A)’’ regarding 

reporting of payments to covered 

recipients, applicable manufacturers 

and applicable GPOs must report 

information regarding physician 

ownership and investment interests. 


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Response: We appreciate the 

comment but do not agree that 

applicable GPOs are required to report 

under section 1128G(a)(1) of the Act. 

While the phrasing in section 1128(a)(2) 

could be phrased more clearly, we do 

not believe it suggests that applicable 

GPOs need to report under both 

sections. Applicable GPOs are not 

mentioned in section 1128G(a)(1) at all, 

indicating that Congress did not intend 

for them to be subject to the 

requirements of that section. 

Additionally, other sections of the 

statute, such as the definition of 

payment or other transfer of value 

(section 1128G(e)(10) of the Act), only 

refer to applicable manufacturers when 

discussing payments or other transfers 

of value separately from ownership of 

investment interests. 

a. Reporting Entities 

(1) Applicable Manufacturers 

Section 1128G(a)(2) of the Act 

includes applicable manufacturers as 

defined for section 1128G(a)(1) of the 

Act, as entities subject to the reporting 

requirements in section 1128G(a)(2) of 

the Act. 

(2) Applicable Group Purchasing 

Organizations 

Section 1128G(a)(2) of the Act also 

includes applicable GPOs as entities 

required to submit reports on physician 

ownership or investment interests; these 

reports are also required to include 

payments or other transfers of value 

provided to the applicable GPO’s 

physician owners or investors. Section 

1128G(e)(1) of the Act defines 

‘‘applicable group purchasing 

organization’’ as ‘‘a group purchasing 

organization (as defined by the 

Secretary) that purchases, arranges for 

or negotiates the purchase of a covered 

drug, device, biological, or medical 

supply, which is operating in the United 

States, or in a territory, commonwealth 

or possession of the United States.’’ 

We proposed to define ‘‘applicable 

GPOs’’ as an entity that: (1) operates in 

the United States, or in a territory, 

possession or commonwealth of the 

United States; and (2) purchases, 

arranges for or negotiates the purchase 

of a covered drug, device, biological, or 

medical supply for a group of 

individuals or entities, and not solely 

for use by the entity itself. 

We proposed that the definition will 

not include entities that buy covered 

drugs, devices, biologicals, or medical 

supplies solely for their own use, such 

as some large practices or hospitals 

(including those owned by physicians). 

Rather, it is our intent to capture entities 

(including physician-owned entities) 

that purchase, arrange for or negotiate 

the purchase of covered drugs, devices, 

biologicals, or medical supplies for 

resale or distribution to others. 

Additionally, we also interpreted the 

statute to encompass not only more 

traditional GPOs that negotiate contracts 

for their members, but also entities that 

purchase covered drugs, devices, 

biologicals, and medical supplies for 

resale or distribution to groups of 

individuals or entities. These 

interpretations would include, for 

example, physician owned distributors 

(PODs) of covered drugs, devices, 

biologicals, and medical supplies. 

Comment: A number of commenter 

supported the definition of ‘‘applicable 

GPOs,’’ particularly the inclusion of 

PODs. However, some commenters 

suggested revisions to the definition in 

order to capture additional PODs. For 

example, these comments included 

removing the reference to ‘‘group’’ in 

the definition, as well as limiting the 

exclusion for entities that purchase the 

products for their own use to only those 

entities that are the end users of the 

device based on billing under the same 

provider or supplier number as the 

entities that purchased the product. The 

commenters suggested that this would 

capture both fee-based and buy-and-sell 

POD models. Finally, a few commenters 

recommended that CMS issue a few 

clarifications, including allowing 

reselling in case of shortages and 

explicitly including commonly owned 

entities purchasing together as ‘‘own 

use.’’ 

Response: We appreciate the 

comments, but do not agree with the 

recommended changes to the definition 

to include additional PODs. While we 

appreciate the need to include as many 

PODs as possible, we are concerned that 

removing the word ‘‘group’’ from the 

definition would be contrary to the 

statutory phrase ‘‘group purchasing 

organization’’ which clearly implies that 

in order to be a GPO, the entity must be 

purchasing for a group. Therefore, we 

are not going to remove the word 

‘‘group’’ from the definition. We are also 

concerned that hospitals and large 

group practices may not always 

purchase under the same provider or 

supplier number with which they bill, 

making it difficult to determine the end 

user by billing number. Therefore, we 

will not be changing the language in the 

definition to require use of the same 

provider or supplier number. Based on 

these considerations, we have decided 

to finalize the proposed definition. We 

recognize that this definition may not 

include every POD model; however, we 

intend for it to capture as many PODs 

as possible, while still aligning with the 

statutory language. Finally, we do not 

intend our definition to apply to rare 

and circumstantial resale of a product in 

response to a documented drug 

shortage. Similarly, we believe that bulk 

purchasing of covered products for 

commonly owned entities, which will 

be used only by those entities, would be 

considered ‘‘own use.’’ 

b. Physician Owners or Investors 

Section 1128G(a)(2) of the Act differs 

from section 1128G(a)(1) of the Act in 

that section 1128G(a)(2) of the Act does 

not use the term ‘‘covered recipient’’ as 

defined in 1128G(e)(6) of the Act, which 

explicitly excludes payments or other 

transfers of value to employees of an 

applicable manufacturer from the 

reporting requirements. Instead, section 

1128G(a)(2) of the Act uses the term 

‘‘physician’’ as defined in section 

1861(r) of the Act. Based on this 

definition of ‘‘physician,’’ we proposed 

that the requirement to report physician 

ownership and investment interests 

includes any physician, regardless of 

whether the physician is an employee of 

the applicable manufacturer or 

applicable GPO. We did not receive any 

comments on this interpretation, and we 

will finalize it. 

Additionally, as required by statute, 

ownership and investment interests of 

immediate family members of 

physicians must also be reported under 

this provision. In the proposed rule, we 

defined immediate family member as 

one of the following (as defined for 

purposes of section 1877(a) of the Act at 

42 CFR 411.351): 

• Spouse. 

• Natural or adoptive parent, child, or 

sibling. 

• Stepparent, stepchild, stepbrother, 

or stepsister. 

• Father-, mother-, daughter-, son-, 

brother-, or sister-in-law. 

• Grandparent or grandchild. 

• Spouse of a grandparent or 

grandchild. 

In the proposed rule, we also stated 

that in cases when the ownership or 

investment interest is held by an 

immediate family member of a 

physician, applicable manufacturers 

and applicable GPOs should report not 

only the required information for the 

physician, but also that the ownership 

or investment interest is held by an 

immediate family member of the 

physician. We considered whether to 

require the reporting of the immediate 

family member’s relationship to the 

physician, as well as the immediate 

family member’s name, but did not 

propose to require it. 


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Comment: A few commenters 

recommended that ownership or 

investment interests held by immediate 

family members of physicians should 

not be reported at all. Similarly, a few 

other commenters advocated that CMS 

employ a narrower definition of 

‘‘immediate family member.’’ 

Response: We appreciate the 

comments; however, both the 

requirement to report ownership or 

investment interests of immediate 

family members of physicians, as well 

as the proposed definition of immediate 

family member, are required by statute. 

Section 1128G(a)(2) requires the 

reporting of ownership or investment 

interests held by an immediate family 

member of a physician and states that 

‘‘immediate family member’’ is defined 

as it is for purposes of section 1877(a) 

of the Act, which is codified at 42 CFR 

411.351. Given the statutory 

requirements, we have finalized the 

definition as proposed. 

Comment: Many commenters 

supported not reporting the name and 

relationship of the immediate family 

member. However, a few commenters 

suggested that applicable manufacturers 

should not be required to report the 

name or relationship of immediate 

family members, but applicable GPOs 

should be required to report the 

information. Additionally, some 

commenters requested that CMS clarify 

expectations for how applicable 

manufacturers and applicable GPOs 

should obtain ownership or investment 

interest information. A few commenters 

also recommended that CMS should not 

require physicians to disclose this 

information and applicable 

manufacturers may rely on the 

representations by owners or investors 

regarding immediate family members. 

Finally, a few commenters 

recommended that in the event that 

multiple family members hold an 

ownership or investment interest in a 

specific entity, then the applicable 

manufacturer or applicable GPO should 

only report the ownership or investment 

interest in aggregate. 

Response: We appreciate the 

comments and agree that applicable 

manufacturers and applicable GPOs 

should not report the name and 

relationship of immediate family 

members of physicians holding 

ownership or investment interests in 

such entities. However, we do not agree 

that this standard should be applied 

differently for applicable manufacturers 

and applicable GPOs since we believe 

the privacy for immediate family 

members is the same regardless of the 

entity at issue. 

Regarding the requirements for 

obtaining information on ownership or 

investment interests, we have revised 

the definition to help clarify situations 

when the applicable manufacturer or 

applicable GPO does not know that a 

reportable ownership or investment 

interest exists. We do not have the 

authority to require physicians or 

owners or investors to report this 

information; however, we believe that 

an applicable manufacturer or 

applicable GPO may inquire about these 

relationships. These situations are 

discussed more fully in the section on 

the definition of ‘‘ownership or 

investment interests.’’ 

Finally, we also agree that applicable 

manufacturers and applicable GPOs 

may report a specific ownership or 

investment interest in aggregate across 

multiple family members. Since we are 

finalizing that applicable manufacturers 

and applicable GPOs do not need to 

report the name or relationship for an 

immediate family member holding an 

ownership or investment interest in 

such entity, we do not believe the 

reported interests need to be on the 

individual level and instead can be 

aggregated across multiple immediate 

family members. However, we intend 

that applicable manufacturers and 

applicable GPOs can only aggregate 

interests when multiple immediate 

family members have ownership or 

investment interests with the same 

terms (as reported pursuant to 

§ 403.906(b)(5)) and the value reported 

includes the total value of all the 

immediate family member’s interests. 

c. Ownership or Investment Interests 

We proposed to define an ownership 

or investment interest in an applicable 

manufacturer or applicable GPO in a 

similar manner as in the physician selfreferral regulation (42 CFR 411.354(b)). 

Specifically, we proposed to define an 

ownership or investment interest as one 

that may be direct or indirect, and 

through debt, equity, or other means. 

We further proposed that ownership or 

investment interest includes, but is not 

limited to, stock, stock options (other 

than those received as compensation, 

until they are exercised), partnership 

shares, limited liability company 

memberships, as well as loans, bonds, 

or other financial instruments that are 

secured with an entity’s property or 

revenue or a portion of that property of 

revenue. As required by statute, we 

proposed that an ownership or 

investment interest shall not include an 

ownership or investment interest in a 

publicly traded security or mutual fund, 

as described in section 1877(c) of the 

Act. Additionally, we proposed that 

ownership or investment interest must 

not include the following: 

• An interest in an applicable 

manufacturer or applicable GPO that 

arises from a retirement plan offered by 

that applicable manufacturer or 

applicable GPO to the physician (or a 

member of his or her immediate family) 

through the physician’s (or immediate 

family member’s) employment with that 

applicable manufacturer or applicable 

GPO; 

• Stock options and convertible 

securities received as compensation, 

until the stock options are exercised or 

the convertible securities are converted 

to equity; 

• An unsecured loan subordinated to 

a credit facility. 

Comment: Some commenters 

recommended that CMS only require 

that applicable manufacturers and 

applicable GPOs report direct 

ownership or investment interests, 

rather than both direct and indirect 

interests. However, the commenters also 

recommended a few limitations in the 

event the agency decided to require 

reporting of indirect ownership or 

investment interests. These 

recommendations included setting a 

minimum threshold amount for 

ownership interests, following the 

knowledge requirements in the 

physician self-referral regulation, and 

requiring that the physician has sole 

control of the interest. Beyond indirect 

ownership interests, a few commenters 

also recommended that CMS require 

reporting of stock options as ownership 

or investment interests when they are 

granted, rather than only when 

exercised. Similarly, a few commenters 

recommended that CMS not distinguish 

between ownership or investment 

interests arising from a retirement plan 

and stock options once exercised. 

Response: We appreciate the 

comments. However, we do not agree 

that applicable manufacturers and 

applicable GPOs should only report 

direct ownership or investment 

interests. Section 1128G(a)(2) of the Act 

requires that applicable manufacturers 

and applicable GPOs report ‘‘any 

ownership or investment interest * * * 

held by a physician.’’ We believe that 

‘‘any ownership or investment interest’’ 

encompasses both direct and indirect 

interests, since indirect ownership or 

investment interests are also true 

interests. However, we do agree that 

there should be some limitation on 

indirect ownership or investment 

interests. We appreciate the comments 

on ways to limit reporting of indirect 

ownership or investment interests. We 

believe that limiting ownership or 

investment interests to those when the 


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physician has sole control and right to 

receive the proceeds is too narrow. We 

believe this will eliminate a significant 

number of ownership or investment 

interests, greatly reducing those 

reported. Similarly, we believe that 

setting a threshold for indirect 

ownership or investment interest creates 

an incentive to structure relationships to 

remain below the threshold. However, 

we do understand that there should be 

some limitations. We have decided to 

finalize the recommendation that aligns 

with the physician self-referral rule in 

that applicable manufacturers and 

applicable GPOs will not have to report 

ownership or investment interests held 

by physicians or their immediate family 

members if they did not know about 

such interests. We agree that this 

limitation is warranted, since it is 

impossible for an applicable 

manufacturer or applicable GPO to 

report an indirect ownership or 

investment interest that is unknown to 

it. Additionally, we believe that many 

stakeholders are already familiar with 

this standard from the physician selfreferral regulation. Therefore, we have 

finalized that applicable manufacturers 

and applicable GPOs do not have to 

report indirect ownership or investment 

interests held by physicians or 

immediate family members of 

physicians about which they do not 

know (as defined for the purposes of 

this rule). 

Finally, we understand the concerns 

regarding stock options received as 

compensation and requiring reporting of 

options when granted, rather than when 

exercised. However, we believe that 

stock options before they are exercised 

are traditionally considered 

compensation, rather than an ownership 

or investment interest, so we do not 

believe that we should require them to 

be reported as held ownership or 

investment interests. This is consistent 

with the definition in the physician selfreferral regulation. However, we note 

stock options will need to be reported 

when granted under sections 

1128G(a)(1) and 1128G(a)(2)(C) of the 

Act as a payment or other transfer of 

value. Reporting under sections 

1128G(a)(1) and 1128G(a)(2)(C) may not 

include all stock options that are 

granted to physicians. For example, 

stock options that are granted to a 

physician who is an employee of the 

applicable manufacturer and is not 

already an existing owner or investor of 

that entity would not be reported; 

however, we believe reporting under 

sections 1128G(a)(1) and 1128G(a)(2)C) 

will capture a significant portion of 

stock options when granted. 

d. Physician Ownership or Investment 

Report Content 

Under section 1128G(a)(2) of the Act, 

applicable manufacturers and 

applicable GPOs are required to report 

information about each ownership or 

investment interest held by physician 

owners or investors (or their immediate 

family member(s)). 

As required in section 1128G(a)(2) of 

the Act, we proposed that the applicable 

manufacturer or applicable GPOs 

should report the name, address, NPI, 

and specialty of the physician owner or 

investor, as well as the dollar amount 

invested and the value and terms of the 

ownership or investment interest. 

Section 1128G(a)(2)(C) of the Act 

requires the reporting of ‘‘[a]ny payment 

or other transfer of value provided to a 

physician holding such an ownership or 

investment interest (or to an entity or 

individual at the request of or 

designated on behalf of a physician 

holding such an ownership interest) 

* * *’’ Applicable manufacturers and 

applicable GPOs must report all the 

information required in section 

1128G(a)(1)(A) of the Act for those 

physicians who hold ownership or 

investment interests in such entity. 

With regard to reporting payments and 

transfers of value to physician owners or 

investors, we proposed that applicable 

manufacturers and applicable GPOs 

follow the procedures outlined in this 

preamble for reporting payments and 

other transfers of value. 

We also noted that there was some 

overlap between the requirements for 

reporting payments or other transfers of 

value and reporting ownership or 

investment interests. In order to help 

manage the overlap, we proposed that 

applicable manufacturers submit one 

report for all their payments and other 

transfers of value and another for all 

their physician ownership or 

investment interests. To comply with 

section 1128G(a)(2)(C) of the Act, we 

proposed that applicable manufacturers 

report the payments or other transfers of 

value provided to physician owners or 

investors (regardless of whether the 

physician owner is a covered recipient) 

in the report for payments and other 

transfers of value, but should note that 

the covered recipient receiving the 

payment or other transfers of value is a 

physician owner or investor. 

Since applicable GPOs are not subject 

to the reporting requirements in section 

1128G(a)(1) of the Act, we believe there 

is less of a potential for duplicative 

reporting. However, we proposed that 

when an applicable GPO has payments 

or other transfers of value to report for 

physician owners or investors, the 

applicable GPOs should use the data 

elements outlined in section II.B.1.f. of 

the final rule on payments and other 

transfers of value report contents. 

Comment: A few commenters 

discussed the content of physician 

ownership or investment interest 

reports. The commenters specifically 

recommended that CMS not require the 

reporting of the ‘‘terms’’ of the 

ownership or investment interest. 

Response: We appreciate the 

comments. However, we are unable to 

waive reporting of the terms of an 

ownership or investment interest, since 

it is a statutory requirement. Because we 

did not receive any comments on other 

aspects, we will finalize these 

provisions to align with the reporting 

requirements for payments or other 

transfers of value reports to the extent 

the requirements overlap. For example, 

applicable manufacturers and 

applicable GPOs should report both 

physician NPI and State professional 

license number(s) for at least one State 

where the physician maintains a license 

(including the name of the applicable 

State) to ensure that the agency is able 

to attribute ownership and investment 

interests to the appropriate physician. 

Similarly, requirements for reporting 

name, primary business address and 

specialty should also be the same as 

described for reporting payments or 

other transfers of value. Finally, as 

described in the section on the 

assumptions document, both applicable 

manufacturers and applicable GPOs 

may submit an assumptions document 

including information on their 

assumptions and methodologies when 

reporting payments or other transfers of 

value, or ownership or investment 

interests. 

Comment: We also received a few 

comments concerning the potential for 

duplicative reporting due to the overlap 

between the two sections. The 

comments requested clarification of the 

proposed rule but did not have any 

specific recommendation or advocate 

any particular changes. 

Response: We appreciate the 

comments and seek to clarify as much 

as possible; however, we have finalized 

these provisions as proposed. 

Applicable manufacturers must report 

all payments or other transfers of value 

to covered recipients and physician 

owners or investors, including the 

provision of ownership and investment 

interests. In the event that a physician 

receives an ownership or investment 

interest in a given year, an applicable 

manufacturer should report it as a 

payment or other transfer of value 

(under section 1128G(a)(1) of the Act), 

as well as a standing ownership or 


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investment interest (under section 

1128G(a)(2) of the Act). 

Additionally, an individual may be 

both a covered recipient and a physician 

owner or investor, so an applicable 

manufacturer should only report a 

payment or other transfer of value once, 

regardless of whether the individual is 

a covered recipient, a physician owner 

or investor, or both. The payment or 

other transfer of value and all the 

additional required information must be 

reported in the ‘‘payments or other 

transfers of value’’ reporting template; 

however for physician owners or 

investor (regardless of whether the 

physician is a covered recipient) the 

applicable manufacturer should mark 

that that payment or other transfer of 

value was provided to a physician 

owner or investor. All payments or 

other transfer of value should only be 

reported once regardless of whether it is 

required to be reported under section 

1128G(a)(1) and/or section 

1128G(a)(2)(C) of the Act. 

C. Report Submission and Review 

The statute requires the Secretary to 

establish procedures for applicable 

manufacturers and applicable GPOs to 

submit the required information and for 

the Secretary to make such information 

submitted available to the public. We 

recognize that these regulations require 

applicable manufacturers and 

applicable GPOs to collect and submit 

large amounts of new data, so we have 

tried to finalize flexible processes for 

data collection and submission. 

However, we also recognize that in 

order to accept and aggregate the data 

effectively and efficiently, there needs 

to be system standardization. 

1. Prior to Submission 

In the proposed rule, we considered 

that prior to submission of data to CMS, 

applicable manufacturers and 

applicable GPOs would provide each 

covered recipient or physician owner or 

investor with information regarding the 

information that the applicable 

manufacturer plans to report to CMS on 

the covered recipient’s or physician 

owner or investor’s behalf. While we 

did not propose to require this type of 

pre-review, we recommended that 

applicable manufacturers and 

applicable GPOs provide it. 

Comment: Several commenters 

supported the pre-submission review. 

However, the commenters were divided 

over whether to require it or leave it 

voluntary. Many commenters stated that 

there simply was not time between the 

end of the data collection year and the 

data of submission to facilitate the 

review; whereas some commenters 

recommended it, stating it would greatly 

reduce disputes and inaccuracies in the 

data. 

Response: We appreciate the 

comments and agree that presubmission review would help ensure 

the accuracy of the data. However, we 

have finalized that CMS will not 

administer or manage a pre-submission 

review process and will not make it 

mandatory. We recommend that 

applicable manufacturers voluntarily 

provide covered recipients the 

opportunity to review the data prior to 

submission to CMS, but doing so is not 

mandatory. We understand that the 

processes and systems of applicable 

manufacturers and applicable GPOs 

may not allow for a review of this 

capacity. Similarly, since there is a postsubmission review period, we do not 

believe that it is worth the additional 

burden for applicable manufacturers 

and applicable GPOs to make significant 

system changes in order to provide a 

pre-submission review. However, we do 

believe a pre-submission review could 

be extremely useful and recommend 

that applicable manufacturers and 

applicable GPOs consider ways that 

they could administer a pre-submission 

review external to CMS. Because CMS is 

not requiring the review, we do not feel 

it is appropriate for CMS to prescribe 

the process and standardize it; 

nevertheless, we believe that ongoing 

notice throughout the year of any 

reportable interactions would be ideal. 

2. Report Submission 

Applicable manufacturers and 

applicable GPOs are statutorily required 

to submit their reports for the preceding 

calendar year electronically to CMS on 

March 31, 2013 and on the 90th day of 

each calendar year thereafter. We 

proposed to interpret ‘‘on’’ March 31, 

2013 or the 90th of the each year 

thereafter as ‘‘by’’ March 31, 2013 or the 

90th of each year thereafter and intend 

to allow applicable manufacturers and 

applicable GPOs to submit data prior to 

this date to provide applicable 

manufacturers and applicable GPOs 

with more flexibility for submission. We 

did not receive any comments on this 

interpretation and have finalized it as 

proposed; however, as discussed in the 

timing section, because of the 

publication date of this final rule, 

reports including 2013 data will not be 

due until March 31, 2014. 

a. Registration 

In the proposed rule, we proposed 

that only applicable manufacturers that 

have payments or other transfers of 

value and/or physician ownership or 

investment interests to disclose for the 

previous calendar year must register and 

submit reports. Similarly, we proposed 

that only applicable GPOs with 

physician owners or investors would be 

required to register and submit 

information. For applicable 

manufacturers and applicable GPOs that 

did have information to disclose, we 

proposed that applicable manufacturers 

and applicable GPOs register with us 

prior to submission to facilitate 

communication. We proposed the 

registration process would require the 

applicable manufacturer or applicable 

GPO to designate a point of contact, 

which we would use for 

communications related to the 

submitted data. Alternatively, we 

considered requiring that all applicable 

manufacturers and applicable GPOs 

register with CMS, regardless of whether 

they had information to report, in order 

help us better understand the extent of 

these relationships and ensure 

compliance with the reporting 

requirements. 

Comment: Many commenters 

supported the registration requirement, 

but disagreed on which entities should 

be required to register. Some 

commenters supported the proposal to 

require registration only by those 

entities with payments or other transfers 

of value or ownership or investment 

interests to report; other commenters 

recommended that CMS employ the 

alternative and require all entities that 

meet the definition of applicable 

manufacturer or applicable GPOs to 

register. 

Response: Given the comments 

received, we believe that we do not 

need to require all entities that meet the 

definition of applicable manufacturer or 

applicable GPO to register and have 

finalized the position as proposed. 

Because the statute only requires the 

reporting of payments or other transfers 

of value, we will not require action by 

entities without payments or other 

transfers of value to report. All 

applicable manufacturers with 

payments or other transfers of value to 

report under paragraph 1 of the 

definition must register individually, 

regardless of whether they intend to be 

part of a consolidated report being 

submitted by another applicable 

manufacturer. We believe this will 

better allow CMS to ensure that 

applicable manufacturers required to 

report are reporting under the reporting 

requirements. However, applicable 

manufacturers that are submitting data 

as a part of a consolidated report under 

another applicable manufacturer may 

indicate during registration that they 

intend to be part of the consolidated 

report to be submitted by another 


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applicable manufacturer, allowing CMS 

to approximate the number of 

consolidated reports to anticipate. 

Additionally, as stated in the applicable 

manufacturer section, the reporting 

entity submitting a consolidated report 

must indicate all the applicable 

manufacturers for which it is reporting. 

Similarly, applicable manufacturers that 

are reporting separately must each 

register individually. 

Comment: A few commenters 

discussed reporting of the point of 

contact, specifically recommending that 

two points of contact be provided for a 

single applicable manufacturer or 

applicable GPO. 

Response: We agree that establishing 

and maintaining appropriate points of 

contact are important because it is 

essential that we be able to contact 

applicable manufacturers and 

applicable GPOs in the event that 

questions arise regarding their 

submission. We believe that requiring a 

second point of contact to serve as a 

backup will be beneficial and ensure 

that CMS can contact applicable 

manufacturers and applicable GPOs. We 

are finalizing that applicable 

manufacturers and applicable GPOs 

must indicate two points of contact 

when they register to allow for a 

primary and backup point of contact for 

each reporting entity. In order to ensure 

that the points of contact are up to date 

in the CMS system, applicable 

manufacturers and applicable GPOs will 

be able to change them as appropriate 

(subject to CMS user security protocols). 

We did not receive any comments on 

our proposed timing for registration, so 

we have finalized those provisions as 

proposed. We proposed that applicable 

manufacturers or applicable GPOs with 

payments or other transfers of value to 

report must register prior to the 

deadline for data submission for data for 

the preceding calendar year for every 

annual reporting cycle. We intend 

applicable manufacturers and 

applicable GPOs to register sufficiently 

prior to the deadline in order to allow 

registration to be completed 

appropriately. Applicable 

manufacturers or applicable GPOs will 

be able to choose to submit the data 

immediately after completing the 

registration process successfully. We 

proposed to open the registration 

process at the beginning of the calendar 

year, giving applicable manufacturers 

and applicable GPOs time to register 

and submit their data; however, we may 

open registration earlier to allow 

additional time. 

b. File Format 

We also received several comments of 

the format of the data and process for 

submission to CMS. We proposed that 

applicable manufacturers and 

applicable GPOs submit their data 

electronically in a comma-separated 

value (CSV) format and solicited 

comments on and suggestions for 

alternatives to that format. Additionally, 

we proposed that each line item in the 

dataset should represent a unique 

payment or other transfer of value, or a 

unique ownership or investment 

interest. In the event that a single file 

does not have sufficient volume for all 

the data required, then we proposed the 

applicable manufacturer or applicable 

GPO could submit as many files as 

necessary to provide the entirety of its 

data. 

Comment: Many commenters 

recommended that CMS create a 

standardized format and template and 

allow stakeholders an opportunity to 

review. Additionally, a few commenters 

supported the use of CSV files, whereas 

a few other commenters recommended 

using Pipe Line Delineated files rather 

than CSV files. These commenters 

explained that since some numbers are 

presented with comma separators (for 

example, $100,000), CSV files may be 

problematic. Similarly, a few 

commenters recommended that CMS 

establish a uniform naming system for 

applicable manufacturers. 

Besides the format of the report, we 

also received comments on the 

organization and submission of the data. 

A few commenters recommended that 

CMS accept submission of data multiple 

times throughout the year, such as 

quarterly or ongoing, and allow 

extensions. Conversely, other 

commenters recommended allowing 

applicable manufacturers to submit 

multiple reports, organized by topic or 

individual. Finally to receive the data, 

a few commenters recommended that 

CMS develop a data exchange and data 

portal to accept files. 

Response: We appreciate the 

comments and agree that CMS should 

provide applicable manufacturers and 

applicable GPOs with reporting 

templates and more details on reporting. 

However, we do not believe it is 

necessary or beneficial to provide this 

information in regulation, in order to 

allow the agency more flexibility to 

make changes in response to feedback 

from stakeholders. If we intend to make 

changes to the reporting template or 

other details for reporting (which we 

envision could happen particularly as 

the program evolves in early years), we 

will provide them at least 90 days prior 

to first day of data collection for the 

next reporting year. In providing revised 

templates, we will also comply with the 

requirements of the Paperwork 

Reduction Act to seek public comments 

on the proposed changes to the 

information collections, as required by 

law. This will allow applicable 

manufacturers and applicable GPOs to 

make any necessary changes to prepare 

for the next reporting year. This is the 

same time as the date by which we will 

publish the list of teaching hospitals. 

We appreciate the comments on the 

organization of the submitted files, but 

per the statute, we will only allow 

submission of a single report consisting 

of the entire reporting period (for 

example CY 2014). We will only be 

collecting and staging data for public 

posting in accordance with annual 

submissions, so we will not be 

accepting ongoing or quarterly 

submissions. We believe that not only is 

annual publication sufficient for end 

users, but also allows for a single review 

and dispute period prior to publicly 

publishing the data, which is 

operationally easier for all parties. In 

addition, submission extensions will 

not be granted. After receiving all the 

submitted data, we will need to process 

all the data to aggregate across 

manufacturers and applicable GPOs and 

provide a single review and dispute 

period to correct submitted data prior to 

public posting. Late data will be 

considered failure to report and may be 

subject to penalties. Similarly, as 

required in the regulations, applicable 

manufacturers and applicable GPOs 

should not aggregate any payments or 

other transfers of value, or ownership or 

investment interests (except as 

described for small payments or other 

transfers of value). All reported 

transactions must be at the individual 

payment or other transfer of value, or 

ownership or investment interest level 

and do not intend applicable 

manufacturers or applicable GPOs to 

organize or group specific transactions. 

Finally, we appreciate the comments 

regarding a data exchange portal and 

agree that CMS should create an 

electronic system for accepting the data. 

We plan to publish additional 

information along with greater detail on 

the submission process. 

c. Attestation Process 

In the proposed rule, we proposed 

that annually, following the submission 

of data, an authorized representative 

from each applicable manufacturer and 

applicable GPO will be required to 

submit a signed attestation certifying the 

timeliness, accuracy, and completeness 

of the data submitted to the best of the 


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signer’s knowledge and belief. We 

specified that such attestations must be 

signed by the chief executive officer, 

chief financial officer or chief 

compliance officer. 

Comment: The majority of 

commenters supported the attestation 

requirement. However, a few 

commenters recommended revising the 

attestation to certify that the entity made 

a reasonable effort to ensure that data 

meets regulatory requirements. These 

commenters explained that the 

reporting requirements are, in their 

view, complicated, so it would be 

impossible to know whether the data 

submitted was accurate. Similarly, a few 

commenters suggested that CMS allow 

other officers (at the discretion of the 

reporting entity) to attest. 

Response: We appreciate the 

comments, but we continue to believe 

that applicable manufacturers and 

applicable GPOs can and should be 

confident that the data is accurate. We 

recognize that the reporting 

requirements require significant data to 

be collected, but the majority of 

comments supported the language 

without revision, suggesting that 

reporting entities can be confident in 

their data. Additionally, the penalties 

are significantly less for unknowing 

errors, so the statute provides safeguards 

for unexpected errors. Finally, we do 

understand that applicable 

manufacturers and applicable GPOs 

may have different business structures. 

We do not want to confine applicable 

manufacturers and applicable GPOs 

with regard to which officers must 

attest, so we have finalized that other 

officers will be allowed to attest, as 

designated by the company. 

We also seek to clarify the timing of 

the attestation requirement. Applicable 

manufacturers and applicable GPOs 

must provide an attestation for their 

data at the time of original submission 

for it to be considered submitted; 

however, they will also be required to 

provide an attestation any time the data 

is changed or updated. The most recent 

data for which there is an attestation 

will be considered the official data 

submission from the applicable 

manufacturer or applicable GPO. Data 

without such attestation will not be 

considered an official submission for 

purposes of reporting under section 

1128G of the Act. This is discussed in 

more detail in the section on dispute 

resolution. However, we believe this 

may alleviate some of the concerns of 

applicable manufacturers regarding the 

difficulty in knowing whether the data 

submitted originally will be 

appropriately amended during the 

review and correction period. 

Finally, as discussed in the section on 

applicable manufacturers, applicable 

manufacturers for which covered drugs, 

devices, biologicals, or medical supplies 

represent less than 10 percent of total 

(gross) revenue for the preceding year 

that have payments or other transfers of 

value to report, as a part of the 

attestation process, must attest that less 

than ten percent of total (gross) revenue 

in the immediately preceding year came 

from covered drugs, devices, biological, 

or medical supplies. We also note that 

for consolidated reports, the applicable 

manufacturer that submitted the 

consolidated report will be required to 

attest on behalf of all the entities 

included in the consolidated report. 

Applicable manufacturers that have 

reportable payments or other transfers of 

value that are submitted through a 

consolidated report by another 

applicable manufacturer will be 

required to register with CMS, but will 

not be required to attest. Accordingly 

we encourage applicable manufacturers 

considering submitting a consolidated 

report to fully consider the ramifications 

of doing so, particularly the applicable 

manufacturer actually attesting on 

behalf of all the entities included in the 

consolidated report. 

3. Report Content 

We have outlined the fields of 

information to be included when 

reporting payments or other transfers of 

value and physician ownership and 

investment interests. Some changes 

have been made below based on 

comments submitted; however, these 

decisions and changes are discussed 

throughout the final rule. The asterisks 

indicate the additional information that 

we will require under the discretion 

provided by the statute. 

For each payment and other transfer 

of value, the following information is 

required: 

• Applicable manufacturer’s name. 

• Covered recipient’s— 

++ Name (for physicians only, 

provide name as listed in NPPES, 

including first and last name, and 

middle initial and suffix (if applicable)); 

++ Specialty (for physicians only); 

++ Primary business street address 

(practice location); 

++ NPI (for physicians only, as 

listed in NPPES); 

++ State professional license 

number(s) for at least one State where 

the physician maintains a license, 

including the applicable State where the 

license(s) is held; * 

• Amount of payment or other 

transfer of value in U.S. dollars. 

• Date of payment or other transfer of 

value. 

• Form of payment or other transfer 

of value. 

• Nature of payment or other transfer 

of value. 

• Name(s) of the related covered drug, 

device, biological, or medical supply, as 

applicable. 

• NDCs of related covered drugs and 

biologicals, if any. * 

• Name of entity that received the 

payment or other transfer of value, if not 

provided to the covered recipient 

directly. * 

• Whether the payment or other 

transfer of value was provided to a 

physician holding ownership or 

investment interests in the applicable 

manufacturer. (Yes or No response). 

• Statement providing additional 

context for the payment or other transfer 

of value (optional). * 

For each research-related payment or 

other transfer of value, the following 

information is required: 

• Applicable manufacturer’s name. 

• Name of research institution/entity 

receiving payment. 

• Total amount of research payment. 

• Name of study. 

• Name(s) of related covered drug, 

device, biological or medical supply 

(same requirements as for all payments 

or other transfers of value). 

• NDCs of related covered drugs and 

biologicals, if any. * 

• Principal investigator(s) (including 

name (as listed in NPPES), NPI (as listed 

in NPPES), State professional license 

number(s) for at least one State where 

the physician maintains a license 

including the applicable State where the 

license(s) is held, specialty and primary 

business address). 

• Context of research (optional). 

• ClinicalTrials.gov identifier 

(optional). 

• Whether the payment or other 

transfer of value should be granted a 

delay in publication because it was 

made pursuant to a product research 

agreement, development agreement, or 

clinical investigation. (Yes or No 

response). 

For each physician ownership or 

investment interest, the following 

information is required: 

• Applicable manufacturer’s or 

applicable GPO’s name. 

• Physician owner or investor’s— 

++ Name (as listed in NPPES, 

including first and last name, middle 

initial, and suffix (if applicable)); 

++ Specialty; 

++ Primary business street address 

(practice location); 

++ NPI (as listed in NPPES); 

++ State professional license 

number for at least one State where the 

physician maintains a license including 


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the applicable State where the license(s) 

is held; * and 

• Whether the ownership or 

investment interest is held by the 

physician, or an immediate family 

member of the physician. 

• Dollar amount invested. 

• Value and terms of each ownership 

or investment interest. 

• Any payments or other transfers of 

value provided to the physician owner 

or investor, including the following 

(applicable manufacturers should report 

this information with their other 

payments or other transfers of value, 

and indicate that the covered recipient 

is a physician investor or owner): 

++ Amount of payment or other 

transfer of value in U.S. dollars. 

++ Date of payment or other transfer 

of value. 

++ Form of payment or other 

transfer of value. 

++ Nature of payment or other 

transfer of value. 

++ Name(s) of related covered drugs, 

devices, biologicals, or medical 

supplies. 

++ NDCs of related covered drugs 

and biologicals, if any. * 

++ Name of entity that received the 

payment or other transfer of value, if not 

provided to the physician owner or 

investor directly. * 

++ Statement providing additional 

context for the payment or other transfer 

of value (optional).* 

4. 45-Day Review Period for Applicable 

Manufacturers, Applicable GPOs, 

Covered Recipients, and Physician 

Owners or Investors 

Section 1128G(c)(1)(C)(ix) of the Act 

requires that the Secretary allow 

applicable manufacturers, applicable 

GPOs, covered recipients, and physician 

owners or investors the opportunity to 

review the data submitted for a period 

of at least 45-days prior to the data being 

made available to the public. This 

section outlines the comments received 

on the processes for and length of this 

review and correction period. 

a. Notification of Review and Correction 

Period 

In the proposed rule, we stated that 

we would notify covered recipients and 

physician owners or investors about the 

review and correction period in a few 

ways. We proposed to allow, but not 

require, covered recipients, and 

physician owners or investors to register 

with CMS to ensure they receive 

communication about the processes for 

review. Additionally, we proposed to 

notify physicians and hospitals through 

CMS’s list-serves and by posting the 

information publicly (for example: on 

the CMS Web site or in the Federal 

Register). We also considered an 

alternative method, in which we would 

require applicable manufacturers and 

applicable GPOs to collect and report 

whether the covered recipient, or 

physician owner or investor would like 

to be notified by USPS or email of the 

processes for their review, as well as the 

individual’s email address, if indicated. 

We received numerous comments on 

this which are described later in this 

section. 

Finally, we proposed that the 

notification to physicians and teaching 

hospitals would be provided annually to 

announce the review and correction 

period, and would include the specific 

instructions for performing this review. 

We did not receive any comments on 

this provision, so we have decided to 

finalize it as proposed. 

Comment: Many commenters 

addressed how to notify physicians and 

teaching hospitals of the opportunity to 

review payments or other transfers of 

value or ownership or investment 

interests that were attributed to them in 

reports submitted by applicable 

manufacturers or applicable GPOs. 

Some of these commenters supported 

the methods outlined in the proposed 

rule and provided other suggestions. 

Many commenters requested that 

physicians and teaching hospitals be 

notified personally of the processes for 

review and correction. Some of these 

commenters recommended the 

alternative method of collecting contact 

information (applicable manufacturers 

and applicable GPOs providing 

preferred method of communication), 

while others recommended another 

method or simply stated that CMS 

should notify physicians and teaching 

hospitals, but supported flexibility in 

the notification method. Conversely, 

many other commenters indicated that 

the proposed alternative would be 

overly burdensome, and recommended 

that CMS notify physicians and teaching 

hospitals in another manner. Finally, 

some commenters recommended more 

ongoing approaches to notification and 

allowing review to happen multiple 

times throughout the year. 

Response: We appreciate the 

comments and have tried to balance the 

necessity to notify physicians and 

teaching hospitals with the desire to 

avoid adding any additional burden on 

applicable manufacturers and 

applicable GPOs. We have also 

considered what is operationally 

possible and concluded that we will 

notify physicians and teaching 

hospitals, as proposed, using email list 

serves, online postings (including both 

on the CMS Web site and the Federal 

Register) and directly (likely by email) 

to any physicians or teaching hospitals 

that have registered with CMS ahead of 

time. We strongly recommend that all 

covered recipients and physician 

owners or investors register. Although 

registration is not mandatory for these 

entities, in order for covered recipients 

to be able to review the data attributed 

to them, they will be required to register 

so we can appropriately match them to 

their data. In addition to the methods 

proposed, we plan to work with 

physician professional societies and 

provide the information to applicable 

manufacturers and applicable GPOs to 

provide voluntarily to covered 

recipients and physician owners or 

investors. We understand that these 

methods do not constitute direct, 

personal notification, but believe that 

these methods are sufficient and 

significantly more cost effective for both 

CMS, and applicable manufacturers and 

applicable GPOs. 

Finally, we note that since applicable 

manufacturers and applicable GPOs 

only submit data for the previous 

calendar year to CMS once annually, the 

agency may not provide ongoing 

notifications to covered recipients or 

physician owners or investors for data 

submitted on their behalf outside of the 

formal period (such as in response to a 

dispute). Similarly, we will only 

provide for one formal review and 

correction period prior to the 

publication of that year’s data. We 

discuss our plans to allow for updates 

to submitted data or submission of data 

previously omitted, as well as 

additional time to review and dispute, 

later in this section, but the formal 

review and correction period will only 

happen once annually prior to the next 

publication on the public Web site. 

b. Length of Review and Correction 

Period 

Section 1128G(c)(1)(D) of the Act 

requires that CMS provide a review and 

correction period of ‘‘not less than 45 

days.’’ We proposed a 45-day review 

period to maximize the time for the 

agency to aggregate and publish the 

data. Additionally to facilitate the 

review, we proposed that applicable 

manufacturers, applicable GPOs, 

covered recipients, and physician 

owners and investors would sign into a 

secure Web site to view the data 

submitted. We proposed that only the 

current and previous years would be 

available for review and correction. For 

example, during the 45-day review 

period in 2015, applicable 

manufacturers, applicable GPOs, 

covered recipients, and physician 

owners or investors would be able to 


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review and amend the data submitted 

for 2013 and 2014. During the 2016 

review, 2014 and 2015 would be 

available for changes. 

Comment: Many commenters 

requested a longer review period, 

particularly to allow for additional time 

to resolve disputes. Many of these 

commenters recommended a 60- or 90- 

day review period and asked that the 

review period include a distinct phase 

to resolve disputes. These commenters 

stated that this was particularly 

important for disputes which may be 

initiated towards the end of the review 

and correction period. 

Response: We appreciate the 

comments and are sympathetic to the 

need to provide time for review and 

correction and tried to maximize the 

time as much as possible. However, 

time constraints restrict flexibility in 

this area given the statutory date for 

publication of the submitted data on the 

public Web site. In finalizing the 

proposal, we tried to balance providing 

appropriate time for review which 

allows us sufficient time to process the 

data for review and publication. 

Following the first year of reporting, in 

which we must publish the data within 

approximately 6 months of receiving the 

data, we must thereafter publish the 

data within 90 days of the last day for 

data submission (March 31), so a 90-day 

review period is not feasible. Similarly, 

we also believe that a 60-day review 

period would not leave us enough time 

to aggregate the data and prepare it for 

publication within 90 days of data 

submission. Nevertheless, we do agree 

that there should be a distinct phase for 

correcting data to resolve disputes since 

we recognize that it is not practical to 

resolve disputes initiated at the end of 

the review and correction period, within 

the time allotted. We believe that there 

should be a distinct period after the 

review and correction period 

specifically for correcting data to resolve 

potential disputes. 

Given these constraints, we have 

finalized a 45-day review and correction 

period, during which covered recipients 

and physician owners and investors 

may register and then sign into the CMS 

secure Web site and review the data 

submitted by applicable manufacturers 

and applicable GPOs on their behalf and 

choose to dispute certain payments or 

other transfers of value, or ownership of 

investment interests. As soon as a 

dispute is initiated, applicable 

manufacturers or applicable GPOs may 

begin resolving the dispute and 

correcting the data. Following the end of 

the review and correction period, 

applicable manufacturers and 

applicable GPOs will have an additional 

15 days to correct data for purposes of 

resolving disputes, and after which they 

may submit (and provide attestation for) 

updated data to CMS to finalize their 

data submission. Undisputed data will 

be finalized for publication after the 

close of the annual 45-day review and 

correction period. Regarding the 15-day 

period for resolving and correcting 

disputes following the 45-day review 

period, we recognize that 15 days is not 

much time for applicable manufacturers 

and applicable GPOs to resolve disputes 

submitted late in the review and 

correction period. Because we do not 

believe that we have the authority to 

shorten the period when covered 

recipients and physician owners and 

investors can review and submit 

corrections to the data, the 15-day 

period to correct data and resolve 

disputes must be after the 45-day review 

and correction period. Extending the 15- 

day dispute resolution period would not 

allow us sufficient time to prepare for 

public posting and we cannot delay 

public posting for the review and 

correction period. Only data changes 

initiated during the 45-day review and 

correction period and resolved by the 

end of the 15-day period for dispute 

resolution will be captured in the initial 

publication of the current reporting year 

of data on the public Web site. Disputes 

submitted earlier in the review and 

correction period will have more time to 

be resolved. In order to try to maximize 

the successful resolution of disputes 

and have more accurate data for 

publication, we plan to encourage 

covered recipients and physician 

owners and investors to register with 

the CMS system, review their data and 

if necessary, initiate disputes as soon as 

possible within the 45-day review and 

correction period to maximize the 

likelihood of successful resolution and 

accurate data available for publication. 

We also note that covered recipients 

and physicians owners and investors 

will have the opportunity to review and 

submit corrections for data updated by 

applicable manufacturers and 

applicable GPOs (either in response to 

a dispute, omission, or other error). 

There is no limit to the number of times 

a particular transaction can be reviewed 

and disputed. 

Comment: Many commenters also 

discussed the processes for the review 

and correction period, including what 

data would be available during the 45- 

day period. The majority of these 

commenters supported the secure Web 

site to view the data and recommended 

that CMS determine a process to 

validate the identities of the applicable 

manufacturers. Regarding the data 

available, many commenters 

recommended that CMS allow review 

and correction of more data, beyond the 

2 previous years. Additionally, a few 

commenters recommended that for data 

granted delayed publication, CMS 

should allow review and correction of 

the data in the year the data is 

submitted, rather than the year it will be 

published. These commenters explained 

that it will be easier for covered 

recipients and physician owners and 

investors to review and correct the data 

immediately after the payment was 

made, rather than up to four years later. 

Response: We appreciate the 

comments on the review and correction 

process and what data should be 

available for review during the review 

and correction period. Regarding the 

review and correction process, we have 

finalized our proposal of facilitating the 

process on a CMS-secure Web site. We 

are working to develop a system to 

allow secure registration, data 

submission, data review and submission 

of corrections processes. Applicable 

manufacturers and applicable GPOs will 

only be able to access and review the 

data they submitted or that was 

submitted for them within a 

consolidated report submitted by 

another covered entity; covered 

recipients and physician owners and 

investors will only be granted access to 

data regarding payments or other 

transfers of value and/or ownership or 

investment interests submitted on their 

behalf. We agree that we will need to 

validate the identities of individuals 

signing on to the Web site and plan to 

employ a system that will allow for 

secure user identification and 

authorization. We also plan to allow 

physicians and teaching hospitals to 

register prior to the start of the annual 

formal review and correction period to 

establish their profile, allowing them 

immediate access to the information at 

the beginning of the formal review and 

correction period. The secure user-based 

authentication requires that the actual 

individual register and interact with the 

system to ensure the utmost security of 

the data. The registration process will 

also help us collect additional 

information from the covered recipients 

and physician owners or investors to 

ensure that only the appropriate data is 

available to them and able to be 

aggregated and presented to the 

appropriate individual. 

Beyond the process for accessing the 

information, we do not agree that more 

than 2 years of data should be available 

for review and correction. While we 

believe that covered recipients and 

physician owners and investors should 

have appropriate opportunity to review 

the data, we believe that the data should 


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be finalized and no longer open to 

disputes and updates after a certain time 

period. As discussed later in this 

section, we have worked to improve the 

review and correction processes to 

allow covered recipients and physician 

owners and investors the opportunity to 

review and correct their data and 

resolve disputes with applicable 

manufacturers and applicable GPOs 

throughout the year. Given this 

increased flexibility, we believe that 

allowing only the review of the previous 

year’s data (submitted in that year) 

provides covered recipients and 

physician owners and investors 

sufficient time to review and, if 

necessary, correct disputes. 

Additionally, we agree that all data 

from the previous reporting year, 

including data granted delayed 

publication should be available for 

review during the review and correction 

period following the reporting year. For 

example, a payment or transfer of value 

granted delayed publication, but made 

in 2014 and reported in 2015, would be 

made available to the covered recipient 

for review and correction in 2015, but 

would not be published until the 

appropriate time for release. We believe 

covered recipients and physician 

owners and investors, as well as 

applicable manufacturers and 

applicable GPOs will be better able to 

review and correct the data during the 

period of time immediately following 

the transaction, rather than years 

afterward when the data is about to be 

published. Finally, we intend to provide 

additional information and guidance on 

the reporting requirements and timing 

of data review and correction to help 

applicable manufacturers, applicable 

GPOs, covered recipients and physician 

owners or investors understand how 

transactions should be reported. 

c. Dispute Resolution 

In the proposed rule, we provided 

information on the public presentation 

of disputed, but unresolved 

transactions. We proposed that if an 

applicable manufacturer or applicable 

GPO, and covered recipient, or 

physician owner or investor have 

contradictory information that cannot be 

resolved by the parties involved, then 

the data would be identified as 

contradictory and both the original 

submission from the applicable 

manufacturer or applicable GPO, and 

the modified information provided by 

the covered recipient or physician 

owner or investor, would appear in the 

final publicly available Web site. We 

also proposed that for aggregation 

purposes, we would use the 

contradictory data, as corrected by the 

covered recipient or physician owner or 

investor, for any aggregated totals. 

We also received numerous comments 

on the proposed process for dispute 

resolution. In the proposed rule, we 

stated that we should not be actively 

involved in arbitrating disputes between 

applicable manufacturers or applicable 

GPOs, and covered recipients, or 

physician owners or investors regarding 

the receipt, classification or amount of 

any payment or other transfer of value, 

or ownership or investment interest. We 

proposed that covered recipients, and 

physician owners or investors may 

request from us the contact information 

for a specific applicable manufacturer or 

applicable GPO, in the event of a 

potential dispute over the reported data. 

However, it would be the responsibility 

of the covered recipient, or physician 

owner or investor, to contact and 

resolve the dispute with the applicable 

manufacturer or applicable GPO. We 

proposed that at least one of any entity 

involved (applicable manufacturer, 

applicable GPO, covered recipient, or 

physician owner or investor) must 

report to CMS that a payment or other 

transfer of value, or ownership or 

investment interest is disputed and the 

results of that dispute. 

Regarding the timing for submitting 

disputes, we proposed that the 45-day 

review period is the primary 

opportunity to correct errors or contest 

the data submitted by applicable 

manufacturers and applicable GPOs to 

CMS. Once the 45-day review period 

has passed and the parties have 

identified all changes or disputes and 

we have made or noted them all, we 

proposed that neither applicable 

manufacturers, applicable GPOs, 

covered recipients, nor physician 

owners or investors would be permitted 

to amend the data for that calendar year. 

We also proposed that applicable 

manufacturers, applicable GPOs, 

covered recipients, or physician owners 

or investors alert us as soon as possible 

regarding any errors or omissions, but 

these changes may not be made until the 

data is updated for the following 

reporting year. At that time, all parties 

would once again have an opportunity 

to review and amend the data. However, 

we proposed that we would have the 

option to make changes to the data at 

any time (for example, to correct 

mathematical mistakes). 

Comment: Commenters had mixed 

reactions to the proposal that CMS not 

play a central role in mediating 

disputes. Many commenters stated that 

CMS should manage the process to 

ensure it is standardized and intervene 

in situations when disputes cannot be 

resolved. Conversely, many other 

commenters supported that CMS should 

not be involved and that it should be at 

the discretion of the disputing parties. 

Many commenters also recommended 

options for resolution, such as engaging 

a third party to mediate the disputes or 

developing an appeals process. 

Several commenters recommended 

that CMS allow applicable 

manufacturers and applicable GPOs 

discretion over which payments or other 

transfers of value or ownership or 

investment interests to resolve. A few of 

these commenters noted that the statute 

only requires that CMS grant a review 

and correction period, but not that all 

disputes must be resolved. Conversely, 

a few commenters recommended that 

CMS impose a materiality threshold, 

and applicable manufacturers and 

applicable GPOs would not be required 

to resolve disputes below the threshold. 

Additionally, a few commenters 

recommended that applicable 

manufacturers and applicable GPOs 

should be responsible for reporting the 

resolution of disputes to CMS since they 

are subject to penalties for incorrect 

reporting. Most of these commenters 

recommended that applicable 

manufacturers and applicable GPOs 

should be allowed to re-certify the data 

after the dispute resolution. Finally, a 

few commenters discussed how the 

post-submission review process would 

interact with a pre-submission review. 

Response: We appreciate the 

comments and agree that effective and 

accurate resolution of disputes is 

essential to the program. After 

reviewing the comments, we believe 

that we do have a responsibility to 

facilitate the capability for correcting 

the data and resolving disputes among 

the parties. However, we maintain that 

we should not be actively engaged in 

mediating dispute resolutions. The 

relationship exists between the 

applicable manufacturer or applicable 

GPO, and the covered recipient or 

physician owner or investor, so these 

parties should be involved in the 

resolution of the dispute, not CMS. We 

believe that we are not the appropriate 

party to mediate the disputes. However, 

we do plan to provide the opportunity 

for covered recipients, or physician 

owners or inventors to review and 

correct the data submitted on their 

behalf. We also plan to monitor the rate 

of disputes and resolutions, including 

whether an applicable manufacturer or 

applicable GPO has an abnormally high 

number of disputes or has an 

abnormally high rate of unresolved 

disputes. 

When covered recipients and 

physician owners or investors register 

and sign on to the secure CMS Web site, 


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all payments or other transfers of value, 

and all ownership or investment 

interests, submitted on their behalf will 

be available for review. The covered 

recipient or physician owner or investor 

will be responsible for reviewing each 

payment or other transfer of value, or 

ownership or investment interest, and 

will be able to initiate a dispute on a 

particular transaction, if he/she chooses. 

If a covered recipient or physician 

owner or investor decides to initiate a 

dispute, he or she will be directed to fill 

out electronic fields detailing the 

dispute, including the proposed 

corrections. The system will 

automatically flag that the transaction 

was disputed and the system will notify 

the appropriate applicable manufacturer 

or applicable GPO of the dispute, 

detailing the information submitted by 

the disputing covered recipient or 

physician owner or investor. The 

applicable manufacturer or applicable 

GPO and physician or teaching hospital 

will then be responsible for resolving 

the dispute, after which the applicable 

manufacturer or applicable GPO will be 

responsible for submitting corrected 

data and re-attesting to the new data by 

the end of the 15-day resolution period. 

If a dispute cannot be resolved in this 

time, the parties may and should 

continue to work to reach resolution 

and update the data. However, we will 

continue to move forward with 

publishing the original and attested 

data, but will mark it as disputed. 

If an applicable manufacturer or 

applicable GPO submits updated data to 

resolve dispute(s), the applicable 

manufacturer or applicable GPO must 

re-attest to the timeliness, accuracy, and 

completeness of the data, as required 

during the original data submission. If 

an applicable manufacturer or 

applicable GPO does not update its data 

at the end of the correction period, then 

its original attestation will be used. We 

recognize that this requirement adds a 

second attestation for applicable 

manufacturers and applicable GPOs that 

submit updated data, but we believe it 

is important that all the data presented 

on the public Web site be subject to the 

same attestation requirements. We also 

believe applicable manufacturers and 

applicable GPOs will appreciate the 

opportunity to re-attest in response to 

any updates to the data changed during 

the review and correction period. 

Additionally, we do not agree that the 

statute does not require applicable 

manufacturers and applicable GPOs to 

resolve disputes. We believe that by 

requiring a review and correction 

period, Congress intended any disputes 

identified to be resolved; however, we 

do recognize that there may be 

situations when the cost of initiating 

and resolving a dispute may not be 

worth the potential benefits. We intend 

to monitor the volume and terms of 

disputes and resolutions, and plan to 

provide additional guidance regarding 

situations when the cost of resolving a 

dispute may outweigh the benefits. 

Finally, since we are neither requiring, 

nor managing the pre-submission 

review process, we do not believe there 

should be any connection between any 

pre-submission processes and the CMS 

processes for data submission and 

review and correction. For example, we 

will not restrict a physician who 

reviewed and approved a payment in 

the pre-submission review from 

disputing such payment or other 

transfer of value during the CMS 

process for review and correction, since 

we will not know whether the physician 

received an opportunity to pre-review 

the payments or the result of his/her 

pre-review. 

Comment: Numerous commenters 

opposed CMS’s proposed approach for 

presenting disputed data. Many 

commenters stated that it would be 

misleading to end users of the data to 

include both accounts. However, they 

differed in their preferred options for 

presenting unresolved transactions. 

Several commenters recommended that 

disputed transactions should be flagged 

as disputed, but only one account of the 

transaction be included. The majority of 

these commenters suggested that the 

information, as submitted by the 

applicable manufacturer or applicable 

GPO, should be the account of the 

transaction published, since they are the 

entities with the reporting requirements 

and subject to penalties. Other 

commenters recommended that the 

unresolved data should not be 

published until it has been resolved. 

Beyond the data reported, a few 

commenters recommended that CMS 

outline incentives for resolving disputes 

in order to ensure that applicable 

manufacturers, applicable GPOs, 

covered recipients and physician 

owners and investors participate in the 

dispute resolution process. 

Response: We appreciate the 

comments and agree that publishing 

both accounts of a disputed transaction 

would be misleading. Although we 

believe publishing both accounts would 

provide the details of the dispute 

thereby providing the greatest 

transparency, we believe that this level 

of detail would not be useful for end 

users of the data. We also agree that any 

disputed transactions that have not yet 

been resolved should be labeled as such, 

but that only a single account of the 

transaction should be listed on the 

public Web site. 

We also do not agree that disputed 

transactions should not be published 

publicly until they are resolved. We 

believe that this method would 

potentially create an incentive for 

covered recipients and physician 

owners or investors to dispute each 

transaction of the public Web site to 

prevent them from being made public. 

We also believe that publication of 

disputed transactions will incentivize 

the parties to resolve disputes in a 

timely manner. We do not believe that 

any additional incentives are necessary. 

We believe that the interest to only 

publish accurate and undisputed 

information will push all parties to 

actively resolve disputes. 

Therefore, we will finalize that on the 

public Web site, payments or other 

transfers of value or ownership or 

investment interests that cannot be 

resolved by the end of the 15-day 

resolution period will be marked as 

‘‘disputed,’’ but the applicable 

manufacturer’s or applicable GPO’s 

most recent attested data subject to the 

dispute will be the only account of the 

information published. We believe 

publishing the most recent attested 

account by the applicable manufacturer 

or applicable GPO (rather than the 

corrected account provided by the 

covered recipient or physician owner or 

investor during the review and 

correction period) is appropriate 

because applicable manufacturers and 

applicable GPOs are responsible for 

collecting, reporting, and attesting to the 

accuracy of the information and are 

subject to penalties for failure to report. 

The parties may continue to resolve 

disputes after the close of the resolution 

period and after the data has been 

published publicly, or may leave the 

data as disputed; however, we 

discouraged leaving data as disputed 

and advocate for timely dispute 

resolution. 

Comment: Several commenters did 

not support the 45-day review period 

being the only opportunity to review 

and correct the data and recommended 

that review and correction be available 

more frequently. Many commenters also 

recommended that CMS allow for 

changes to be made more than once 

annually to ensure that mistakes are 

identified and corrected on the public 

Web site as soon as possible. Finally, a 

few commenters also recommended that 

applicable manufacturers, applicable 

GPOs, covered recipients, and physician 

owners or investors should not have to 

report mistakes immediately, but allow 

time to investigate the mistake 

internally. 


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Response: We appreciate the 

comments on updating the public Web 

site and agree that we have a 

responsibility to allow for updates to the 

data more frequently than once a year 

during the formal 45-day review and 

correction period and 15-day resolution 

period, particularly given the short time 

period for the data to be reviewed and 

updated. We believe that some disputes 

will not be resolved in time for updated 

data to be included in the public data 

release for that reporting year, but will 

be resolved and require changes 

thereafter. These should not be 

incorrectly listed on the Web site for a 

whole year, when they have in fact been 

resolved. Nevertheless, we also believe 

that we do not have the resources to 

make continual changes to the Web site 

and should not be required to 

continually update the data. We will 

update the current and a previous year’s 

data at least once annually, beyond the 

initial data publication following the 

submission of the data. 

Similarly, we also believe that 

covered recipients, and physician 

owners or investors should be allowed 

to review and dispute the contents of 

the public Web site throughout the year. 

After registering with the CMS system, 

physicians and teaching hospitals, and 

physician owners and investors may 

sign in to the system to review or 

dispute officially submitted and attested 

transactions any time during the year. 

However, any disputes and subsequent 

updates initiated and resolved outside 

the 45-day review and correction period 

and 15-day resolution period may not be 

reflected on the public Web site until 

the next update of the data. We believe 

this fairly allows covered recipients and 

physician owners or investors control 

over reviewing and correcting their data 

at all times, but does not require us to 

make continual changes to the 

published data. This system will also 

allow covered recipients and physician 

owners and investors the opportunity to 

easily and efficiently review (and 

dispute, if necessary) data updated and 

re-submitted by an applicable 

manufacturer or applicable GPO. 

Finally, we also understand 

applicable manufacturers, applicable 

GPOs, covered recipients, and physician 

owners or investors may want to 

investigate errors internally before 

notifying CMS of errors or omissions. 

However, we believe that errors and 

changes need to be reported to us as 

soon as possible so that we have the 

most accurate information possible. We 

believe that covered recipients and 

physician owners or investors should 

use the CMS review and correction 

processes to report errors and begin to 

resolve them with applicable 

manufacturers and applicable GPOs as 

quickly as possible. It will be the 

responsibility of the applicable 

manufacturer or applicable GPO that 

submitted and attested to the data to 

submit any updates, including errors 

and omissions, immediately after 

confirming that an update is needed or 

an error needs to be corrected; failure to 

do so may be considered incomplete 

reporting and may give rise to penalties. 

D. Public Availability 

Under the statute, we are required to 

publish on a publicly available Web site 

the data reported by applicable 

manufacturers and applicable GPOs for 

CY 2012 by September 30, 2013. For 

each year thereafter, we must publish 

the data for the preceding calendar year 

by June 30th. Given the timing of the 

final rule, no data will be collected for 

CY 2012, so the first data publication 

will be in 2014 for data collected in 

2013. 

In the proposed rule, we noted that 

section 4 of Executive Order 13563 calls 

upon agencies to consider approaches 

that ‘‘maintain flexibility and freedom 

of choice for the public,’’ including the 

‘‘provision of information to the public 

in a form that is clear and intelligible.’’ 

We requested comment on how to 

structure this Web site for ultimate 

usability and proposed, as required by 

statute, that the Web site will include 

information on any enforcement 

activities taken under section 1128G of 

the Act for the previous year; 

background or other helpful information 

on relationships between the drug and 

device industry and physicians and 

teaching hospitals; and publication of 

information on payments or other 

transfers of value that were granted 

delayed reporting. 

Comment: Numerous commenters 

provided feedback on the public Web 

site, particularly the development of the 

Web site. Many commenters called 

upon CMS to solicit stakeholder 

assistance in the development of the 

public Web site and that stakeholders 

should be given the opportunity to 

comment on the Web site content prior 

to it being finalized. A few commenters 

also recommended various methods to 

better develop the Web site, such as 

reviewing existing Web sites with 

similar information as examples. 

Finally, a few other commenters 

requested that CMS provide more 

information on the public Web site in 

the final rule. 

Response: We appreciate the 

comments and agree that stakeholder 

input is essential to the success of the 

public Web site. We plan to engage 

stakeholders regarding the content of 

the Web site, since we recognize that 

stakeholders and the public must be a 

part of the development process. We 

agree that it is important that the final 

Web site is user-friendly and provide 

accurate and understandable 

information to the public. In order to 

regain flexibility over the details of the 

Web site and allow the opportunity to 

work with stakeholders on 

development, we have only provided 

general information on the public Web 

site in the final rule. We believe that it 

is important that we have flexibility to 

make changes to the Web site as they are 

identified, but do plan to engage the 

public on the future development. We 

intend to release additional information 

about the Web site through education 

and outreach to the stakeholder 

community. 

Comment: In response to our request 

for comment on the structure of the 

public Web site, we received numerous 

comments recommending specific 

information to be included, as well as 

the Web site’s capabilities. Some 

commenters recommended that specific 

information and research should be 

included on the Web site as background 

or contextual information, particularly 

including details of the reporting 

requirements and the benefits of 

relationships between manufacturers 

and physicians and teaching hospitals. 

Additionally, some other commenters 

recommended that CMS link to other 

Web sites, such as physician codes of 

conducts or a manufacturer’s published 

data. 

Regarding the capabilities of the Web 

site, some commenters recommended 

that the data should be easily searchable 

and downloadable. Other commenters 

recommended specific file structures 

and details for the data, for public use, 

as well as use by researchers, including 

allowing researchers to obtain 

information that is not publicly 

available. 

Response: We appreciate the 

comments and agree that both the 

information included and capabilities of 

the Web site are extremely important. 

We support many of the 

recommendations and have provided 

general plans for the information to be 

presented, as well as the capabilities of 

the Web site. We plan to ensure that the 

public Web site accurately and 

completely describes the nature of 

relationships between physicians and 

teaching hospitals, and the industry, 

including an explanation of beneficial 

interactions. In addition, we plan to 

provide information to stakeholders 

regarding the data submission, review, 

dispute, dispute resolution and other 


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applicable operational processes. As 

proposed, the Web site will clearly state 

that disclosure of a payment or other 

transfer of value on the Web site does 

not indicate that the payment was 

legitimate nor does it necessarily 

indicate a conflict of interest or any 

wrongdoing. We appreciate the support 

of this language and plan to emphasize 

it on the Web site. We also plan to 

provide Frequently Asked Questions 

(FAQs) and other methods to help users 

find and understand this important 

contextual information. 

While we appreciate that there is 

similar information available from 

industry and stakeholders that may be 

beneficial to include on the public Web 

site, we also want to try to reduce the 

promotional or company specific 

information on the Web site, so we will 

need to assess the best way to include 

this information, if at all. Finally, we are 

also cognizant that the Web site will 

include a significant amount of 

information and are considering the best 

way to provide sufficient context 

without overwhelming the consumer. 

As required by statute, we plan to 

aggregate the data submitted and 

publish the data on a Web site that is 

searchable across multiple fields and 

available for downloads. In addition, we 

plan to establish mechanisms for 

researchers who may want information 

that is not publicly available. We 

believe that the data included in the 

database is primarily important for 

consumers, but understand that it also 

provides numerous opportunities for 

research on provider-industry 

relationships. We plan to provide 

opportunities to download the data that 

support researchers, as well as 

consumers, since we believe that 

research on this information is an 

important benefit of any transparency 

initiative. 

1. Data Elements 

In the proposed rule, we listed the 

data elements that would be available 

on the public Web site. We did not 

receive any comments on these, so we 

have finalized them as proposed. As 

required by statute, a physician’s NPI 

will not be published on the public Web 

site. In these lists, we have included any 

necessary changes as required by other 

sections of the final rule. The asterisks 

indicate the additional information that 

we will publish under the discretion 

provided by the statute. As required in 

section 1128G(c)(1)(C)(ii) of the Act, at 

a minimum the following information 

on payments and other transfers of 

value would be included on the public 

Web site in a format that is searchable, 

downloadable, understandable, and able 

to be aggregated: 

• Applicable manufacturer’s name. 

• Covered recipient’s— 

++ Name; 

++ Specialty (physician only); and 

++ Primary business street address 

(practice location). 

• Amount of payment or other 

transfer of value in U.S. dollars. 

• Date of payment or other transfer of 

value. 

• Form of payment or other transfer 

of value. 

• Nature of payment or other transfer 

of value. 

• Name(s) of the related covered 

drugs, devices, biologicals, or medical 

supplies, as applicable. 

• NDCs of related covered drugs and 

biologicals, if any.* 

• Name of the entity that received the 

payment or other transfer of value, if not 

provided to the covered recipient 

directly. 

• Statement providing additional 

context for the payment or other transfer 

of value (optional).* 

For research payments or other 

transfers of value, at a minimum the 

following research related information 

will be available on the public Web site: 

• Name of research institution/entity 

receiving payment. 

• Total amount of research payment. 

• Name of study. 

• Name(s) of the related covered 

drugs, devices, biologicals or medical 

supplies. 

• NDCs of related covered drugs and 

biologicals, if any.* 

• Principal investigator(s) (including 

name, specialty and primary business 

address). 

• Context of research. 

• ClinicalTrials.gov identifier 

(optional). 

For physician ownership and 

investment interests, at a minimum the 

following information would be 

included on the public Web site in a 

format that is searchable, downloadable, 

understandable, and able to be 

aggregated: 

• Applicable manufacturer’s or 

applicable GPO’s name. 

• Physician owner or investor’s— 

++ Name; 

++ Specialty; and 

++ Primary business street address. 

• Whether the ownership or 

investment interest is held by the 

physician or an immediate family 

member of the physician. 

• Dollar amount invested. 

• Value and terms of each ownership 

or investment interest. 

• Any payment or other transfer of 

value provided to the physician owner 

or investor, including: 

++ Amount of payment or other 

transfer of value in U.S. dollars. 

++ Date of payment or other transfer 

of value. 

++ Form of payment or other transfer 

of value. 

++ Nature of payment or other 

transfer of value. 

++ Name(s) of the related covered 

drugs, devices, biologicals, or medical 

supplies, as applicable. 

++ NDCs of related covered drugs 

and biologicals, if any.* 

++ Name of the entity that received 

the payment or other transfer of value, 

if not provided to the physician directly. 

++ Statement providing additional 

context for the payment or other transfer 

of value (optional).* 

E. Delayed Publication for Payments 

Made Under Product Research or 

Development Agreements and Clinical 

Investigations 

Section 1128G(c)(1)(E) of the Act 

provides for delayed publication of 

payments or other transfers of value 

from applicable manufacturers to 

covered recipients made pursuant to 

certain kinds of product research or 

development agreements and in 

connection with clinical investigations. 

This provision seeks to balance the need 

for confidentiality of proprietary 

information with the need for public 

transparency of payments to covered 

recipients that could affect prescribing 

habits or research outcomes. 

In the proposed rule, we proposed 

that payments or other transfers of value 

would be granted delayed publication 

only if they were made in the context 

of a relationship for bona fide research 

or clinical investigation activities. We 

proposed that the ‘‘product research or 

development agreement’’ referenced in 

the statute included a written statement 

or contract between the applicable 

manufacturer and covered recipient, as 

well as a written research protocol. 

Section 1128G(c)(1)(E) of the Act 

provides specific situations when 

delayed publication of payments or 

other transfers of value is appropriate, 

including the following: 

• Research in connection with a 

potential new medical technology or a 

new application of an existing medical 

technology. 

• The development of a new drug, 

device, biological, or medical supply. 

• In connection with a clinical 

investigation regarding a new drug, 

device, biological, or medical supply. 

In the proposed rule, we noted the 

difficulty in separating medical 

technology from the definition of 

covered drug, device, biological or 

medical supply and proposed to 


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consider ‘‘medical technology’’ broadly 

to include any drug, device, biological, 

or medical supply. Similarly, due to the 

overlap between the terms ‘‘research’’ 

and ‘‘development,’’ we proposed to 

treat them similarly in this provision. In 

the proposed rule, we noted that the 

definition of clinical investigations in 

section 1128G(e)(3) of the Act is distinct 

from both ‘‘research’’ and 

‘‘development’’ for the purposes of 

section 1128G the Act. We noted that 

this definition may also differ from 

those that applicable manufacturers may 

be familiar with in 21 CFR 312.3 and 

812.3. 

Given these interpretations, we 

proposed that delayed publication 

should apply to payments to covered 

recipients for services in connection 

with research on, or development of, 

new drugs, devices, biologicals, or 

medical supplies, as well as new 

applications of existing drugs, devices, 

biologicals, or medical supplies. 

Conversely, we proposed limiting 

delayed publication for payments in 

connection with clinical investigations 

to new drugs, devices, biologicals, or 

medical supplies, but not new 

applications of existing drugs, devices, 

biologicals, or medical supplies. 

Finally, the statute also requires that 

information about payments and other 

transfers of value that are delayed from 

publication must be made publicly 

available on the first publication date 

after the earlier of either: (1) the 

approval, licensure or clearance by the 

FDA of the covered drug, device, 

biological or medical supply; or (2) 4 

calendar years after the date of payment 

or other transfer of value. 

Comment: Numerous commenters 

provided input on these interpretations 

and proposals. Some commenters 

recommended that CMS expand the 

situations when a payment or other 

transfer of value may be granted delayed 

publication. For example, a few 

commenters suggested that all researchrelated payments or other transfers of 

value should be granted a delay in 

publication, regardless of the product 

under consideration. Some commenters 

also explained that research on noncovered products should also be granted 

delayed publication, including preclinical research, which is often not 

expressly connected to a product. 

Conversely, other commenters 

recommended that CMS narrow the 

situations when a payment or other 

transfer of value is granted delayed 

publication. For example, a few 

commenters suggested interpreting 

medical technology as a subset of 

covered drugs, devices, biologicals or 

medical supplies, which would include 

only devices or even only a subset of 

devices. A few commenters also 

recommended that CMS not allow any 

delayed publication for payments or 

other transfers of value related to new 

applications of existing products. 

Finally, a few other commenters 

requested that CMS allow for delayed 

publication of sensitive payments or 

other transfers of value that are not 

related to research, such as business 

development activities. 

Response: We appreciate these 

comments. However, we believe that 

our proposal strikes a good balance for 

granting certain payments or other 

transfers of value a delay in publication. 

In order to provide additional context to 

stakeholders, we seek to clarify our 

interpretation of the proposed 

requirements for delayed publication. 

All payments or other transfers of 

value that are related to research, as 

defined in § 403.902, and are made 

pursuant to a written research 

agreement for research related to new 

products will be granted a delay. 

However, payments or other transfers of 

value related to research for new 

applications of products already on the 

market will be treated differently due to 

the statutory distinction between new 

products and new applications of 

existing products. Pursuant to the 

statute, payments related to research on 

new applications of existing products 

will be granted a delay only if the 

research does not meet the definition of 

‘‘clinical investigation.’’ We recognize 

that clinical investigations are a subset 

of research; however, we believe that 

the statute clearly differentiates them for 

purposes of delayed publication from 

research and development, and 

indicates that payments or other 

transfers of value made in connection 

with clinical investigations (as defined 

in section 1128G(e)(3) of the Act) related 

to new applications of existing products 

should not be granted a delay. Given the 

broad scope of the statutory definition 

of ‘‘clinical investigation,’’ we believe 

this includes Phases I through IV 

clinical research for drugs and 

biologicals, and approval trials for 

devices (including medical supplies). 

We also amended the regulatory 

definition to include biologicals and 

medical supplies, as well as drugs and 

devices, since all product types should 

be treated similarly. 

We recognize that the interpretation 

of the meaning of a new product (as 

opposed to a new application of an 

existing product) for the purposes of 

section 1128G of the Act may differ 

from other definitions, such as the 

definition of new drug in 21 U.S.C. 355. 

For purposes of determining eligibility 

for delayed publication under section 

1128G(c)(1)(E) of the Act, new generic 

products will be considered new 

products, including drugs receiving 

approval under an Abbreviated New 

Drug Application, and devices under 

the 510(k) process. 

Finally, while we recognize the 

potentially sensitive nature of business 

development activities, we do not 

believe that the statute grants us the 

ability to granted delays for payment 

types other than research. 

Regarding the written agreement and 

research protocol, we discussed 

numerous comments on these 

requirements earlier in the research 

section, particularly regarding the 

requirement that a research study must 

be subject to both a written agreement 

and a research protocol. We have 

finalized the same requirements for 

payments or other transfers of value 

granted delayed publication. In general, 

a payment or other transfer of value can 

only be granted delayed publication if 

the payment meets the definition of 

research and could be reported under 

the ‘‘research’’ nature of payment 

category. Any related payments or other 

transfers of value that would not be 

reported as a part of the research nature 

of payment category, pursuant to the 

discussion in section II.B.1.i. of this 

final rule, will not be granted delayed 

publication. 

Comment: Commenters specifically 

recommended that 4 years is not enough 

time for full development of a product, 

and that payments should only be 

published after FDA approval, licensure 

or clearance. 

Response: We appreciate the 

comments, but the timelines are clearly 

delineated in section 1128G(c)(1)(E) of 

the Act. We do not have the authority 

to alter them. Additionally, we believe 

Congress clearly intended that all 

payments should be included on the 

public Web site, even if a product never 

received FDA approval, licensure or 

clearance. 

1. Process for Reporting Payments or 

Other Transfers of Value Granted 

Delayed Publication 

We received numerous comments on 

our proposed method for notification to 

CMS which payments or other transfers 

of value are eligible for delayed 

publication on the public Web site, as 

well as additional methods for reporting 

the information to CMS. We proposed 

that applicable manufacturers should 

indicate on their reports whether or not 

a payment or other transfer of value 

should be granted a delay from 

publication. In addition, we proposed 

that payments or other transfers of value 


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subject to delayed reporting need to be 

reported each year with a continued 

indication that publication should 

remain delayed and any updated 

information on the payment or other 

transfer of value, as necessary. Further, 

we proposed that following FDA 

approval, licensure or clearance, 

applicable manufacturers must indicate 

in their next annual submission that the 

payment should no longer be granted a 

delay and should be published in the 

current reporting cycle. Finally, we 

proposed that if a report includes a date 

of payment 4 years prior to the current 

year, then the payment or other transfer 

of value would be automatically 

published, regardless of whether the 

applicable manufacturer indicates that 

the payment should be delayed. 

Comment: A few commenters 

requested clarification on whether 

applicable manufacturers would be 

required to indicate that a payment or 

other transfer of value should be granted 

delayed publication. Other commenters 

provided alternative methods for 

reporting payments or other transfers of 

value eligible for delayed publication. 

For example, some commenters 

recommended that applicable 

manufacturers should only report the 

payment or other transfer of value to 

CMS in the year it was made and then 

again in the year it is to be published. 

Similarly, other commenters 

recommended that applicable 

manufacturers should only report 

payments or other transfers of value in 

the year they are to be published. In 

addition, a few commenters expressed 

concern about confidentiality and 

recommended that applicable 

manufacturers should not be required to 

report the identifying details of the 

payment or other transfer of value until 

the payment was scheduled to be 

published. Beyond identifying details, 

some commenters recommended that 

CMS allow applicable manufacturers to 

report ‘‘research and development’’ for 

the product name, rather than the 

product, in order to better protect 

proprietary interests. Similarly, 

commenters recommended that CMS 

never require the collection of research 

protocols in order to ensure a payment 

or other transfer of value should be 

granted delayed publication. 

Response: We appreciate the 

comments and agree that applicable 

manufacturers are not required to 

indicate that payments or other transfers 

of value are eligible for delayed 

publication and may instead choose not 

to indicate eligibility for the delay. 

However, if a manufacturer does not 

indicate that a payment or other transfer 

of value is eligible for delayed 

publication, it will be published 

immediately on the next publication 

date. 

We also appreciate the comments 

regarding alternative methods for 

reporting payments or other transfers of 

value granted delayed publication; 

however, we believe that the proposed 

method is preferable. We believe that 

continual reporting is beneficial because 

it will allow us to ensure that payments 

or other transfers of value made more 

than four years earlier will be published 

appropriately. Otherwise, payments or 

other transfers of value from the same 

applicable manufacturer may be stored 

in various places. Additionally, we 

believe it will be difficult for us to 

enforce and audit payments or other 

transfers of value eligible for delayed 

publication if they are not reported until 

they are scheduled to be published. 

Nevertheless, we understand the 

confidentiality concerns, particularly for 

new products that have not yet been 

granted FDA approval, licensure, or 

clearance. However, after reviewing the 

comments, we believe that allowing 

applicable manufacturers to report in a 

different manner and allowing special 

considerations for certain research 

payments or other transfers of value 

makes the reporting requirements 

significantly more complicated. 

Additionally, section 1128G(c)(1)(E)(ii) 

of the Act requires CMS to keep the 

information submitted confidential 

prior to publication. We believe that 

creating separate requirements is too 

burdensome particularly when the 

statute and regulations already provide 

for confidentiality. We do not intend 

applicable manufacturers to provide 

research protocols or other such 

agreements to CMS for verification. 

Finally, pursuant to the statute, 

information reported by applicable 

manufacturers that is subject to delayed 

publication under section 

1128G(c)(1)(E) of the Act shall be 

considered confidential and shall not be 

subject to disclosure under 5 U.S.C. 552, 

or any other similar Federal, State or 

local law, until after the date on which 

the information is made available to the 

public via publication on the Web site. 

F. Penalties 

Section 1128G(b) of the Act 

authorizes the imposition of CMPs for 

failures to report required information 

on a timely basis in accordance with the 

regulations. If an applicable 

manufacturer or applicable GPO fails to 

submit the required information, then 

the applicable manufacturer or 

applicable GPO will be subject to a CMP 

of at least $1,000, but no more than 

$10,000, for each payment or other 

transfer of value, or ownership or 

investment interest not reported as 

required. The maximum total CMP with 

respect to each annual submission for 

failure to report is $150,000. For 

knowing failure to submit required 

information in a timely manner, an 

applicable manufacturer or applicable 

GPO will be subject to a CMP of at least 

$10,000, but no more than $100,000, for 

each payment or other transfer of value, 

or ownership or investment interest not 

reported as required. The maximum 

total CMP with respect to each annual 

submission for a knowing failure to 

report is $1,000,000. 

In the proposed rule, we outlined the 

penalty amounts as required by statute 

for failure to report and knowing failure 

to report. In addition, we proposed that 

all CMPs would be collected and 

imposed in the same manner as the 

CMPs collected and imposed under 

section 1128A of the Act. Additionally, 

we proposed that the procedures in 42 

CFR part 402 subpart A would apply 

with regard to imposition and appeal of 

CMPs. Similarly, we defined the term 

‘‘knowingly’’ based on the meaning in 

the False Claims Act, 31 U.S.C. 3729(b), 

as required by statute. Finally, we also 

proposed that a CMP may be imposed 

for failure to report information in a 

timely, accurate, or complete manner. 

In the proposed rule, we outlined the 

factors that we would consider when 

determining the amount of a CMP, as 

well as when the maximum CMP would 

be imposed. We did not receive any 

comments on these factors, so we have 

decided to finalize these provisions as 

proposed. The factors to be considered 

include, but are not limited to, the 

following: 

• The length of time the applicable 

manufacturer or applicable GPO failed 

to report, including the length of time 

the applicable manufacturer and 

applicable GPO knew of the payment or 

other transfer of value, or ownership or 

investment interest. 

• Amount of the payment or other 

transfer of value or the value of the 

ownership or investment interest the 

applicable manufacturer or applicable 

GPO failed to report. 

• Level of culpability. 

• Nature and amount of information 

reported in error. 

• Degree of diligence exercised in 

correcting information reported in error. 

Finally, we proposed that in order to 

facilitate audits and enforcement, 

applicable manufacturers and 

applicable GPOs must maintain all 

books, records, documents, and other 

materials sufficient to enable an audit, 

evaluation or inspection of the 

applicable manufacturer’s or applicable 


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GPO’s compliance with the 

requirements in section 1128G of the 

Act and the implementing regulations. 

We proposed that applicable 

manufacturers and applicable GPOs 

must maintain these books, records, 

documents, and other materials for a 

period of at least 5 years from the date 

the payment or other transfer of value, 

or ownership or investment interest is 

published publicly on the Web site. 

Comment: A few commenters 

discussed the proposed penalties for 

failure to report. These commenters 

generally supported higher CMP 

amounts for knowing failures to report. 

However, a few of these commenters 

suggested that the penalties were too 

low. The commenters also 

recommended that penalties should be 

imposed for inaccurate reporting, as 

well as omitted transactions. 

Beyond the structure of the penalties, 

a few commenters also requested 

additional information on how CMS 

planned to enforce the program. They 

requested information on which 

agencies would be responsible for 

enforcement, as well as the enforcement 

mechanisms. Finally, a few commenters 

requested clarification on when the 

maximum penalty would be imposed 

and recommended that errors corrected 

during the review and correction period 

would not be subject to penalties. 

Response: We appreciate the 

comments. However, we cannot change 

the amount or terms of the penalties, 

since they were authorized by statute. 

Section 1128G(b) of the Act outlines the 

CMP amounts and requires that they are 

imposed and collected in the same 

manner as those in section 1128A of the 

Act. Nevertheless, we do agree that the 

penalties should be imposed for 

inaccurate reporting. We have finalized 

our proposal that a CMP may be 

imposed for failure to report 

information in a timely, accurate, or 

complete manner. This includes failure 

to report timely or accurately an entire 

transaction, as well as failure to report 

timely or accurately certain fields 

related to a transaction. For example, 

this could entail reporting an erroneous 

payment amount or not reporting that 

an ownership or investment interest was 

held by an immediate family member of 

a physician. In order to clarify this, we 

have revised the regulation text in 42 

CFR 402.105 to include the same text 

regarding reporting in a timely, 

accurate, or complete manner. In 

addition, we have revised the regulation 

text at § 402.105 and § 403.912 to clarify 

that the penalties imposed for failures to 

report and knowing failures to report 

will be aggregated separately and are 

subject to separate aggregate totals, with 

a maximum combined annual total of 

$1,150,000. Finally, we also realized 

that in the proposed rule we did not 

refer to the procedures for collection of 

CMPs in 42 CFR part 402 subpart B, so 

we are clarifying in this final rule that 

the procedures in 42 CFR part 402 

subpart A and subpart B will apply with 

regard to imposition, appeal, and 

collection of CMPs. 

Regarding corrections made during 

the review and correction, and dispute 

resolution periods, we want applicable 

manufacturers and applicable GPOs to 

correct any errors they have submitted 

without fear of alerting CMS to errors 

that will be subject to penalties; 

however, we do not want to allow 

applicable manufacturers to submit 

grossly inaccurate or incomplete data by 

the original submission date without 

risk of sanction. Therefore, we are 

requiring applicable manufacturers and 

applicable GPOs to attest the timeliness, 

accuracy, and completeness of their 

original submission to CMS prior to the 

review and correction period. 

Applicable manufacturers and 

applicable GPOs should make a good 

faith effort to ensure that the original 

data submitted to CMS is correct. We do 

not intend that errors corrected during 

the review and correction, and dispute 

resolution periods will be subject to 

penalties for failure to report in 

instances when the original submission 

was made in good faith. As noted 

earlier, applicable manufacturers and 

applicable GPOs will be required to reattest after the submission of updated or 

new data. Outside this period, any 

errors or omissions will be considered 

failures to report timely, accurately, or 

completely, and will be subject to 

penalties. Additionally, both CMS and 

the HHS OIG are authorized to impose 

CMPs and both agencies will have the 

ability to investigate failures to report 

timely, accurately or completely. 

Finally, in light of the increased 

flexibility for consolidated reports, we 

have clarified how penalties will be 

enforced for applicable manufacturers 

submitting consolidated reports. As 

explained previously, for consolidated 

reports, the applicable manufacturer 

that submitted the consolidated report 

will be required to attest on behalf of all 

the entities included in the consolidated 

report. Therefore, the applicable 

manufacturer actually submitting the 

consolidated report and signing the 

attestation will be subject to the 

maximum penalties (based on 

unknowing and knowing failures to 

report) for each individual applicable 

manufacturer included in the 

consolidated report. For example, an 

applicable manufacturer submitted a 

consolidated report for itself (Company 

A) and two other applicable 

manufacturers (Subsidiary B and C). We 

discover six instances of a failure to 

report a payment or other transfer of 

value in Company A’s submission (each 

penalized at $10,000), seven instances 

of a knowing failure to report in 

Subsidiary B’s submission (each 

penalized at $100,000) and finally nine 

knowing instances of failure to report 

(each penalized at $100,000) in 

Subsidiary C’s submission. Company A, 

as the submitter and attester of the data, 

would be subject to a penalty of $60,000 

for Company A’s failure to report, 

$700,000 for Subsidiary B and $900,000 

for Subsidiary C. To be clear, Company 

A would be subject to the penalties for 

knowing failure to report from both 

Subsidiary B’s and Subsidiary C’s 

submissions even though the penalties 

together exceed $1,000,000, because we 

interpret the maximum to apply 

individually to each applicable 

manufacturer’s submission, even if the 

submission is contained within a 

consolidated report. We believe this 

appropriately handles the penalty 

requirements for applicable 

manufacturers submitting consolidated 

reports, since each applicable 

manufacturer should be subject to the 

same maximum penalties regardless of 

whether it submits individually, or as a 

part of a consolidated report. Two 

applicable manufacturers submitting a 

consolidated report should not be 

subject to lower penalties than two 

applicable manufacturers not submitting 

a consolidated report. Additionally, 

because the applicable manufacturer 

submitting the consolidated report is the 

entity attesting to the data, we believe 

it is fair that it be subject to the CMPs 

for each applicable manufacturer 

included in the consolidated report. 

Therefore, as noted previously we 

encourage applicable manufacturers 

considering consolidated reports to fully 

assess the requirements and potential 

penalties. 

Comment: A few commenters 

discussed the retention period; in 

particular, many of them stated that the 

5-year retention period was too long. A 

few other commenters recommended 

that the 5 years should begin on the date 

of first submission, rather than the date 

of publication. These commenters 

explained that retention based on date 

of publication would require applicable 

manufacturers and applicable GPOs to 

retain some records for longer than 5 

years. Finally, a few commenters 

questioned whether the 5-year retention 

requirement was considered absolute in 

terms of liability. 


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Response: We appreciate the 

comments, but do not agree that 5 years 

is too long. We believe that 5 years is 

sufficient, since it is less than other 

retention requirements with which 

applicable manufacturers and 

applicable GPOs may be familiar. In 

addition, we believe that the retention 

period should begin at the date of 

publication. While we understand this 

policy may require the records to be 

retained for up to 9 years, we believe 

this information is essential for audits, 

and given the confidentiality 

requirements for data granted delayed 

publication, these activities may not be 

possible until after the data is 

published. If the date of retention began 

when the data was reported, in some 

cases there may be less than a year 

between when the data was published 

and the end of the retention period, 

which we do not believe is sufficient 

time to allow for audits, penalties, and 

appeals. Given these decisions, we have 

finalized the retention requirements as 

proposed. Finally, the requirements set 

forth in this final rule are in addition to, 

and do not limit, any other applicable 

requirements that may obligate 

applicable manufacturers or applicable 

GPOs to retain and allow access to 

records. 

G. Annual Reports 

We are required to submit annual 

reports to the Congress and the States. 

The Report to Congress is due annually 

on April 1st, beginning April 1, 2013, 

and shall include aggregated 

information on each applicable 

manufacturer and applicable GPO 

submitted during the preceding 

calendar year, as well as any 

enforcement action taken and any 

penalties paid. Similarly, we must 

report information submitted during the 

previous year to States annually by 

September 30, 2013 and June 30 for 

each year thereafter. In the preamble to 

the proposed rule, we explained that 

since we will not receive data for the 

prior year until the 90th day of each 

year, the data submitted that year will 

not be ready for the April 1st report. 

Instead, we proposed that we report to 

the Congress information submitted by 

applicable manufacturers and 

applicable GPOs during the preceding 

year. 

Finally, we proposed that the State 

reports would be State-specific and 

include summary information on the 

data submitted regarding covered 

recipients and physician owners or 

investors in that State. Since these 

reports are due later in the year than the 

Report to Congress, we proposed that 

the reports would include data collected 

during the previous calendar year which 

was submitted in the current year. We 

also proposed that neither the 

Congressional nor State reports will 

include any payments or other transfers 

of value that were not published under 

the delayed publication requirements in 

section 1128G(c)(1)(E) of the Act. We 

did not receive any comments on these 

provisions and have finalized them as 

proposed. 

Comment: A few commenters did not 

support the proposed timing for the 

Congressional report and instead 

recommended that CMS publish the 

Congressional report along with the 

publication of the data. Additionally, a 

few commenters recommended that 

CMS provide more information on the 

content of the Congressional reports. 

Particularly, they recommended that the 

report provides aggregate spending 

across applicable manufacturers and 

applicable GPOs, including aggregate 

spending for payments or other transfers 

of value granted delayed publication. 

Finally, a few commenters also 

recommended that CMS establish a 

process for sharing information across 

government agencies, such as OIG and 

the Department of Justice (DOJ). 

Response: We appreciate the 

comments. We agree that the annual 

Congressional report should include 

summary statistics on the annual 

aggregate totals across applicable 

manufacturers and applicable GPOs. We 

also agree that inclusion of the aggregate 

total of payments or other transfers of 

value would be useful for oversight of 

the program. We plan to include this 

information in our annual Congressional 

report; however, in general we believe 

that we should not include specific 

details in the final rule to allow us 

flexibility to include and present 

information as appropriate. We also 

plan to work closely with other Federal 

agencies, since we recognize that other 

agencies are involved in similar 

activities. However, the purpose of this 

program is not to prosecute reporting 

entities, but to promote transparency. 

Regarding the timing of the 

Congressional report, we recognize the 

awkwardness of the timing, but note 

that the report could be submitted early 

since it is only required by April 1st. We 

do not believe we have the authority to 

change the statutory deadline in 

regulation, but will try to publish the 

report as soon as possible. 

Based on the timing of the publication 

of the final rule we have finalized that 

the Report to Congress will be submitted 

annually on April 1st, beginning April 

1, 2015, and will include aggregated 

information submitted by each 

applicable manufacturer and applicable 

GPO submitted during the preceding 

calendar year (that is, data collected in 

CY 2013 and submitted in March of 

2014), as well as any enforcement 

actions taken and any penalties paid. 

H. Relation to State Laws 

Section 1128G(d)(3) of the Act 

preempts any State or local laws 

requiring reporting, in any format, of the 

same type of information concerning 

payments or other transfers of value 

made by applicable manufacturers to 

covered recipients. No State or local 

government may require the separate 

reporting of any information regarding a 

payment or other transfer of value that 

is required to be reported under section 

1128G(a) of the Act, unless such 

information is being collected by a 

Federal, State or local governmental 

agency for public health surveillance, 

investigation, or other public health 

purposes or health oversight. 

Comment: A few commenters 

discussed the relation of section 1128G 

of the Act to relevant State laws. These 

commenters strongly supported 

preemption, but requested information 

on how CMS interpreted the timing, 

given the missed statutory deadline. 

Many commenters also requested that 

CMS identify what elements of current 

State laws will be preempted. 

Additionally, these commenters 

recommended clarifying the statutory 

language to prevent preemption from 

being applied too narrowly to 

successfully consolidate reporting. A 

few commenters explained that a broad 

interpretation of the exceptions to 

preemption, particularly ‘‘other public 

health purposes or health oversight 

purposes’’ could require applicable 

manufacturers and applicable GPOs to 

report the same information to States, as 

well as the Federal program. These 

commenters recommended that CMS 

clarify these terms to prevent them from 

being interpreted so broadly to not 

allow for any preemption. 

Response: We appreciate the 

comments and acknowledge that the 

statute seems to provide that 

preemption of State or local 

transparency and disclosure laws is 

effective for payments or other transfers 

of value made on or after January 1, 

2012. We understand that the delay in 

publication of the rule implementing 

section 1128G of the Act, which was to 

be published by October 1, 2011, has led 

to uncertainty regarding when 

preemption actually becomes effective. 

We urge manufacturers to continue to 

report under State or local disclosure 

laws until the requirements under the 

Federal rule take effect. 


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We also seek to provide some 

additional guidelines to clarify the 

preemption requirements; however, we 

note that preemption determinations 

will need to be analyzed on a case-bycase basis. 

We interpret ‘‘type of information’’ for 

purposes of the preemption clause at 

1128G(d)(3)(A) of the Act, to refer to the 

categories of information for each 

payments or other transfer of value 

required to be reported under the statute 

at 1128G(a)(1)(A)(i) through (viii) of the 

Act and § 403.904(c) of the regulations. 

We believe this is consistent with the 

statutory exception from preemption in 

section 1128G(d)(3)(B)(i) of the Act 

pertaining to the reporting to States and 

localities of information not of the type 

required to be disclosed under Federal 

law. Thus, State and local entities may 

require reporting of nonrequired 

categories of information for payments 

or other transfers of value reported to 

CMS, which are not required under 

Federal law. This includes payment 

categories excluded by the Federal law 

(including those listed at section 

1128G(e)(10)(B) of the Act), with the 

exception of those that do not meet the 

minimum dollar threshold set forth in 

section 1128G(e)(10)(B)(i) of the Act. In 

addition, States and localities may 

require reporting of payments or other 

transfers of value not required to be 

reported at all under the Federal law. 

For example, they may require the 

reporting of payments to non-covered 

recipients or by nonapplicable 

manufacturers. We believe this is 

consistent with the statutory exceptions 

from preemption in section 

1128G(d)(3)(B)(iii) of the Act. 

Finally, we understand the concern 

over other public health and oversight 

activities; however, this language is 

required by statute, so we cannot 

expressly change it. However, these 

exceptions cannot be used to avoid 

preemption. If a Federal, State or local 

government agency seeks to collect 

information reportable under this 

regulation for public health and/or 

oversight purposes and specifically 

needs the information for a purpose 

other than transparency, then such 

collection will not be preempted. 

However, if the purpose of the 

collection does not meet this exception 

and in actuality seeks to achieve the 

same transparency goal as the collection 

required under section 1128G of the 

Act, we believe such a collection would 

be preempted, and the States or 

localities can obtain the information 

they want from the Federal program. 

We have finalized the proposed 

discussion of public health agencies. We 

intend such agencies to include those 

that are charged with preventing or 

controlling disease, injury or disability 

and/or with conducting oversight 

activities authorized by law, including 

audits, investigations, inspections, 

licensure or disciplinary actions, or 

other activities necessary for oversight 

of the health care system. 

III. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 

notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. The information collections 

contained in this rulemaking are 

numerous and somewhat complex. We 

plan to obtain approval for the 

information collections in a step-wise 

fashion as we develop our system for 

receiving and displaying the required 

information and for allowing covered 

recipients and physician owners or 

investors to review the reported data 

prior to display on our Web site. Below, 

we provide an outline of the 

information collections and the current 

status of our requests for OMB approval. 

A. Recordkeeping and Reporting of 

Payments or Other Transfers of Value 

and Physician Ownership and 

Investment Interests (§ 403.904, 

§ 403.906, § 403.908(a),(b),(d),(f) and (g), 

§ 403.912(e)) 

Section 403.904 requires applicable 

manufacturers of covered drugs, 

devices, biologicals, and medical 

supplies to report annually to CMS all 

payments and other transfers of value to 

physicians and teaching hospitals 

(collectively, covered recipients). This 

includes special reporting rules for 

research-related payments. Section 

403.906 requires applicable 

manufacturers and applicable GPOs to 

report ownership and investment 

interests held by physicians or the 

immediate family members of 

physicians in such entities. This 

information is to be aggregated and 

posted publicly by CMS on a searchable 

Web site. Annually, under § 403.908(g) 

applicable manufacturers and 

applicable GPOs will be able to review 

and correct the data provided in any 

reporting period during the 45 day 

period to review and correction period. 

Under § 403.912(e), applicable 

manufacturers and applicable GPOs 

must retain records to support their 

reports for 5 years from the date when 

the information is publicly posted on 

the CMS Web site. This is, in some 

cases, a recordkeeping requirement of at 

most about 9 years for payments or 

other transfers of value eligible for 

delayed publication. In our proposed 

rule, we requested comment on the 

information required in the proposed 

regulation, but did not include all the 

data elements we expected applicable 

manufacturers and applicable GPO’s to 

report, nor did we include detailed 

information about the mechanism for 

submission, amendment, or correction. 

For this reason, we are publishing a 60- 

day notice elsewhere in today’s Federal 

Register seeking public comment on the 

information collection. As part of the 

process, we will be seeking public 

comment on templates that contain the 

data specifications for the system we 

will be building. 

B. Registration for Applicable 

Manufacturers and Applicable GPOs 

(§ 403.908(c)) 

As required by § 403.908(c), any 

applicable manufacturer or applicable 

GPO that is required to report under this 

subpart must register with CMS within 

90 days of the end of the calendar year 

for which a report is required. During 

registration, two points of contact must 

be provided, as well as other 

information. Registration is required 

once, but upon filing the annual reports 

the system will prompt applicable 

manufacturers and applicable GPOs to 

confirm that the registration information 

(for example, points of contact) is still 

accurate. If it is not accurate, the 

applicable manufacturers and 

applicable GPOs will be prompted to 

provide updated information. We have 

yet to seek OMB approval for the 

information collections associated with 

these provisions. We plan to seek public 

comment consistent with the 

requirement of the Paperwork 

Reduction Act and request OMB 

approval at a later date. Consistent with 

5 CFR part 1320, these provisions will 

not be effective until OMB approves the 

collection of information. 

C. Attestation (§ 403.908(e)) 

As required by § 403.908(e), each 

report, including corrections, must 

include a certification that the 

information reported is timely, accurate, 

and complete. We have yet to seek OMB 

approval for the information collections 

associated with these provisions. We 

plan to seek public comment consistent 

with the requirement of the Paperwork 

Reduction Act and request OMB 

approval at a later date. Consistent with 

5 CFR part 1320, these provisions will 

not be effective until OMB approves the 

collection of information. 


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5All quotes from pages 315–316 of ‘‘Public 

reporting of physicians’ financial relationships’’ at 

http://www.medpac.gov/chapters/Mar09_Ch05.pdf. 

D. Assumptions Document (§ 403.908(f)) 

Under (§ 403.908(f)), applicable 

manufacturers and applicable GPOs 

may submit an assumptions document 

with their reports. This document can 

set out the assumptions and 

methodologies used to produce the 

reports. It will not be made available to 

the public, covered recipients or 

physician owners or investors, but it 

will provide CMS with information to 

help identify areas where additional 

guidance and clarity is needed. This is 

a voluntary collection and CMS does 

not plan to request that it be submitted 

in any particular way. We have yet to 

seek OMB approval for the information 

collections associated with these 

provisions. We plan to seek public 

comment consistent with the 

requirement of the Paperwork 

Reduction Act and request OMB 

approval at a later date. Consistent with 

5 CFR part 1320, these provisions will 

not be effective until OMB approves the 

collection of information. 

E. Information Collections Regarding 

Review and Correction by Physicians 

and Teaching Hospitals (§ 403.908(g)) 

As required by section 1128G of the 

Act, applicable manufacturers, 

applicable GPOs, covered recipients, 

and physician owners or investors must 

have an opportunity to review and 

submit corrections to the information 

submitted for a period of not less than 

45-days before CMS makes the 

information available to the public. To 

accomplish this review, we plan to ask 

covered recipients and physician 

owners and investors that would like to 

review the information to register with 

CMS using the CMS Enterprise Portal 

and associated identity and access 

management system. Once registered, 

they will be able to access a secure Web 

site that allows them to submit or 

review data securely. We have yet to 

seek OMB approval for the information 

collections associated with these 

provisions. We plan to seek public 

comment consistent with the 

requirement of the Paperwork 

Reduction Act and request OMB 

approval at a later date. Consistent with 

5 CFR part 1320, these provisions will 

not be effective until OMB approves the 

collection of information. 

F. Notice of Resolved Disputes by 

Applicable Manufacturers and 

Applicable GPOs (§ 403.908(g)(4)) 

Under § 403.908(g)(4), applicable 

manufacturers and applicable GPOs 

must notify CMS of resolved disputes. 

We have not yet established the content 

or form of this notice, and therefore we 

have yet to seek OMB approval for the 

information collections associated with 

these provisions. We plan to seek public 

comment consistent with the 

requirement of the Paperwork 

Reduction Act and request OMB 

approval at a later date. Consistent with 

5 CFR part 1320, these provisions will 

not be effective until OMB approves the 

collection of information. 

G. Notice of Errors or Omissions 

(§ 403.908(h)) 

Under § 403.908(h), applicable 

manufacturers and applicable GPOs 

must notify CMS immediately upon 

discovering errors or omissions in their 

reports. We have not yet established the 

content or form of this notice, and 

therefore we have yet to seek OMB 

approval for the information collections 

associated with these provisions. We 

plan to seek public comment consistent 

with the requirement of the Paperwork 

Reduction Act and request OMB 

approval at a later date. Consistent with 

5 CFR part 1320, these provisions will 

not be effective until OMB approves the 

collection of information. 

IV. Regulatory Impact Analysis 

A. Statement of Need 

This final rule is necessary to 

implement the requirements in section 

1128G of the Act (as added by section 

6002 of the Affordable Care Act), which 

requires applicable manufacturers of 

covered drugs, devices, biologicals, and 

medical supplies to report annually to 

the Secretary all payments and other 

transfers of value to physicians and 

teaching hospitals (collectively, covered 

recipients). Section 1128G of the Act 

also requires applicable manufacturers 

and applicable GPOs to report 

ownership and investment interests 

held by physicians or the immediate 

family members of physicians in such 

entities. 

These provisions of the Act were 

modeled largely on the 

recommendations of the MedPAC, 

which voted in 2009 to recommend 

Congressional enactment of a new 

regulatory program. The problem 

addressed, as stated by MedPAC, is that 

‘‘at least some’’ drug and device 

manufacturer interactions with 

physicians ‘‘are associated with rapid 

prescribing of new, more expensive 

drugs and with physician requests that 

such drugs be added to hospital 

formularies,’’ as well as ‘‘concern that 

manufacturers’ influence over 

physicians’ education may skew the 

information physicians receive.’’ 

MedPAC went on to say that ‘‘there is 

no doubt that those relationships should 

be transparent,’’ while pointing out that 

‘‘transparency does not imply that all— 

or even most—of these financial ties 

undermine physician-patient 

relationships.’’ 5 While a few comments 

discussed the reliability of the data used 

for the MedPAC report, we believe that 

the overall conclusions of the report are 

valid and continue to see the report’s 

findings as a reason to promote 

transparency. 

B. Overall Impact 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), Executive 

Order 13563 on Improving Regulation 

and Regulatory Review (January 18, 

2011), the Regulatory Flexibility Act 

(RFA) (September 19, 1980, Pub. L. 96– 

354), section 1102(b) of the Social 

Security Act, section 202 of the 

Unfunded Mandates Reform Act of 1995 

(March 22, 1995; Pub. L. 104–4), 

Executive Order 13132 on Federalism 

(August 4, 1999) and the Congressional 

Review Act (5 U.S.C. 804(2)). 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and promoting flexibility. Section 4 of 

Executive Order 13563 calls upon 

agencies to consider approaches that 

‘‘maintain flexibility and freedom of 

choice for the public,’’ including the 

‘‘provision of information to the public 

in a form that is clear and intelligible.’’ 

A regulatory impact analysis (RIA) must 

be prepared for major rules with 

economically significant effects ($100 

million or more in any 1 year). We 

estimate that this rulemaking is 

‘‘economically significant’’ as measured 

by the $100 million threshold. 

Accordingly, we have prepared a 

Regulatory Impact Analysis that 

presents estimated costs and benefits of 

the rulemaking. We solicited comments 

on all assumptions and estimates in this 

regulatory impact analysis, including 

some assumptions and estimates that 

were presented in the Collection of 

Information Requirements section of the 

proposed rule. As is standard practice in 


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6http://www.sba.gov/sites/default/files/ 

Size_Standards_Table.pdf. 

meeting these various requirements for 

regulatory analysis, this section of the 

final rule addresses all of them together. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

entities, if a rule has a significant impact 

on a substantial number of small 

entities. Under the RFA, ‘‘small 

entities’’ are those that fall below size 

thresholds set by the Small Business 

Administration, or are not-for-profit 

organizations or governmental 

jurisdictions with a population of less 

than 50,000. We did not receive any 

comments on these aspects of the RFA, 

so have finalized it as proposed. For 

purposes of the RFA, we estimate that 

the majority of teaching hospitals and 

physicians, and most applicable 

manufacturers and applicable GPOs are 

small entities under either the size or 

not-for-profit standard. According to the 

Small Business Administration size 

standards 6 the threshold size standard 

for ‘‘small’’ pharmaceutical 

manufacturers is 750 employees, for 

biological products, and surgical 

equipment, surgical supplies, and 

electromedical/electrotherapeutic 

apparatus manufacturers is 500 

employees and for drug and medical 

equipment wholesalers is 100 

employees. We estimate that 

approximately 75 percent of applicable 

manufacturers and applicable GPOs are 

smaller than these size standards. In this 

final rule, we assume that applicable 

manufacturers that do not have 

payments or other transfers of value or 

physician ownership or investment 

interests to report do not need to submit 

a report. We believe that many small 

applicable manufacturers and 

applicable GPOs will have no 

relationships, thus will not have to 

report, so the burden on them will be 

negligible. For small entities with 

financial relationships to report, we 

believe that they will only have a small 

number to report, making the reporting 

process significantly less burdensome. 

We believe that the average burden of 

the reporting requirements will be about 

$80,000 in the first year (the sum of 0.25 

FTEs of compliance officer at $48 

hourly rate and 1 administrative support 

FTE at $26 hourly rate times 40 hours 

and 52 weeks) for smaller 

manufacturers, and even less in 

subsequent years. This amount is far 

below the 3 percent of revenues that 

HHS uses as a threshold for ‘‘significant 

impact’’ under the RFA, so these 

regulations will not have a significant 

effect on these small entities. For 

example, if a firm with only 100 

employees generates annual revenues of 

$200,000 per employee, or $20 million, 

a cost of $80,000 would be less than 0.5 

percent of the revenues. Firms this 

small would potentially face costs 

considerably less than $80,000, and 

hence an even lower effect. 

As previously noted, most teaching 

hospitals and physicians are small 

entities under the RFA, since most 

teaching hospitals are not-for-profit and 

some have revenues below $34.5 

million. We estimate that 95 percent of 

physician practices have revenues 

under $10 million. We believe the 

regulatory effects of this provision on 

physicians and teaching hospitals are 

relatively minor. Physicians and 

teaching hospitals are provided with the 

opportunity to review and correct this 

information, but are not involved in the 

data collection or reporting processes. 

We estimated that this review would 

take 1 hour from the individual 

physicians and 5 hours for the 

supporting staff to perform the duty to 

maintain records and review the reports 

annually. For teaching hospitals, it is 

estimated that on average 40 hours of 

compliance officer and 80 hours of 

supporting staff would needed. Given 

that their review will take such a small 

amount of their time annually, the costs 

faced by physicians and teaching 

hospitals are not substantial. As a result, 

we believe that the cost burden of this 

review and correction period will be far 

below the 3 percent threshold for 

‘‘significant impact.’’ Therefore, we 

have determined that this proposed rule 

will not have a significant economic 

impact on a substantial number of small 

entities in any category of entities it 

affects. 

In addition, as stated in the proposed 

rule, section 1102(b) of the Act requires 

us to prepare a regulatory impact 

analysis if a rule may have a significant 

impact on the operations of a substantial 

number of small rural hospitals. This 

analysis must conform to the provisions 

of section 604 of the RFA. For purposes 

of section 1102(b) of the Act, we define 

a small rural hospital as a hospital that 

is located outside of a metropolitan 

statistical area and has fewer than 100 

beds. In the proposed rule, we stated 

that we did not believe that any of the 

affected teaching hospitals are small 

rural hospitals, so did not believe that 

the rule had a significant impact on the 

operations of small rural hospitals. We 

did not receive any comments on this, 

so we have determined that this final 

rule will not have a significant impact 

on the operations of a substantial 

number of small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

require spending in any single year of 

$100 million in 1995 dollars, updated 

annually for inflation. In early 2013, 

that threshold is approximately $139 

million. The estimates presented in this 

section of this rule exceed this threshold 

and as a result, we have provided a 

detailed assessment of the anticipated 

costs and benefits in section V.C.4. of 

this final rule. Reporting under section 

1128G of the Act is required by law, so 

we are limited as to policy options. 

Section IV.D. of this final rule, as well 

as other parts of the preamble, provide 

detailed additional information on the 

alternatives we considered. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

While this final rule does preempt 

certain elements of State law, the 

regulatory standard simply follows the 

express preemption provision in the 

statute. Because of this and the fact that 

this regulation does not impose any 

costs on State or local governments, the 

requirements of Executive Order 13132 

are not applicable. We offer a more 

detailed discussion of preemption in 

§ 403.914 of this final rule. 

C. Anticipated Effects 

The regulatory impact of this 

provision includes applicable 

manufacturers and applicable GPOs 

collection and submitting this 

information to CMS, and physician and 

teaching hospital review and correction 

period. The costs of these requirements 

are outlined in section III. of this final 

rule. We estimate a total cost of about 

$269 million for the first year of 

reporting, followed by about $180 

million in the second year and annually 

thereafter. 

1. Effects on Applicable Manufacturers 

and Applicable GPOs 

For applicable manufacturers, only 

those that made reportable payments or 

other transfers of value, or have 

physicians (or immediate family 

members of physicians) holding 

ownership and investment interests, 

will be required to submit reports. 

Similarly, only applicable GPOs that 

have ownership or investment interests 

held by physicians (or immediate family 

members of physicians) would be 

required to submit reports. We estimate 

that approximately 1,150 applicable 


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manufacturers, (150 drug and biologic 

manufacturers, and 1,000 device and 

medical supply manufacturers), and 

approximately 420 applicable GPOs 

would submit reports. We based these 

estimates on the number of 

manufacturers reporting in States with 

similar transparency provisions, as well 

as the number of manufacturers 

registered with FDA. The number of 

drug manufacturers is based on 

reporting in Massachusetts, Minnesota, 

and Vermont, whereas the number of 

device manufacturers is based on 

reporting in Massachusetts and 

Vermont, since Minnesota does not 

require device manufacturers to report. 

Because the State laws have higher 

payment thresholds and are specific to 

the physicians in the State, we 

estimated that the number of 

manufacturers reporting would be 

greater under section 1128G of the Act, 

so we increased the State reporting 

numbers by 50 percent. For device 

manufacturers, we also used data from 

the FDA to identify the total number of 

manufacturers to use as a ceiling for our 

estimate, combining the two data 

sources we increased the State reporting 

numbers by 75 percent. We believe that 

device manufacturers are often smaller 

and more region specific, which is why 

we increased the State estimates by a 

greater percentage. We did not receive 

comments on the number of reporting 

entities, except for information on the 

number of device manufacturers 

reporting in Vermont, where the 

legislature amended the transparency 

scheme in 2009 to include reporting by 

device manufacturers, so have finalized 

these assumptions. 

It is difficult to establish with 

precision the number of GPOs, as 

proposed, because the definition of GPO 

includes some physician owned 

distributorships (PODs). However, we 

did rely on a recent report by the Senate 

Finance Committee which identified 20 

States with multiple PODs and more 

than 40 PODs in California.7. When we 

extrapolate these estimates to the 

national level, taking into account the 

disproportionately higher number in 

California, we estimate that there are 

approximately 260 PODs currently in 

the U.S. We further estimate that there 

are an additional 160 GPOs, which have 

some form of physician ownership or 

investment. This is based on a review of 

what little literature exists and 

discussions with knowledgeable 

persons. Our research found that there 

are approximately 800 GPOs and that 

approximately 20 percent of GPOs have 

at least one physician owner or investor. 

We did not receive comments on the 

number of GPOs, so have finalized these 

assumptions. 

In the public comments, we received 

comments on the estimated costs of the 

reporting requirements, but not the 

individual activities associated with 

them. Given these comments, we have 

revised the estimates, but have not 

revised the activities the FTEs will be 

required to perform, since we believe 

they accurately portray the 

requirements. Coordinating the data 

collection will require ensuring that all 

payments and other transfers of value 

are attributed to the correct covered 

recipient and reported in the manner 

required in this final rule. These 

estimates include our aggregate estimate 

of the overall time required to build and 

maintain the reporting systems 

(including the development of new 

information technology systems), train 

appropriate staff, obtain NPI and other 

information from the NPPES system 

(and if necessary supplement that 

information), establish whether any 

owners or investors have physicians as 

immediate family members (if 

necessary), organize the data for 

submission to CMS (within the 

organization and with any third party 

vendors), register with CMS and submit 

the required data, review the aggregated 

data that CMS produces, respond to any 

physician or teaching hospital queries 

during the review process, and resubmit 

and re-attest to certain disputed 

information (if necessary). Finally, it 

also includes any time required to 

maintain records, as required. However, 

we believe that much of this 

information will be collected and stored 

already for financial reasons, so we do 

not anticipate a significant burden. It 

allows for time applicable 

manufacturers and applicable GPOs 

may sometimes use for ‘‘presubmission’’ reviews but assumes that 

would be rarely used, and only for 

complex cases. It also includes the time 

that applicable manufacturers may elect 

to spend to submit with their data a 

document describing their assumptions 

and methodology for categorizing the 

nature of payments. The estimates also 

include a downward adjustment to 

reflect the potential time savings that 

would accrue to applicable 

manufacturers who register with the 

CMS system and thus have the ability to 

query CMS, receive informal guidance 

through a listserv or other methods of 

providing technical assistance, and 

ultimately obtain useful information on 

low cost methods of compliance. 

Comment: Several commenters stated 

that the current cost estimation for 

applicable manufactures and applicable 

GPOs to comply with the reporting 

requirements are too low, and CMS 

should increase the FTE estimates. 

Response: We agree with the 

comment and have increased our 

estimates of the average FTE burden 

associated with the manufacturer and 

GPO reporting requirements. However, 

we believe that applicable 

manufacturers and applicable GPOs 

vary in their readiness to comply with 

the reporting requirements. Some 

companies have existing reporting 

systems in place, which can be used to 

comply with the government 

requirements. These systems track the 

wide range of financial interactions 

between the company, and physicians 

and teaching hospitals. Additionally, 

the efforts and workload varies with the 

size of the company as larger 

manufacturers will have more 

transactions, so may need more FTEs 

accordingly. As in the proposed rule, we 

estimated the impact based on all sizes 

of companies, recognizing that there are 

a few very large companies for which 

this would be a low estimate, but there 

are small companies which may need 

fewer FTEs. Additionally, we also took 

into account the finalized provisions 

that applicable manufacturers with less 

than 10 percent of gross revenues 

coming from covered products would 

only have to report payments or other 

transfers of value related to covered 

products, rather than all products. This 

will greatly reduce the reporting burden 

for these manufacturers, so we have 

considered them small companies for 

reporting purposes. Finally, we 

separated the FTE estimates to include 

a full time compliance officer, as well as 

multiple support staff for bookkeeping, 

accounting, and auditing; this change in 

approach yields a lower average cost per 

FTE than we estimated in the PRA. 

We estimate that, for year 1, on 

average, smaller applicable 

manufacturers will have to dedicate 25 

percent of an FTE employee (mainly in 

the range of zero to 50 percent), whereas 

larger applicable manufacturers may 

have to dedicate 1 to 10 FTE employees 

to comply with the reporting 

requirements (we assume 2 FTEs on 

average). Furthermore, we estimated 

that reporting activities will be 

conducted by the managerial staff and 

supporting staffs, the compliance or 

similar level of staffs will oversee the 

reporting activities, which will largely 

be supported by staff involved with 

bookkeeping, accounting and auditing. 

Since there are many more small 

companies, we estimate that on average, 

0.5 FTEs of compliance officer and 2 

FTEs of supporting staff would be 

needed for each applicable 

manufacturer in the first year (2 FTEs of 


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compliance officer and 8 FTEs of 

supporting staffs in 150 larger firms and 

0.25 FTEs of compliance officer and 1 

FTE of supporting staffs in 1,000 smaller 

firms). We appreciate that this is 

considerable simplification of a far more 

complex distribution of firms, but we 

believe that it captures the distribution 

in manufacturing sectors where a 

relative handful of firms have sales in 

the billions of dollars annually over a 

wide range of products, and a far larger 

number have annual sales in low 

millions of dollars annually for just a 

few products, with practices regarding 

financial relationships with physicians 

varying widely within each group and, 

in many cases by product or product 

class. 

Therefore, for applicable 

manufacturers, the revised cost 

estimation assumes a compliance officer 

(0.5 full-time equivalents (FTEs)) and 2 

FTEs of bookkeeping, accounting and 

auditing staff support in the first year. 

In the second year and thereafter, we 

reduced the estimates, since we believe 

the system will be more automated. In 

year 2 and thereafter we assumed 0.375 

FTEs (780 hours) of a compliance officer 

and 1.5 FTEs (3,120 hours) of 

bookkeeping, accounting, and auditing 

support. Compared with the estimates 

we provided in the proposed rule, the 

total first-year FTE increased from 1.74 

to 2.5 FTEs for applicable 

manufacturers. It should be noted that 

this is an average cost while the large 

manufacturers may need more and the 

small manufacturers may need less 

FTEs. 

The greater staff time for year 1 

represents time for applicable 

manufacturers to alter their systems to 

collect and report this data. We estimate 

that once procedures and systems are 

modified, costs would be 25 percent 

lower, which reduces this value to an 

average of 0.375 FTEs of compliance 

officer and 1.5 FTEs of support staff in 

year 2 and annually thereafter. We 

emphasize that these are very rough 

estimates. The actual burdens could 

easily average 25 percent lower or 

higher, and would depend on 

manufacturers’ changes in practices 

after the regulations are made final. 

Some may welcome the new 

transparency; others may decide to 

change or eliminate their current 

practices. Our assumption that smaller 

firms could in some cases incur no new 

costs assumes that some do not now 

have any such financial relationships 

and that this proportion would grow as 

some firms decide that the benefits of 

such relationships are less than the 

costs of reporting. Other smaller firms 

with only a few products and only a few 

financial relationships might well 

already have systems in place that 

essentially meet the proposed 

requirements or that could do so with 

minimal effort. 

We anticipate it would be less 

burdensome for an applicable GPO to 

comply with these proposed reporting 

requirements, since we believe 

companies will have fewer relationships 

with physician owners or investors (or 

immediate family members). This will 

make it much easier for applicable GPOs 

to match ownership and investment 

interests to the appropriate physicians 

(or family members). Based on 

discussions with officials of some GPOs 

and industry observers, we estimate that 

it would take from 5 to 25 percent of a 

FTE staff member, depending on the 

size of the applicable GPO. We assume 

that applicable GPOs already know the 

ownership and investment interests of 

its major investors, so the burden of 

these requirements include any changes 

to internal procedures to record and 

report the information. Also again, we 

have not found any empirical studies to 

better inform this estimate. Accordingly, 

we estimate that on average, an 

applicable GPO would dedicate 10 

percent of an FTE (208 hours) of 

compliance officer and 0.25 FTEs (520 

hours) of support staff to reporting 

under this section for year 1, followed 

by 25-percent reductions in both the 

compliance officer’s time and support 

staff’s time for year 2 and annually 

thereafter. Compared with the estimates 

we provided in the proposed rule, the 

total first-year FTE estimates increased 

from 0.1 FTE (208 hours) to 0.35 (728 

hours) for GPOs. 

While many individuals within the 

applicable manufacturer or applicable 

GPO may contribute to the data 

collection and reporting, we believe that 

majority of the work will be performed 

by the support staff and overseen by a 

compliance officer. According to the 

Bureau of Labor Statistics Occupational 

Employment Statistics, in May 2011, the 

average hourly rates for a compliance 

officer and bookkeeping, accounting and 

auditing staff in the pharmaceutical and 

medicine manufacturing field was 

$35.75 and $19.84, respectively. We 

applied a 33 percent increase to this 

amount to account for fringe benefits, 

making the total hourly compensation 

$47.55 and $26.39, respectively. The 

total number of hours for applicable 

manufacturers (including the hours for 

compliance officers and support staff) 

during year 1 would be 5,980,000 (1,150 

applicable manufacturers × 100 hours 

(2.5 FTEs) × 52 weeks). For year 2 and 

subsequent years, we estimate a total of 

4,485,000 hours (1,150 applicable 

manufacturers × 75 hours (1.875 FTEs) 

× 52 weeks). On average, this equals 

4,983,333 hours annually for all 

applicable manufacturers for the first 3 

years. The total number of hours for 

applicable GPOs (including the hours 

for compliance officers and support 

staff) for year 1 would be 305,760 (420 

applicable GPOs × 14 hours (0.35 FTE) 

× 52 weeks) and for year 2 would be 

229,320 hours (420 applicable GPOs × 

10.5 hours (0.2625 FTEs) 52 weeks). For 

the first 3 years in total, applicable 

GPOs will spend on average 254,800 

hours annually. 

The following tables provide our total 

cost estimates for applicable 

manufacturers and applicable GPOs to 

comply with the data collection 

requirements in section 1128G of the 

Act such as collecting information, 

responding to inquiries, developing 

reports, and submitting reports to CMS. 

In total, we estimate that for applicable 

manufacturers and applicable GPOs 

required to report, it will cost 

$193,037,104 for year 1 and will cost 

$144,777,828 for year 2 and annually 

thereafter. For the first 3 years, this 

averages to a cost of $160,864,253 

annually. All estimates are in 2011 

dollars. 

We note that Tables 1A and 1B 

contain revised estimated labor costs. 

The original cost estimates were 

included in the December 19, 2011 

proposed rule (76 FR 78742). 

TABLE 1A—YEAR 1 ESTIMATED LABOR COSTS FOR APPLICABLE MANUFACTURERS AND APPLICABLE GPOS

Estimated reporting organizations 

Estimated hours 

per reporting 

organization 

Hourly rate 

Average total 

cost per 

organization 

Total cost 

Compliance officer in AM ................................. 1,150 1,040 $48 $49,452 $56,869,800 

Supporting staffs in AM ................................... 1,150 4,160 26 109,782 126,249,760 

Compliance officer in Applicable GPOs .......... 420 208 48 9,890 4,153,968 


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TABLE 1A—YEAR 1 ESTIMATED LABOR COSTS FOR APPLICABLE MANUFACTURERS AND APPLICABLE GPOS—Continued 

Estimated reporting organizations 

Estimated hours 

per reporting 

organization 

Hourly rate 

Average total 

cost per 

organization 

Total cost 

Supporting staffs in Applicable GPOs ............. 420 520 26 13,723 5,763,576 

Total .......................................................... ............................ ............................ ............................ ............................ 193,037,104 

TABLE 1B—YEAR 2 AND SUBSEQUENT YEAR ESTIMATED LABOR COSTS FOR APPLICABLE MANUFACTURERS AND

APPLICABLE GPOS

[Annual] 

Estimated reporting organizations 

Estimated hours 

per reporting 

organization 

Hourly rate 

Average total 

cost per 

organization 

Total cost 

Compliance officer in AM ................................. 1,150 780 $48 $37,089 $42,652,350 

Supporting staffs in AM ................................... 1,150 3,120 26 82,337 94,687,320 

Compliance officer in Applicable GPOs .......... 420 156 48 7,418 3,115,476 

Supporting staffs in Applicable GPOs ............. 420 390 26 10,292 4,322,682 

Total .......................................................... ............................ ............................ ............................ ............................ 144,777,828 

In addition to FTE costs, we also 

assume that there would be some 

infrastructure costs associated with the 

reporting requirements under section 

1128G of the Act. We acknowledge a 

substantial amount of uncertainty in 

these estimates. For example, we do not 

know how many companies will be 

using existing systems and technology 

to comply with the requirements and 

how many will be obtaining new 

equipment and technology; in both 

cases, there will be opportunity costs of 

using the systems for the reporting 

required by this rule, but with new 

systems, there might be higher-set-up 

costs. We also envision that companies 

of varying size will have different 

infrastructure needs, so have selected an 

average amount based on CMS 

infrastructure estimates of the 

requirements. We estimate that in year 

1 the infrastructure costs for applicable 

manufacturers will be $10,000. This 

represents an average of $4,000 for small 

companies (estimated to be 1000 

companies) and $50,000 for large 

companies (estimated to be 150 

companies). We assume that the 

majority of these costs will be 

infrastructure costs, such as purchasing 

equipment and initial training, but 

assume that some costs will be required 

to maintain the systems. Therefore, we 

estimate that in year 2 and annually 

thereafter, applicable manufacturers 

will spend about $1,000 annually to 

maintain their systems. This represents 

10 percent of the original infrastructure, 

which we believe is reasonable given 

CMS’s experience with system 

maintenance. We note that this only 

covers the system and equipment 

maintenance and not the staff time to 

comply with the reporting requirements. 

For applicable GPOs, we assume the 

infrastructure costs associated with the 

reporting requirements will be lower 

than that for applicable manufacturers. 

We assume that the applicable GPO 

costs will be roughly 20 percent of those 

for applicable manufacturers. This is 

based on the fact that estimated FTE 

costs for applicable GPOs are roughly 20 

percent of that of applicable 

manufacturers. Therefore, we estimate 

that in year 1 the infrastructure costs for 

applicable GPOs will be $2,000. 

Similarly, we estimate that maintenance 

costs will be 10 percent of the initial 

cost, so in year 2 and beyond the 

maintenance costs for applicable GPOs 

will be $200. Table 2A and 2B contain 

the estimated infrastructure costs for 

applicable manufacturers and 

applicable GOPs in year 1 and year 2 

and thereafter, respectively. We further 

assume that the combined infrastructure 

and maintenance costs per burden hour 

will be the same for physicians and 

teaching hospitals as for GPOs. 

We note, and discuss in the benefits 

section later in this section, that the 

costs of applicable manufacturers may 

be partially offset because many 

companies are already required to report 

to States with similar disclosure 

requirements, but would no longer be 

required to report the same information 

to States after the final rule is issued. In 

addition, a few large companies are 

already reporting similar information on 

a national level in order to comply with 

Corporate Integrity Agreements (CIAs) 

with HHS OIG. These companies may 

not have to invest as much as we 

estimated earlier in this section to 

comply with the requirements in section 

1128G of the Act. However, given the 

differing requirements for each State 

and CIA, and broad scope of section 

1128G of the Act, we do not believe it 

is possible to approximate any lessened 

burden for entities already reporting. 

Because applicable manufacturers 

have some influence in getting their 

products on a Part D plan formulary, 

obtaining billing codes, or getting 

Medicaid coverage, they have some 

control over whether Medicare, 

Medicaid and CHIP payments are 

available for their products. If 

applicable manufacturers were to stop 

accepting such payments so as to avoid 

reporting requirements, it would reduce 

the rule-induced cost that they bear 

themselves, but might negatively affect 

the well-being of Medicare, Medicaid 

and CHIP patients who no longer have 

coverage for a full range of medical 

products. However, because these 

public programs represent a very large 

patient population, we do not anticipate 

that applicable manufacturers will 

refrain from participating in the 

programs just to avoid reporting 

requirements. 


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TABLE 2A—YEAR 1 ESTIMATED INFRASTRUCTURE COSTS FOR APPLICABLE MANUFACTURERS AND APPLICABLE GPOS

Organizations Annual cost Total cost 

Large Applicable Manufacturers ...................................................................................... 150 $50,000 $7,500,000 

Small Applicable Manufacturers ...................................................................................... 1000 4,000 4,000,000 

Applicable GPOs ............................................................................................................. 420 2,000 840,000 

Total .......................................................................................................................... ............................ ............................ 12,340,000 

TABLE 2B—YEAR 2 AND SUBSEQUENT YEAR ESTIMATED INFRASTRUCTURE COSTS FOR APPLICABLE MANUFACTURERS

AND APPLICABLE GPOS

[Annual] 

Organizations Annual cost Total cost 

Large Applicable Manufacturers ...................................................................................... 150 $5,000 $750,000 

Small Applicable Manufacturers ...................................................................................... 1000 400 400,000 

Applicable GPOs ............................................................................................................. 420 200 84,000 

Total .......................................................................................................................... ............................ ............................ 1,234,000 

2. Effects on Physicians and Teaching 

Hospitals 

We also have estimated costs for 

physicians and teaching hospitals, since 

they would have an opportunity to 

review and correct the data submitted 

by applicable manufacturers. The 

statute uses the definition of physician 

in section 1861(r) of the Act, which 

includes doctors of medicine and 

osteopathy, dentists, dental surgeons, 

podiatrists, optometrists and licensed 

chiropractors. Using the Bureau of Labor 

Statistics Occupational Outlook 

Handbook, we estimate that information 

may be available for as many as 897,700 

physicians. However, we believe that 

not all physicians will have 

relationships with applicable 

manufacturers or applicable GPOs. In 

the proposed rule, we assumed that 

roughly 75 percent of physicians would 

have relationships. However, based on 

feedback we received from stakeholders, 

including a private firm with data of 

roughly 50 companies currently 

reporting, we now estimate that less 

than 50 percent of the physicians have 

transactions with industry. We assume 

that 50 percent of physicians have no 

relationships with applicable 

manufacturers or applicable GPOs, 

which reduces our universe of affected 

physicians to approximately 448,850. 

Further, stakeholders have expressed 

that many physicians maintain 

relationships with applicable 

manufacturers that are relatively 

insignificant from a financial point of 

view, so we estimate that many 

physicians will not devote any time to 

reviewing and correct the aggregated 

reports from CMS. We estimate that 

only 50 percent of the remaining 

448,850 physicians will review the 

report, which reduces our universe of 

affected physicians to 224,425 for year 

1. For year 2, we anticipate that there 

would be a further reduction in the 

number of physicians choosing to 

review the data because they would be 

familiar with the type of information on 

the database, so we reduced the number 

of physicians reviewing by another 25 

percent, to 168,319 physicians. We also 

reduced the amount of time it would 

take the physicians choosing to review 

the information, since we believe they 

will be familiar with the review, 

correction and dispute process. For 

teaching hospitals, we know that about 

1,100 hospitals receive Medicare GME 

or IME payments, all of which are 

defined as teaching hospitals for this 

provision. We believe that the vast 

majority of teaching hospitals would 

have at least one financial relationship 

with an applicable manufacturer, so we 

did not apply any adjustments to this 

estimate. We also anticipate that there 

would not be a reduction in the number 

of teaching hospitals that review the 

information after the first year because 

teaching hospitals probably have more 

complex financial relationships. 

See the Table 3 for a breakdown of 

this calculation. In the proposed rule, 

we mistakenly omitted dental surgeons 

from the table, so have added estimates 

for them in the final rule. The definition 

of physician at section 1861(r) of the Act 

explicitly includes them. 

TABLE 3—NUMBER OF PHYSICIANS BY TYPE

Physician type Number 

Doctor of Medicine/Doctor of Osteopathy ........................................................................................................................................... 660,000 

Doctor of Dental Medicine ................................................................................................................................................................... 155,700 

Doctor of Podiatric Medicine ............................................................................................................................................................... 12,000 

Doctor of Optometry ............................................................................................................................................................................ 35,000 

Licensed Chiropractors ........................................................................................................................................................................ * 35,000 

Total .............................................................................................................................................................................................. 897,700 

Adjustment for Physicians with no reports (only 50% had transaction with industry) ........................................................................ 448,850 

Adjustment for Physicians who do not review reports (Year 1—reduction by 50%) .......................................................................... 224,425 

Adjustment for Physicians who do not review reports (Year 2—reduction by 25%) .......................................................................... 168,319 

* Reduced from 50,000 in BLS to account for licensure. 


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8http://www.bls.gov/oes/current/ 

naics4_621100.htm. 

We received numerous comments on 

the cost estimations for physicians and 

teaching hospitals, and have responded 

to them and revised our cost estimates 

accordingly. 

Comment: Several commenters 

questioned the time and cost estimation 

for physicians. Specifically, the 

commenters stated that the time allotted 

for the physicians to review the data is 

too short, since physicians will need to 

maintain records in order to review the 

information submitted on their behalf 

accurately. Similarly, several 

commenters noted that the current 

hourly rate for the physician ($75) is 

low. 

Response: We agree with commenters 

that the physicians and teaching 

hospitals may need to maintain ongoing 

records of the activities for verification 

purposes, so have increased the time 

dedicated to the physician and teaching 

hospital review. However, we assume 

that most of these recordkeeping 

activities will fall on the duty of the 

office assistants, but the physician may 

need to review the records. The hours 

of bookkeeping are added in the revised 

cost estimation for physician and 

teaching hospital accordingly. 

Additionally, we agree that the 

physician hourly rate should be 

increased. The hourly rate for 

physicians in the final rule is updated 

to $137 per hour, which is based on the 

most recent data from Bureau of Labor 

Statistics (BLS). 

Comment: A few commenters 

questioned CMS’s cost estimate of 10 

hours of compliance officer in teaching 

hospitals, which state that teaching 

hospitals will need more time to review 

the transactions and maintain records to 

facilitate the review. 

Response: We agree with commenters 

that teaching hospitals will likely need 

more time for their review. The hospital 

compliance officer’s annual hours have 

been increased from 10 hours to 40 

hours. In addition, we revised the cost 

estimation to include 80 hours of 

administrative supporting staff at 

teaching hospitals to maintain the 

records. The role of the compliance 

officer will be review and oversight, 

while the administrative supporting 

staff will conduct the recordkeeping. 

In response to the comments, even 

though there is no requirement for 

physician and teaching hospitals to 

review the reports or maintain records 

of interaction, we estimated the covered 

recipients may maintain records to 

facilitate reviews. In the final rule, we 

estimated the supporting staffs such as 

bookkeeping, accounting, and auditing 

would perform the tasks while the 

compliance officer would oversee the 

review process. 

When reviewing the information 

reported, physicians and teaching 

hospitals are allowed to review the 

information attributed to them by 

applicable manufacturers and 

applicable GPOs that submitted data to 

CMS. A number of commenters 

suggested that physicians and teaching 

hospitals would spend some time 

during the year maintaining records to 

facilitate their review. In response to 

this feedback, we added estimates for 

recordkeeping for physicians and 

teaching hospitals and assumed that 

support staff would perform these 

functions. We estimate that on average, 

physicians would need 1 hour annually 

to review the information reported. For 

physicians that choose to review the 

information, this would range from a 

few minutes for physicians with few 

relationships with applicable 

manufacturers, to at most 10 or 20 hours 

for the small number of physicians who 

have lengthy disputes over a payment or 

other transfer of value, or ownership or 

investment interest. In addition, we also 

estimated 5 hours annually of 

supporting staff for each physician to 

help them to maintain records to 

facilitate the review. We believe that 

teaching hospitals will have to review 

more payments or other transfers of 

value and have more complex 

relationships, so we estimate that, on 

average, it would take a representative, 

such as a compliance officer, from a 

teaching hospital 40 hours annually to 

review the submitted data, ranging from 

10 hours for small teaching hospitals 

that receive few payments or other 

transfer of value, to 200 hours for 

teaching hospitals that have lengthy 

disputes. In addition, we also estimated 

80 hours annually of administrative 

support staff for each teaching hospital 

to help them maintain their records. 

The Bureau of Labor Statistics 

Occupational Employment Statistics 

publishes data on hourly compensation 

for Healthcare Practitioners and 

Technical Occupations in physicians’ 

offices. The average hourly rate for 

physicians and surgeons is $103.32,8

which rises to $137 with 33-percent 

fringe benefits. This average includes 

physicians, who account for about half 

of the employment in this category. In 

the proposed rule, we used an estimate 

for the hourly wage that included other 

provider types, but having received 

numerous comments that the resulting 

wage was too low, we increased the 

estimate for this final RIA. The average 

hourly rate for the supporting staff is 

$16.35 which rises to $21.75 with 33 

percent fringe benefits. The total 

number of hours for physicians 

(including supporting staffs in 

physician offices) would be 1,346,550 

(224,425 × 6 hours) for year 1 and 

757,436 hours (168,319 × 4.5 hours) for 

year 2, which averages to 953,807 hours 

annually for the first 3 years. The total 

estimated cost for the review and 

correction period for physicians and the 

supporting staffs in year 1 is 

$55,152,444. For year 2 and annually 

thereafter, the estimated cost for 

physician and supporting staffs to 

conduct review and correction is 

$31,023,250. For the first 3 years, the 

average cost for all physicians review 

and correction will be $39,066,314 

annually. 

For teaching hospitals, as explained, 

we expect a compliance officer to 

review the payments and other transfers 

of value with supporting staff to 

maintain any necessary records. Since 

this review could be done by employees 

with multiple titles, we used the Bureau 

of Labor Statistics Occupational 

Employment Statistics reported 

compensation for Management 

Occupations at General Medical and 

Surgical Hospitals in 2010. The hourly 

average rate for compliance officer in 

hospitals is $32.94 or $43.81 when 

fringe benefit costs are applied. The 

average hourly rate for the supporting 

staff in a teaching hospital is $16.22 

which rises to $21.57 with 33 percent 

fringe benefits. For year 1, the total 

number of hours would be 132,000 

(1,100 × 120 hours). For year 2 this 

would decrease to 99,000 hours (1,100 

× 90 hours). For the first 3 years, the 

average number of hours for teaching 

hospitals will be 110,000 annually. The 

total estimated cost for the review and 

correction period for teaching hospitals 

is $3,825,800 for year 1 and $2,869,350 

for year 2 and annually thereafter. On 

average, the cost for all teaching 

hospitals will be $3,188,167 annually 

for the first 3 years. 

We note that Tables 4A and 4B 

contain revised cost estimates. The 

original cost estimates were included in 

the proposed rule (76 FR 78742). 


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TABLE 4A—YEAR 1 ESTIMATED COSTS FOR PHYSICIANS AND TEACHING HOSPITALS

Estimated number of entities 

reviewing 

Estimated hours 

for review Hourly rate Average total cost per entity Total cost 

Physicians ........................................................ 224,425 1.00 $137 $137 $30,746,225 

Physicians Support staffs ................................ 224,425 5.00 22 109 24,406,219 

Compliance officer, Teaching Hospitals .......... 1,100 40.00 44 1,752 1,927,640 

Administrative supporting staffs in teaching 

Hospitals ....................................................... 1,100 80.00 22 1,726 1,898,160 

Total .......................................................... ............................ ............................ ............................ ............................ 58,978,244 

TABLE 4B—YEAR 2 AND SUBSEQUENT YEAR ESTIMATED COSTS FOR PHYSICIANS AND TEACHING HOSPITALS

[Annual] 

Estimated number of entities 

reviewing 

Estimated hours 

for review Hourly rate Average total cost per entity Total cost 

Physicians ........................................................ 168,319 0.75 $137 $103 $17,294,751 

Physicians Support staffs ................................ 168,319 3.75 22 82 13,728,498 

Compliance officer, Teaching Hospitals .......... 1,100 30.00 44 1,314 1,445,730 

Administrative supporting staffs in teaching 

Hospitals ....................................................... 1,100 60.00 22 1,294 1,423,620 

Total .......................................................... ............................ ............................ ............................ ............................ 33,892,600 

For purposes of analysis, we also 

include estimates of the infrastructure 

costs for physicians and teaching 

hospitals, which may need to purchase 

and maintain equipment for internal 

tracking purposes. We assume that the 

combined infrastructure and 

maintenance costs for teaching hospitals 

will be the same as those for GPOs. For 

physicians, we assume a total cost of $2 

million in the first year, and 10 percent 

thereafter. 

TABLE 5A—YEAR 1 ESTIMATED INFRASTRUCTURE COSTS FOR PHYSICIANS AND TEACHING HOSPITALS

Number Annual cost Total cost 

Physicians ........................................................................................................................ 224,425 ............................ $2,000,000 

Teaching Hospitals .......................................................................................................... 1,100 2,000 2,200,000 

Total .......................................................................................................................... ............................ ............................ 4,200,000 

TABLE 5B—YEAR 2 AND SUBSEQUENT YEAR ESTIMATED INFRASTRUCTURE COSTS FOR PHYSICIANS AND TEACHING

HOSPITALS

Number Annual cost Total cost 

Physicians ........................................................................................................................ 168,319 ............................ $200,000 

Teaching Hospitals .......................................................................................................... 1,100 $200 220,000 

Total .......................................................................................................................... ............................ ............................ 420,000 

3. Effects of Third Parties 

We also received some comments on 

including estimates for entities that 

were not included in the proposed rule. 

We have provided the comment, as well 

as our response. 

Comment: Many commenters 

suggested that the costs of 

recordkeeping for third parties, such as 

contract research organizations or 

professional associations that receive 

indirect payments or other transfers of 

value, should be included in the cost 

estimation. 

Response: In the final rule, we have 

clarified the requirements for third 

parties which received payments at the 

request of, or on behalf of, covered 

recipients (§ 403.904(c)(10)), as well as 

the requirements for third parties which 

receive and make indirect payments to 

covered recipients (§ 403.904(i)(1)). We 

believe these revisions will help clarify 

and minimize any reporting 

requirements that third parties viewed 

as burdensome to them, but we 

maintain that the requirements in 

section 1128G of the Act do not impose 

significant burden on third parties, 

since they are neither required to report 

nor review. However, we recognize that 

some business models may require third 

parties to report recipients of payments 

back to applicable manufacturers, so we 

have included in the final rule estimates 

on the burden for third parties. We 

estimate that 58 third parties will incur 

costs under this final rule. We assume 

that there will be significantly fewer 

third parties than applicable 

manufacturers affected by these 

provisions, so we reduced the number 

of applicable manufacturers by 95 

percent to obtain the number of third 


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parties as 5 percent the number of 

applicable manufacturers. Given the 

range of entities that could be third 

parties, we believe it is difficult to 

estimate the hourly rate for these 

entities. We assume that the role will be 

similar to that of compliance officers in 

applicable manufacturers and 

applicable GPOs, since it may require 

them to track similar relationships. 

Therefore, we estimate the hourly rate 

for third parties will be $47.55 ($35.75, 

plus a 33 percent increase for fringe 

benefits), which is the same hourly rate 

described in section IV.C.1. the final 

rule for a compliance officer at an 

applicable manufacturer or applicable 

GPO. As described, we do not believe 

these requirements set significant 

burden on third parties, since they are 

neither required to report nor review. 

We estimate that third parties may need 

to spend 40 hours in year 1 on tasks that 

are associated with the reporting 

requirements. Similarly to other 

estimates, we decreased this estimate by 

25 percent in year 2 (for a total of 30 

hours) to account for increased 

familiarity with the systems. In total, 

third parties will dedicate 2,320 hours 

in year 1 and 1,740 hours in year 2 with 

a total cost of $110,316 in year 1 and 

$82,737 in year 2. 

In summary, the first year and 

subsequent year annual costs are 

presented in the following tables. 

TABLE 6A—TOTAL YEAR 1 ESTIMATED COSTS

Labor costs 

($) 

Infrastructure 

costs 

($) 

Total cost 

($) 

Applicable Manufacturers ................................................................................................ 183,119,560 11,500,000 194,619,560 

Applicable GPOs ............................................................................................................. 9,917,544 840,000 10,757,544 

Third-Parties .................................................................................................................... 110,316 ............................ 110,316 

Physicians ........................................................................................................................ 55,152,444 2,000,000 57,152,444 

Teaching Hospitals .......................................................................................................... 3,825,800 2,200,000 6,025,800 

Total .......................................................................................................................... 252,125,664 16,540,000 268,665,664 

TABLE 6B—TOTAL COSTS, YEAR 2, AND SUBSEQUENT YEARS

[Annual] 

Labor costs 

($) 

Infrastructure 

costs 

($) 

Total cost 

($) 

Applicable Manufacturers ................................................................................................ 137,339,670 1,150,000 138,489,670 

Applicable GPOs ............................................................................................................. 7,438,158 84,000 7,522,158 

Third-Party Recordkeeping .............................................................................................. 82,737 ............................ 82,737 

Physicians ........................................................................................................................ 31,023,250 200,000 31,223,250 

Teaching Hospitals .......................................................................................................... 2,869,350 220,000 3,089,350 

Total .......................................................................................................................... 178,753,165 1,654,000 180,407,165 

4. Effects on the Medicare, Medicaid, 

and CHIP 

Although the Department proposes to 

administer this program through the 

CMS, the final rule would have no 

direct effects on the Medicare, 

Medicaid, and CHIP. Reporting is 

required for physicians and teaching 

hospitals regardless of their association 

with Medicare, Medicaid, or CHIP. 

Manufacturers are identified by whether 

the company has a product eligible for 

payment by Medicare, Medicaid or 

CHIP, but this does not affect whether 

or not the product may be covered 

under titles XVIII, XIX, or XXI of the 

Act. We will incur some costs in 

administering the program. However, as 

required by statute, we will be able to 

use any funds collected from the CMPs 

assessed under this rule to support the 

program, decreasing the agency funding 

required. 

5. Benefits 

We outlined numerous benefits in the 

proposed rule and received numerous 

comments supporting these benefits. We 

appreciate these comments. 

Collaboration among physicians, 

teaching hospitals, and industry 

manufacturers can contribute to the 

design and delivery of life-saving drugs 

and devices. While collaboration is 

beneficial to the continued innovation 

and improvement of our health care 

system, some payments from 

manufacturers to physicians and 

teaching hospitals can introduce 

conflicts of interests that may influence 

research, education, and clinical 

decision-making in ways that 

compromise clinical integrity and 

patient care, and lead to increased 

program costs. It is important to 

understand the extent and nature of 

relationships between physicians, 

teaching hospitals, and industry 

manufacturers through increased 

transparency, and to permit patients to 

make better informed decisions when 

choosing health care professionals and 

making treatment decisions. 

Additionally, it is important to develop 

a system that encourages constructive 

collaboration, while also discouraging 

relationships that threaten the 

underlying integrity of the health care 

system. 

Both the Institute of Medicine and 

other experts, such as MedPAC, have 

noted the recent increases in both the 

amount and scope of industry 

involvement in medical research, 

education, and clinical practice has led 

to considerable scrutiny and 

recommended enhanced disclosure and 

transparency to discourage the 

inappropriate use of financial incentives 

and lessen the risk of such incentives 

interfering with medical judgment and 

patient care. We recognize that 

disclosure is not sufficient to 

differentiate beneficial, legitimate 

financial relationships from those that 

create a conflict of interest or are 

otherwise improper. However, 

transparency can shed light on the 

nature and extent of relationships, and 


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Federal Register / Vol. 78, No. 27 / Friday, February 8, 2013 / Rules and Regulations 9519 

9 Information on the IOM recommendations may 

be found here: http://www.iom.edu/Reports/2009/ 

Conflict-of-Interest-in-Medical-Research-Educationand-Practice.aspx. 

discourage inappropriate conflicts of 

interest.9

We have no empirical basis for 

estimating the frequency of such 

problems, the likelihood that 

transparent reporting will reduce them, 

or the likely resulting effects on 

reducing the costs of medical care. 

Although a few States do have similar 

reporting requirements, determining the 

benefits based on their experiences is 

difficult. Transparency does not identify 

which relationships are conflicts of 

interests or whether public reporting 

dissuaded a relationship from forming, 

making it difficult to assess the benefits 

of public reporting. We plan to continue 

considering methods to use the data 

collected to identify any changes in 

these relationships as a result of public 

reporting. However, we observe, that the 

costs for preparing reports are small in 

relation to the size of the affected 

industry sectors. 

Finally, section 1128G(d)(3) of the Act 

preempts State laws requiring the 

reporting of the same type of 

information as required by section 

1128G(a) of the Act. Applicable 

manufacturers and applicable GPOs 

subject to State requirements would not 

have to comply with multiple State 

requirements, and instead would only 

have to comply with a single Federal 

requirement with regard to the types of 

information required to be reported 

under 1128G(a) of the Act. This benefits 

applicable manufacturers and 

applicable GPOs by allowing them to 

comply with a single set of reporting 

requirements for this information, 

lessening the potential for multiple, 

conflicting State requirements. This 

benefit may also lead to potential costsavings, since a single reporting system 

for reporting this information is less 

burdensome than multiple programs. 

D. Alternatives Considered 

Reporting under section 1128G of the 

Act is required by law, which limits the 

other policy options available. Section 

1128G of the Act encourages 

transparency of financial relationships 

between physicians and teaching 

hospitals, and the pharmaceutical and 

device industry. Although, many of 

these relationships are beneficial, close 

relationships between manufacturers 

and prescribing providers can lead to 

conflicts of interests that may affect 

clinical decision-making. Increased 

transparency of these relationships tries 

to discourage inappropriate 

relationships, while maintaining the 

beneficial relationships. Public 

reporting and publication is the only 

statutorily permissible option for 

obtaining this transparency and 

achieving the intentions of this 

provision. In developing this final rule, 

we tried to minimize the burden on 

reporting entities by trying to simplify 

the reporting requirements as much as 

possible within the statutory 

requirements and in response to public 

comment. 

The statute is prescriptive as to the 

types of information required to be 

reported, and the ways in which it is 

required to be reported; however 

wherever possible we tried to allow 

flexibility in the reporting requirements. 

For example, we note the following: 

• We did not require the submission 

of an assumptions document for nature 

of payment categories, but allow 

applicable manufacturers and 

applicable GPOs to submit this 

voluntarily. 

• The Secretary is allowed discretion 

to require the reporting of additional 

information, but we tried to use this 

discretion as sparingly as possible, in 

large part because of the strong desire 

expressed by stakeholders that we not 

expand reporting categories. For 

example, we considered asking 

applicable manufacturers and 

applicable GPOs to report the method of 

preferred communication and email 

address for physicians and teaching 

hospitals with which they have 

relationships, but based on the 

comments that this would be 

burdensome, we did not finalize it. In 

order to reduce the burden further, we 

could have not added any additional 

reporting categories (such as requiring 

State professional license number or 

NDC (if any)); however, we believe that 

all the additional reporting elements are 

necessary for the successful 

administration of the program and have 

tried to provide sufficient explanation of 

each decision. 

• We limited the definition of 

covered drug, device, biological, and 

medical supply to reduce the number of 

entities meeting the definition of 

applicable manufacturer and applicable 

GPO. We proposed limiting covered 

drugs and biologicals to those that 

require a prescription to be dispensed 

and limiting covered devices (including 

medical supplies that are devices) to 

those that require premarket approval 

by or notification to the FDA. The 

comments strongly supported these 

limitations, so we have finalized them 

in the final rule. 

• In the proposed rule, we defined 

‘‘common ownership’’ as covering any 

ownership portion of two or more 

entities, but are finalizing an alternate 

interpretation that would limit the 

common ownership definition to 

circumstances where the same 

individual, individuals, entity, or 

entities own 5 percent or more of total 

ownership in two or more entities. 

Additionally, we provided further 

guidance on the phrase ‘‘assistance and 

support’’ in order to limit the number of 

entities under common ownership 

reporting. We could have employed a 

higher threshold of common ownership 

to further lower the burden; however, as 

explained in section II.B.1.a.(3). of this 

final rule, we believe that 5 percent is 

a standard threshold. 

• In the proposed rule, we considered 

whether we should require that 

applicable manufacturers report another 

unique identifier, such as State license 

number, for physicians who are 

identified but do not have an NPI. Such 

an approach would provide additional 

information by which to cross-reference 

physicians who do not have an NPI, but 

the approach could also cause confusion 

if the additional information is not 

captured in a consistent manner. We 

received numerous comments on this 

provision and finalized the reporting of 

State professional license number for all 

physician covered recipients. The 

comments and rationale for this 

decision is discussed in section 

II.B.1.d.(1) of the preamble to this final 

rule. 

• The Congress gave the Secretary 

authority to define a GPO and also 

specified that such organizations would 

include organizations that purchase 

covered drugs, devices, biologicals, and 

medical supplies, as well as 

organizations that arrange for or 

negotiate the purchase of covered drugs, 

devices, biologicals, and medical 

supplies. Therefore, we interpret the 

statute to encompass entities that 

purchase covered drugs, devices, 

biological, and medical supplies for 

resale or distribution to groups of 

individuals or entities. This would 

include physician owned distributors 

(PODs) of covered drugs, devices, 

biological, and medical supplies. We 

received numerous comments on this 

proposal and finalized the definition as 

proposed (see section II.B.2.a.(2). of the 

preamble of this final rule). 

• We also finalized limitations that 

will reduce the reporting requirements 

for applicable manufacturers that only 

manufacture a few covered products. 

Applicable manufacturers with less than 

10 percent of revenues from covered 

products do not need to report all 

payments or other transfers of value as 

proposed. This will greatly reduce the 


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9520 Federal Register / Vol. 78, No. 27 / Friday, February 8, 2013 / Rules and Regulations 

burden of reporting for these entities, 

allowing them greater flexibility. We 

could have lowered the burden by 

including additional limitations to 

reporting by certain applicable 

manufacturers, but believe that the 

statute did not provide much flexibility 

to do so. 

• We have finalized, as required by 

statute, a 45-day review period during 

which applicable manufacturers and 

GPOs, covered recipients, and physician 

owners or investors can review the data 

before it is made available to the public. 

In response to the comments, we have 

considered the best methods to 

administer this review, as well as any 

dispute resolution processes. We have 

finalized a dispute resolution system 

which will allow covered recipients and 

physician owners or investors to more 

easily review the information submitted 

on their behalf and a more streamline 

process to initiate disputes, as 

necessary. 

Finally, it is important to evaluate and 

monitor if the changes reflected in this 

rule achieve the goal of improving 

transparency and accountability 

between health care providers and drug 

manufacturers. We will evaluate over 

time, and encourage others to evaluate, 

the effects of this rule on Medicaid 

enrollment, on Federal, State, and 

enrollee costs, and on health outcomes. 

E. Accounting Statement 

The Office of Management and 

Budget, in Circular A–4, requires an 

accounting Statement for rules with 

significant economic impacts. The table 

that follows shows the estimated costs 

annualized over a 10-year period. The 

estimated costs are $269 million in year 

1 and $180 million in year 2. We 

assume that future outlay costs may be 

similar to those costs experienced in 

year 2. We envision that the number of 

financial relationships required to be 

reported will remain similar, so the cost 

of reporting the information will not 

change significantly. 

TABLE 7—ACCOUNTING STATEMENT

Category Primary estimate Year dollars Discount rate 

(percent) Period covered 

Annualized Monetized Costs ........................................................... $192 2011 7 2013–2022 

190 2011 3 2013–2022 

Benefits ............................................................................................ Public reporting of the extent and nature of relationships between 

physicians, teaching hospitals, and industry manufacturers through 

increased transparency will permit patients to make better informed 

decisions when choosing health care professionals and making treatment 

decisions, and deter inappropriate financial relationships. 

F. Conclusions 

Section 1128G of the Act requires 

applicable manufacturers to report 

annually to CMS certain payments or 

transfers of value provided to 

physicians or teaching hospitals. In 

addition, applicable GPOs are required 

to report annually certain physician 

ownership interests. We estimate that 

the impact of these reporting 

requirements will be about $269 million 

for the first year of reporting, and $180 

million for the second year and 

annually thereafter. As we have 

indicated throughout, these are rough 

estimates and subject to considerable 

uncertainty. Better estimates might well 

be 25 percent higher or lower. 

Nonetheless, we believe that the public 

comment period offers an excellent 

opportunity for all stakeholders to 

consider alternatives and to present 

quantitative or qualitative information 

that will enable us to both improve the 

effectiveness and lower the costs of the 

final rule. Therefore, we solicited 

comment on the analysis and 

assumptions provided throughout this 

preamble and in the alternatives section 

of the regulatory impact analysis in 

particular. 

Many of the comments received 

discuss our assumptions for the costs of 

collecting this information. Because this 

rule involves the collection of data, the 

vast majority of the financial impact is 

included in the collection of 

information requirements. Therefore 

earlier in the preamble of this final rule, 

we summarize and respond to the 

comments regarding our cost 

assumptions. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects 

42 CFR Part 402 

Administrative practice and 

procedure, Medicaid, Medicare, 

Penalties. 

42 CFR Part 403 

Grant programs-health, Health 

insurance, Hospitals, Intergovernmental 

relations, Medicare, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 402—CIVIL MONEY PENALTIES, 

ASSESSMENTS, AND EXCLUSIONS 

Subpart A—General Provisions 

■ 1. The authority citation for part 402 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

■ 2. Section 402.1 is amended as 

follows: 

■ A. In paragraph (c) introductory text, 

by removing the reference ‘‘(c)(33)’’ and 

adding the reference ‘‘(c)(34)’’ in its 

place. 

■ B. Adding a new paragraph (c)(34). 

The addition reads as follows: 

§ 402.1 Basis and scope. 

* * * * * 

(c) * * * 

(34) Section 1128G (b) (1) and (2)– 

Any applicable manufacturer or 

applicable group purchasing 

organization that fails to timely, 

accurately, or completely report a 

payment or other transfer of value or an 

ownership or investment interest to 

CMS, as required under part 403, 

subpart I, of this chapter. 

* * * * * 

■ 3. Section 402.105 is amended as 

follows: 

■ A. In paragraph (a), by removing the 

reference to ‘‘paragraphs (b) through (g)’’ 

and adding the reference ‘‘paragraphs 

(b) through (h)’’ in its place. 

■ B. Adding paragraphs (d)(5) and (h). 

The additions read as follows: 

§ 402.105 Amount of penalty. 

* * * * * 


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(d) * * * 

(5) CMS or OIG may impose a penalty 

of not more than $10,000 for each 

failure of an applicable manufacturer or 

an applicable group purchasing 

organization to report timely, 

accurately, or completely a payment or 

other transfer of value or an ownership 

or investment interest (§ 402.1(c)(34)). 

The total penalty imposed with respect 

to failures to report in an annual 

submission of information will not 

exceed $150,000. 

* * * * * 

(h) $100,000. CMS or OIG may impose 

a penalty of not more than $100,000 for 

each knowing failure of an applicable 

manufacturer or an applicable group 

purchasing organization to report 

timely, accurately or completely a 

payment or other transfer of value or an 

ownership or investment interest 

(§ 402.1(c)(34)). The total penalty 

imposed with respect to knowing 

failures to report in an annual 

submission of information will not 

exceed $1,000,000. 

PART 403—SPECIAL PROGRAMS AND 

PROJECTS 

■ 4. The authority citation for part 403 

continues to read as follows: 

Authority: Secs. 1102 and 1871 of the 

Social Security Act (42 U.S.C. 1302 and 

1395hh). 

■ 5. A new subpart I is added to part 

403 to read as follows: 

Subpart I—Transparency Reports and 

Reporting of Physician Ownership or 

Investment Interests 

Sec. 

403.900 Purpose and scope. 

403.902 Definitions. 

403.904 Reports of payments or other 

transfers of value. 

403.906 Reports of physician ownership 

and investment interests. 

403.908 Procedures for electronic 

submission of reports. 

403.910 Delayed publication for payments 

made under product research or 

development agreements and clinical 

investigations. 

403.912 Penalties for failure to report. 

403.914 Preemption of State laws. 

Subpart I—Transparency Reports and 

Reporting of Physician Ownership or 

Investment Interests 

§ 403.900 Purpose and scope. 

The regulations in this subpart 

implement section 1128G of the Act. 

These regulations apply to applicable 

manufacturers and applicable group 

purchasing organizations and describe 

the requirements and procedures for 

applicable manufacturers to report 

payments or other transfers of value 

provided to covered recipients, as well 

as for applicable manufacturers and 

applicable group purchasing 

organizations to report ownership or 

investment interests held by physicians 

or immediate family members of 

physicians in such entities. 

§ 403.902 Definitions. 

For purposes of this subpart, the 

following definitions apply: 

Applicable group purchasing 

organization means an entity that: 

(1) Operates in the United States; and 

(2) Purchases, arranges for or 

negotiates the purchase of a covered 

drug, device, biological, or medical 

supply for a group of individuals or 

entities, but not solely for use by the 

entity itself. 

Applicable manufacturer means an 

entity that is operating in the United 

States and that falls within one of the 

following categories: 

(1) An entity that is 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. 

(2) An entity under common 

ownership with an entity in paragraph 

(1) of this definition, which provides 

assistance or support to such entity with 

respect to the production, preparation, 

propagation, compounding, conversion, 

marketing, promotion, sale, or 

distribution of a covered drug, device, 

biological or medical supply. 

Assistance and support means 

providing a service or services that are 

necessary or integral to the production, 

preparation, propagation, compounding, 

conversion, marketing, promotion, sale, 

or distribution of a covered drug, 

device, biological or medical supply. 

Charitable contribution includes, but 

is not limited to, any payment or 

transfer of value made to an 

organization with tax-exempt status 

under the Internal Revenue Code of 

1986, which is not provided in 

exchange for any goods, items or 

services. 

Charity care means services provided 

by a covered recipient specifically for a 

patient who is unable to pay for such 

services or for whom payment would be 

a significant hardship, where the 

covered recipient neither receives, nor 

expects to receive, payment because of 

the patient’s inability to pay. 

Clinical investigation means any 

experiment involving one or more 

human subjects, or materials derived 

from human subjects, in which a drug, 

device, biological or medical supply is 

administered, dispensed or used. 

Common ownership refers to 

circumstances where the same 

individual, individuals, entity, or 

entities directly or indirectly own 5 

percent or more total ownership of two 

entities. This includes, but is not 

limited to, parent corporations, direct 

and indirect subsidiaries, and brother or 

sister corporations. 

Covered device means any device for 

which payment is available under Title 

XVIII of the Act or under a State plan 

under Title XIX or XXI of the Act (or a 

waiver of such plan), either separately 

(such as through a fee schedule) or as 

part of a bundled payment (for example, 

under the hospital inpatient prospective 

payment system or the hospital 

outpatient prospective payment system) 

and which is of the type that, by law, 

requires premarket approval by or 

premarket notification to the Food and 

Drug Administration (FDA). 

Covered drug, device, biological, or 

medical supply means any drug, device, 

biological, or medical supply for which 

payment is available under Title XVIII 

of the Act or under a State plan under 

Title XIX or XXI of the Act (or a waiver 

of such plan), either separately (such as 

through a fee schedule or formulary) or 

as part of a bundled payment (for 

example, under the hospital inpatient 

prospective payment system or the 

hospital outpatient prospective payment 

system) and which is of the type that in 

the case of a— 

(1) Drug or biological, by law, requires 

a prescription to be dispensed; or 

(2) Device (including a medical 

supply that is a device), by law, requires 

premarket approval by or premarket 

notification to the FDA. 

Covered recipient means— (1) Any 

physician, except for a physician who is 

a bona fide employee of the applicable 

manufacturer that is reporting the 

payment; or 

(2) A teaching hospital, which is any 

institution that received a payment 

under 1886(d)(5)(B), 1886(h), or 1886(s) 

of the Act during the last calendar year 

for which such information is available. 

Employee means an individual who is 

considered to be ‘‘employed by’’ or an 

‘‘employee’’ of an entity if the 

individual would be considered to be an 

employee of the entity under the usual 

common law rules applicable in 

determining the employer-employee 

relationship (as applied for purposes of 


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section 3121(d)(2) of the Internal 

Revenue Code of 1986). 

Immediate family member means any 

of the following: 

(1) Spouse. 

(2) Natural or adoptive parent, child, 

or sibling. 

(3) Stepparent, stepchild, stepbrother, 

or stepsister. 

(4) Father-, mother-, daughter-, son-, 

brother-, or sister-in-law. 

(5) Grandparent or grandchild. 

(6) Spouse of a grandparent or 

grandchild. 

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). 

Know, knowing, or knowingly—(1) 

Means that a person, with respect to 

information— 

(i) Has actual knowledge of the 

information; 

(ii) Acts in deliberate ignorance of the 

truth or falsity of the information; or 

(iii) Acts in reckless disregard of the 

truth or falsity of the information; and 

(2) Requires no proof of a specific 

intent to defraud. 

NPPES stands for the National Plan & 

Provider Enumeration System. 

Operating in the United States means 

that an entity— 

(1) Has a physical location within the 

United States or in a territory, 

possession, or commonwealth of the 

United States; or 

(2) Otherwise conducts activities 

within the United States or in a 

territory, possession, or commonwealth 

of the United States, either directly or 

through a legally-authorized agent. 

Ownership or investment interest—(1) 

Includes, but is not limited to the 

following: 

(i) Stock, stock option(s) (other than 

those received as compensation, until 

they are exercised). 

(ii) Partnership share(s); 

(iii) Limited liability company 

membership(s). 

(iv) Loans, bonds, or other financial 

instruments that are secured with an 

entity’s property or revenue or a portion 

of that property or revenue. 

(2) May be direct or indirect and 

through debt, equity or other means. 

(3) Exceptions. The following are not 

ownership or investment interests for 

the purposes of this section: 

(i) An ownership or investment 

interest in a publicly traded security or 

mutual fund, as described in section 

1877(c) of the Act. 

(ii) An interest in an applicable 

manufacturer or applicable group 

purchasing organization that arises from 

a retirement plan offered by the 

applicable manufacturer or applicable 

group purchasing organization to the 

physician (or a member of his or her 

immediate family) through the 

physician’s (or immediate family 

member’s) employment with that 

applicable manufacturer or applicable 

group purchasing organization. 

(iii) Stock options and convertible 

securities received as compensation, 

until the stock options are exercised or 

the convertible securities are converted 

to equity. 

(iv) An unsecured loan subordinated 

to a credit facility. 

(v) An ownership or investment 

interest if an applicable manufacturer or 

applicable group purchasing 

organization did not know, as defined in 

this section, about such ownership or 

investment interest. 

Payment or other transfer of value 

means a transfer of anything of value. 

Physician has the same meaning given 

that term in section 1861(r) of the Act. 

Related to a covered drug, device, 

biological, or medical supply means that 

a payment or other transfer of value is 

made in reference to or in connection 

with one or more covered drugs, 

devices, biologicals, or medical 

supplies. 

Research includes a systematic 

investigation designed to develop or 

contribute to generalizable knowledge 

relating broadly to public health, 

including behavioral and social-sciences 

research. This term encompasses basic 

and applied research and product 

development. 

Third party means another individual 

or entity, regardless of whether such 

individual or entity is operating in the 

United States. 

§ 403.904 Reports of payments or other 

transfers of value to covered recipients. 

(a) General rule. (1) Direct and 

indirect payments or other transfers of 

value provided by an applicable 

manufacturer to a covered recipient 

during the preceding calendar year, and 

direct and indirect payments or other 

transfers of value provided to a third 

party at the request of or designated by 

the applicable manufacturer on behalf of 

a covered recipient during the preceding 

calendar year, must be reported by the 

applicable manufacturer to CMS on an 

annual basis. 

(2) For CY 2013, only payments or 

other transfers of value made on or after 

August 1, 2013 must be reported to 

CMS. 

(b) Limitations. Certain limitations on 

reporting apply in the following 

circumstances: 

(1) Applicable manufacturers for 

whom total (gross) revenues from 

covered drugs, devices, biologicals, or 

medical supplies constituted less than 

10 percent of total (gross) revenue 

during the fiscal year preceding the 

reporting year are only required to 

report payments or other transfers of 

value that are related to one or more 

covered drugs, devices, biologicals or 

medical supplies. 

(2) Applicable manufacturers under 

paragraph (2) of the definition in 

§ 403.902 are only required to report 

payments or other transfers of value that 

are related to a covered drug, device, 

biological, or medical supply for which 

they provided assistance or support to 

an applicable manufacturer under 

paragraph (1) of the definition. 

(3) Applicable manufacturers under 

either paragraph (1) or (2) of the 

definition in § 403.902 that have 

separate operating divisions that do not 

manufacture any covered drugs, 

devices, biologicals, or medical supplies 

(for example, animal health divisions) 

are only required to report payments to 

covered recipients related to the 

activities of these separate divisions if 

those payments or other transfers of 

value are related to a covered drug, 

device, biological, or medical supply. 

This includes reporting of payments or 

other transfers of value that are related 

to covered drugs, devices, biologicals, or 

medical supplies made by applicable 

manufacturers to covered recipients 

through these operating divisions. 

(4) Applicable manufacturers that do 

not manufacture a covered drug, device, 

biological, or medical supply except 

when under a written agreement to 

manufacture the covered drug, device, 

biological, or medical supply for 

another entity, do not hold the FDA 

approval, licensure, or clearance for the 

covered drug, device, biological, or 

medical supply, and are not involved in 

the sale, marketing, or distribution of 

the product, are only required to report 

payments or other transfers of value that 

are related to one or more covered 

drugs, devices, biologicals, or medical 

supplies. 

(c) Required information to report. A 

report must contain all of the following 

information for each payment or other 

transfer of value: 


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Federal Register / Vol. 78, No. 27 / Friday, February 8, 2013 / Rules and Regulations 9523 

(1) Name of the covered recipient. For 

physician covered recipients, the name 

must be as listed in the National Plan & 

Provider Enumeration System (if 

applicable) and include first and last 

name, middle initial, and suffix (for all 

that apply). 

(2) Address of the covered recipient. 

Primary business address of the covered 

recipient, including all the following: 

(i) Street address. 

(ii) Suite or office number (if 

applicable). 

(iii) City. 

(iv) State. 

(v) ZIP code. 

(3) Identifiers for physician covered 

recipients. In the case of a covered 

recipient who is a physician, the 

following identifiers: 

(i) The specialty. 

(ii) National Provider Identifier (if 

applicable and as listed in the NPPES). 

If a National Provider Identifier cannot 

be identified for a physician, the field 

may be left blank, indicating that the 

applicable manufacturer could not find 

one. 

(iii) State professional license 

number(s) (for at least one State where 

the physician maintains a license), and 

the State(s) in which the license is held. 

(4) Amount of payment or other 

transfer of value. A payment or other 

transfer of value made to a group of 

covered recipients should be distributed 

appropriately among the individual 

covered recipients who requested the 

payment, on whose behalf the payment 

was made, or who are intended to 

benefit from the payment or other 

transfer of value. 

(5) Date of payment or transfer of 

value. The date of each payment or 

other transfer of value. 

(i) For payments or other transfers of 

value made over multiple dates (rather 

than as a lump sum), applicable 

manufacturers may choose whether to 

report each payment or other transfer of 

value as separate line item using the 

dates the payments or other transfers of 

value were each made, or as a single 

line item for the total payment or other 

transfer of value using the first payment 

date as the reported date. 

(ii) For small payments or other 

transfers of value reported as a single 

line item, applicable manufacturers 

must report the date that the first 

bundled small payment or other transfer 

of value was provided to the covered 

recipient. 

(6) Form of payment or transfer of 

value. The form of each payment or 

other transfer of value, as described in 

paragraph (d) of this section. 

(7) Nature of payment or transfer of 

value. The nature of each payment or 

other transfer of value, as described in 

paragraph (e) of this section. 

(8) Related covered drug, device, 

biological or medical supply. The 

name(s) of the related covered drugs, 

devices, biologicals, or medical 

supplies, unless the payment or other 

transfer of value is not related to a 

particular covered drug, device, 

biological or medical supply. 

Applicable manufacturers may report 

up to five covered drugs, devices, 

biologicals or medical supplies related 

to each payment or other transfer of 

value. If the payment or other transfer 

of value was related to more than five 

covered drugs, devices, biologicals, or 

medical supplies, the applicable 

manufacturer should report the five 

covered drugs, devices, biologicals, or 

medical supplies that were most closely 

related to the payment or other transfer 

of value. 

(i) For drugs and biologicals, 

applicable manufacturers must report 

the name under which the drug or 

biological is or was marketed and the 

relevant National Drug Code(s), if any. 

If the marketed name has not yet been 

selected, the applicable manufacturer 

must indicate the name registered on 

clinicaltrials.gov. 

(ii) For devices and medical supplies, 

applicable manufacturers must report at 

least one of the following: 

(A) The name under which the device 

or medical supply is or was marketed. 

(B) The therapeutic area or product 

category for the device or medical 

supply. 

(iii) If the payment or other transfer of 

value is not related to a covered drug, 

device, biological or medical supply, 

but is related to a specific non-covered 

product, applicable manufacturers must 

indicate ‘‘non-covered product.’’ 

(iv) If the payment or other transfer of 

value is not related to any drug, device, 

biological, or medical supply (covered 

or not), applicable manufacturers must 

indicate ‘‘none.’’ 

(v) If the payment or other transfer of 

value is related to at least one covered 

drug, device, biological, and medical 

supply and at least one non-covered 

drug, device, biological, or medical 

supply, applicable manufacturers must 

report the name(s) of the covered drug, 

device, biological or medical supply (as 

required by paragraphs (c)(8)(i) and (ii) 

of this section) and may indicate ‘‘noncovered products’’ in addition. 

(9) Eligibility for delayed publication. 

Applicable manufacturers must indicate 

whether a payment or other transfer of 

value is eligible for delayed publication, 

as described in § 403.910. 

(10) Payments to third parties. (i) If 

the payment or other transfer of value 

was provided to a third party at the 

request of or designated on behalf of a 

covered recipient, the payment or 

transfer of value must be reported in the 

name of that covered recipient. 

(ii) If the payment or other transfer of 

value was provided to a third party at 

the request of or designated on behalf of 

a covered recipient, the name of the 

entity that received the payment or 

other transfer of value (if made to an 

entity) or indicate ‘‘individual’’ (if made 

to an individual). If a covered recipient 

performed a service, but neither 

accepted the offered payment or other 

transfer of value nor requested that it be 

made to a third party, the applicable 

manufacturer is not required to report 

the offered payment or other transfer of 

value unless the applicable 

manufacturer nonetheless provided it to 

a third party and designated such 

payment or other transfer of value as 

having been provided on behalf of the 

covered recipient. 

(11) Payments or transfers of value to 

physician owners or investors. Must 

indicate whether the payment or other 

transfer of value was provided to a 

physician or the immediate family of 

the physician who holds an ownership 

or investment interest (as defined 

§ 403.902) in the applicable 

manufacturer. 

(12) Additional information or context 

for payment or transfer of value. May 

provide a statement with additional 

context for the payment or other transfer 

of value. 

(d) Reporting the form of payment or 

other transfer of value. An applicable 

manufacturer must report each payment 

or transfer of value, or separable part of 

that payment or transfer of value, as 

taking one of the following forms of 

payment that best describes the form of 

the payment or other transfer of value, 

or separable part of that payment or 

other transfer of value. 

(1) Cash or cash equivalent. 

(2) In-kind items or services. 

(3) Stock, stock option, or any other 

ownership interest. 

(4) Dividend, profit or other return on 

investment. 

(e) Reporting the nature of the 

payment or other transfer of value. (1) 

General rule. The categories describing 

the nature of a payment or other transfer 

of value are mutually exclusive for the 

purposes of reporting under subpart I of 

this part. 

(2) Rules for categorizing natures of 

payment. An applicable manufacturer 

must categorize each payment or other 

transfer of value, or separable part of 

that payment or transfer of value, with 

one of the categories listed in 

paragraphs (e)(2)(i) through (xvii) of this 


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9524 Federal Register / Vol. 78, No. 27 / Friday, February 8, 2013 / Rules and Regulations 

section, using the designation that best 

describes the nature of the payment or 

other transfer of value, or separable part 

of that payment or other transfer of 

value. If a payment or other transfer of 

value could reasonably be considered as 

falling within more than one category, 

the applicable manufacturer should 

select one category that it deems to most 

accurately describe the nature of the 

payment or transfer of value. 

(i) Consulting fee. 

(ii) Compensation for services other 

than consulting, including serving as 

faculty or as a speaker at an event other 

than a continuing education program. 

(iii) Honoraria. 

(iv) Gift. 

(v) Entertainment. 

(vi) Food and beverage. 

(vii) Travel and lodging (including the 

specified destinations). 

(viii) Education. 

(ix) Research. 

(x) Charitable contribution. 

(xii) Royalty or license. 

(xiii) Current or prospective 

ownership or investment interest. 

(xiv) Compensation for serving as 

faculty or as a speaker for an 

unaccredited and non-certified 

continuing education program. 

(xv) Compensation for serving as 

faculty or as a speaker for an accredited 

or certified continuing education 

program. 

(xvi) Grant. 

(xvii) Space rental or facility fees 

(teaching hospital only). 

(f) Special rules for research 

payments. All payments or other 

transfers of value made in connection 

with an activity that meets the 

definition of research in this section and 

that are subject to a written agreement, 

a research protocol, or both, must be 

reported under these special rules. 

(1) Research-related payments or 

other transfers of value to covered 

recipients (either physicians or teaching 

hospitals), including research-related 

payments or other transfers of value 

made indirectly to a covered recipient 

through a third party, must be reported 

to CMS separately from other payments 

or transfers of value, and must include 

the following information (in lieu of the 

information required by § 403.904(c)): 

(i) Name of the research institution, 

individual or entity receiving the 

payment or other transfer of value. 

(A) If paid to a physician covered 

recipient, all of the following must be 

provided: 

(1) The physician’s name as listed in 

the NPPES (if applicable). 

(2) National Provider Identifier. 

(3) State professional license 

number(s) (for at least one State where 

the physician maintains a license) and 

State(s) in which the license is held. 

(4) Specialty. 

(5) Primary business address of the 

physician(s). 

(B) If paid to a teaching hospital 

covered recipient, list the name and 

primary business address of teaching 

hospital. 

(C) If paid to a non-covered recipient 

(such as a non-teaching hospital or 

clinic), list the name and primary 

business address of the entity. 

(ii) Total amount of the research 

payment, including all research-related 

costs for activities outlined in a written 

agreement, research protocol, or both. 

(iii) Name of the research study. 

(iv) Name(s) of any related covered 

drugs, devices, biologicals, or medical 

supplies (subject to the requirements 

specified in paragraph (c)(8) of this 

section) and for drugs and biologicals, 

the relevant National Drug Code(s), if 

any. 

(v) Information about each physician 

covered recipient principal investigator 

(if applicable) set forth in paragraph 

(f)(1)(i)(A) of this section. 

(vi) Contextual information for 

research (optional). 

(vii) ClinicalTrials.gov identifier 

(optional). 

(2) For pre-clinical studies (before any 

human studies have begun), only report 

the following information: 

(i) Research entity name (as required 

in paragraph (f)(1)(i) of this section). 

(ii) Total amount of payment (as 

required in paragraph (f)(1)(ii) of this 

section). 

(ii) Principal investigator(s) (as 

required in paragraph (f)(1)(v) of this 

section). 

(g) Special rules for payments or other 

transfers of value related to continuing 

education programs. (1) Payments or 

other transfers of value provided as 

compensation for speaking at a 

continuing education program are not 

required to be reported, if all of the 

following conditions are met: 

(i) The event at which the covered 

recipient is speaking meets the 

accreditation or certification 

requirements and standards for 

continuing education of one of the 

following: 

(A) The Accreditation Council for 

Continuing Medical Education. 

(B) The American Academy of Family 

Physicians. 

(C) The American Dental 

Association’s Continuing Education 

Recognition Program. 

(D) The American Medical 

Association. 

(E) The American Osteopathic 

Association. 

(ii) The applicable manufacturer does 

not pay the covered recipient speaker 

directly. 

(iii) The applicable manufacturer does 

not select the covered recipient speaker 

or provide the third party (such as a 

continuing education vendor) with a 

distinct, identifiable set of individuals 

to be considered as speakers for the 

continuing education program. 

(2) Payments or other transfers of 

value that do not meet all of the 

requirements in paragraph (g)(1) must 

be reported as required by this section. 

(i) Payments or other transfers of 

value that meet the requirements in 

paragraph (g)(1)(i) of this section, but 

not also (g)(1)(ii) or (g)(1)(iii) of this 

section or both, must be reported under 

the nature of payment category 

‘‘Compensation for serving as faculty or 

as a speaker for an accredited or 

certified continuing education 

program.’’ 

(ii) Payments or other transfers of 

value that do not meet the requirements 

in paragraph (g)(1)(i) of this section 

should be reported under the nature of 

payment category ‘‘Compensation for 

serving as a faculty or as a speaker for 

a unaccredited and non-certified 

continuing education program.’’ 

(iii) Payments or other transfers of 

value for speaking engagements not 

related to medical education should be 

reported under the nature of payment 

category ‘‘Compensation for services 

other than consulting, including serving 

as a speaker at an event other than a 

continuing education program.’’ 

(h) Special rules for reporting food 

and beverage. (1) When allocating the 

cost of food and beverage among 

covered recipients in a group setting 

where the cost of each individual 

covered recipient’s meal is not 

separately identifiable, such as a platter 

provided to physicians in a group 

practice setting, applicable 

manufacturers must calculate the value 

per person by dividing the entire cost of 

the food or beverage by the total number 

of individuals who partook in the meal 

(including both covered recipients and 

non-covered recipients, such as office 

staff). The per person value of the meal 

must be reported as a payment or other 

transfer of value only for covered 

recipients who actually partook in the 

food or beverage. 

(2) Applicable manufacturers are not 

required to report or track buffet meals, 

snacks, soft drinks, or coffee made 

generally available to all participants of 

a large-scale conference or similar largescale event. 

(i) Exclusions from reporting. The 

following are excluded from the 


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Federal Register / Vol. 78, No. 27 / Friday, February 8, 2013 / Rules and Regulations 9525 

reporting requirements specified in this 

section: 

(1) Indirect payments or other 

transfers of value (as defined in 

§ 403.902), where the applicable 

manufacturer is unaware of the identity 

of the covered recipient. An applicable 

manufacturer is unaware of the identity 

of a covered recipient if the applicable 

manufacturer does not know (as defined 

in § 403.902) the identity of the covered 

recipient during the reporting year or by 

the end of the second quarter of the 

following reporting year. 

(2)(i) For CY 2013, payments or other 

transfers of value less than $10, unless 

the aggregate amount transferred to, 

requested by, or designated on behalf of 

the covered recipient exceeds $100 in a 

calendar year. 

(ii) For CY 2014 and subsequent 

calendar years, to determine if transfers 

of value are excluded under this section, 

the dollar amounts specified in 

paragraph (i)(2)(i) of this section must 

be increased by the same percentage as 

the percentage increase in the consumer 

price index for all urban consumers (all 

items; U.S. city average) for the 12- 

month period ending with June of the 

previous year. CMS will publish the 

values for the next reporting year 90 

days before the beginning of the 

reporting year. 

(iii) Payments or other transfers of 

value of less than $10 in CY 2013 (or 

less than the amount described in 

paragraph (i)(2)(ii) of this section for CY 

2014 and subsequent calendar years) 

provided at large-scale conferences and 

similar large-scale events, as well as 

events open to the public, do not need 

to be reported nor included for purposes 

of the $100 aggregate threshold in CY 

2013 (or the aggregate threshold 

calculated in accordance paragraph 

(i)(2)(ii) of this section for CY 2014 and 

subsequent calendar years), even if the 

aggregate total for a covered recipient 

exceeds the aggregate threshold for the 

calendar year. 

(iv) When reporting payments or other 

transfers of value under the $10 

threshold for CY 2013 (or under the 

amount described in paragraph (i)(2)(ii) 

of this section for CY 2014 and 

subsequent calendar years) for covered 

recipients that exceed the aggregate 

threshold for the reporting year, 

applicable manufacturers may (but are 

not required to) report all small 

payments to a particular covered 

recipient that fall within the same 

nature of payment category as a single 

payment or other transfer of value. 

(3) Product samples, including 

coupons and vouchers that can be used 

by a patient to obtain samples, which 

are not intended to be sold and are 

intended for patient use. 

(4) Educational materials and items 

that directly benefit patients or are 

intended to be used by or with patients, 

including the value of an applicable 

manufacturer’s services to educate 

patients regarding a covered drug, 

device, biological, or medical supply. 

(5) The loan of a covered device or a 

device under development, or the 

provision of a limited quantity of 

medical supplies for a short-term trial 

period, not to exceed a loan period of 

90 days or a quantity of 90 days of 

average daily use, to permit evaluation 

of the device or medical supply by the 

covered recipient. 

(6) Items or services provided under 

a contractual warranty (including 

service or maintenance agreements), 

whether or not the warranty period has 

expired, including the replacement of a 

covered device, where the terms of the 

warranty are set forth in the purchase or 

lease agreement for the covered device. 

(7) A transfer of anything of value to 

a physician covered recipient when the 

covered recipient is a patient, research 

subject or participant in data collection 

for research, and not acting in the 

professional capacity of a covered 

recipient. 

(8) Discounts, including rebates. 

(9) In-kind items used for the 

provision of charity care. 

(10) A dividend or other profit 

distribution from, or ownership or 

investment interest in, a publicly traded 

security or mutual fund. 

(11) In the case of an applicable 

manufacturer who offers a self-insured 

plan or directly reimburses for 

healthcare expenses, payments for the 

provision of health care to employees 

and their families. 

(12) In the case of a covered recipient 

who is a licensed non-medical 

professional, a transfer of anything of 

value to the covered recipient if the 

transfer is payment solely for the nonmedical professional services of the 

licensed non-medical professional. 

(13) In the case of a covered recipient 

who is a physician, a transfer of 

anything of value to the covered 

recipient if the transfer is payment 

solely for the services of the covered 

recipient with respect to an 

administrative proceeding, legal 

defense, prosecution, or settlement or 

judgment of a civil or criminal action 

and arbitration. 

(14) A payment or transfer of value to 

a covered recipient if the payment or 

transfer of value is made solely in the 

context of a personal, non-businessrelated relationship. 

§ 403.906 Reports of physician ownership 

and investment interests. 

(a) General rule. (1) Each applicable 

manufacturer and applicable group 

purchasing organization must report to 

CMS on an annual basis all ownership 

and investment interests in the 

applicable manufacturer or applicable 

group purchasing organization that were 

held by a physician or an immediate 

family member of a physician during 

the preceding calendar year. 

(2) For CY 2013, only ownership or 

investment interests held on or after 

August 1, 2013 must be reported to 

CMS. 

(b) Identifying information. Reports 

on physician ownership and investment 

interests must include the following 

identifying information: 

(1) Name of the physician (as listed in 

the National Plan & Provider 

Enumeration System (if applicable), 

including first and last name, middle 

initial, and suffix (for all that apply), 

and an indication of whether the 

ownership or investment interest was 

held by the physician or an immediate 

family member of the physician. 

(2) Primary business address of the 

physician, including the following: 

(i) Street address. 

(ii) Suite or office number (if 

applicable). 

(iii) City. 

(iv) State. 

(v) ZIP code. 

(3) The following information for the 

physician (regardless of whether the 

ownership or investment interest is held 

by an immediate family member of the 

physician): 

(i) The specialty. 

(ii) National Provider Identifier (if 

applicable and as listed in NPPES). 

(iii) State professional license 

number(s) (for at least one State where 

the physician maintains a license), and 

the State(s) in which the license is held. 

(4) Dollar amount invested by each 

physician or immediate family member 

of the physician. 

(5) Value and terms of each 

ownership or investment interest. 

(6) Direct and indirect payments or 

other transfers of value provided to a 

physician holding an ownership or 

investment interest, and direct and 

indirect payments or other transfers of 

value provided to a third party at the 

request of or designated by the 

applicable manufacturer or applicable 

group purchasing organization on behalf 

of a physician owner or investor, must 

be reported by the applicable 

manufacturer or applicable group 

purchasing organization in accordance 

with the requirements for reporting 

payments or other transfers of value in 


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9526 Federal Register / Vol. 78, No. 27 / Friday, February 8, 2013 / Rules and Regulations 

§ 403.904(c) through (i). The terms 

‘‘applicable manufacturer and 

applicable group purchasing 

organization’’ must be substituted for 

‘‘applicable manufacturer,’’ and 

‘‘physician owner or investor’’ must be 

substituted for ‘‘covered recipient’’ in 

each place they appear. 

§ 403.908 Procedures for electronic 

submission of reports. 

(a) File format. Reports required 

under this subpart must be 

electronically submitted to CMS by 

March 31, 2014, and by the 90th day of 

each subsequent calendar year. 

(b) General rules. (1) If an applicable 

manufacturer made no reportable 

payments or transfers of value in the 

previous calendar year, nor had any 

reportable ownership or investment 

interests held by a physician or a 

physician’s immediate family member 

(as defined in § 403.902) during the 

previous calendar year, the applicable 

manufacturer is not required to file a 

report. 

(2) If an applicable group purchasing 

organization had no reportable 

ownership or investment interests held 

by a physician or physician’s immediate 

family member during the previous 

calendar year, the applicable group 

purchasing organization is not required 

to file a report. 

(c) Registration. (1) Applicable 

manufacturers that have reportable 

payments or other transfers of value, 

ownership or investment interests, or 

both, are required to report under this 

subpart and must register with CMS 

within 90 days of the end of the 

calendar year for which a report is 

required. 

(2) Applicable group purchasing 

organizations that have reportable 

ownership or investment interests are 

required to report under this subpart 

and must register with CMS within 90 

days of the end of the calendar year for 

which a report is required. 

(3) During registration, applicable 

manufacturers and applicable group 

purchasing organizations must name 

two points of contact with appropriate 

contact information. 

(d) Other rules. (1) Consolidated 

reports. (i) An applicable manufacturer 

under paragraph (1) of the definition 

that is under common ownership with 

separate entities that are also applicable 

manufacturers under paragraph (1) of 

the definition may, but is not required 

to, file a consolidated report of all the 

payments or other transfers of value to 

covered recipients, and physician 

ownership or investment interests, for 

all of the entities. 

(ii) An applicable manufacturer under 

paragraph (1) of the definition of 

applicable manufacturer and an entity 

(or entities) under common ownership 

with the applicable manufacturer under 

paragraph (2) of the definition of 

applicable manufacturer may, but are 

not required to, file a consolidated 

report of all the payments or other 

transfers of value to covered recipients, 

and physician ownership or investment 

interests. 

(iii) If multiple applicable 

manufacturers (under paragraph (1) or 

(2) of the definition or both paragraphs 

of the definition) submit a consolidated 

report, the report must provide the 

names of each applicable manufacturer 

and entity (or entities) under common 

ownership that the report covers, and 

the report must identify the specific 

entity that provided each payment. 

(iv) A single payment or other transfer 

of value reported in a consolidated 

report must only be reported once by 

one applicable manufacturer. 

(v) The applicable manufacturer 

submitting a consolidated report on 

behalf of itself and other applicable 

manufacturers under common 

ownership, as permitted under this 

paragraph, is liable for civil monetary 

penalties imposed on each of the 

applicable manufacturers whose 

reportable payments or other transfers of 

value were included in the consolidated 

report, up to the annual maximum 

amount specified in § 403.912(c) for 

each individual applicable 

manufacturer included in the report. 

(2) Joint ventures. If a payment or 

other transfer of value is provided in 

accordance with a joint venture or other 

cooperative agreement between two or 

more applicable manufacturers, the 

payment or other transfer of value must 

be reported— 

(i) In the name of the applicable 

manufacturer that actually furnished the 

payment or other transfer of value to the 

covered recipient, unless the terms of a 

written agreement between the 

applicable manufacturers specifically 

require otherwise, so long as the 

agreement requires that all payments or 

other transfers of value in accordance 

with the arrangement are reported by 

one of the applicable manufacturers; 

and 

(ii) Only once by one applicable 

manufacturer. 

(e) Attestation. Each report, including 

any subsequent corrections to a filed 

report, must include an attestation by 

the Chief Executive Officer, Chief 

Financial Officer, Chief Compliance 

Officer, or other Officer of the 

applicable manufacturer or applicable 

group purchasing organization that the 

information reported is timely, accurate, 

and complete to the best of his or her 

knowledge and belief. For applicable 

manufacturers choosing to submit a 

consolidated report in accordance with 

paragraph (d)(1) of this section, the 

applicable manufacturer submitting the 

consolidated report must attest on 

behalf of itself, in addition to each of the 

other applicable manufacturers 

included in the consolidated report. 

(f) Assumptions document. 

Applicable manufacturers and 

applicable group purchasing 

organizations may submit an 

assumptions document, explaining the 

reasonable assumptions made and 

methodologies used when reporting 

payments or other transfers of value, or 

ownership or investment interests. The 

assumptions documents will not be 

made available to covered recipients, 

physician owners or investors, or the 

public. 

(g) 45-day review period for review 

and error correction. (1) General rule. 

Applicable manufacturers, applicable 

group purchasing organizations, covered 

recipients, and physician owners or 

investors must have an opportunity to 

review and submit corrections to the 

information submitted for a period of 

not less than 45-days before CMS makes 

the information available to the public. 

In no case may this 45-day period for 

review and submission of corrections 

prevent the information from being 

made available to the public. 

(2) Notification. CMS notifies the 

applicable manufacturers, applicable 

group purchasing organizations, covered 

recipients, and physician owners or 

investors when the reported information 

is ready for review. 

(i) Applicable manufacturers and 

applicable group purchasing 

organizations are notified through the 

points of contact they identified during 

registration. 

(ii) Physicians and teaching 

hospitals— 

(A) Are notified using an online 

posting and notifications on CMS’s 

listserves. 

(B) May also register with CMS to 

receive notification about the review 

processes. 

(iii) The 45-day review period begins 

on the date specified in the online 

notification. 

(3) Process. (i) An applicable 

manufacturer, applicable group 

purchasing organization, covered 

recipient or a physician owner or 

investor may log into a secure Web site 

to view only the information reported 

specifically about itself. 

(ii) Covered recipients and physician 

owners or investors are able to review 


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Federal Register / Vol. 78, No. 27 / Friday, February 8, 2013 / Rules and Regulations 9527 

data submitted about them for the 

previous reporting year. 

(iii) If the applicable manufacturer, 

applicable group purchasing 

organization, covered recipient, or 

physician owner or investor agrees with 

the information reported, the applicable 

manufacturer, applicable group 

purchasing organization, covered 

recipient, or physician owner or 

investor may electronically certify that 

the information reported is accurate. 

(iv) If a covered recipient or physician 

owner or investor disagrees with the 

information reported, the covered 

recipient or physician owner or investor 

can initiate a dispute, which is sent to 

the appropriate applicable manufacturer 

or applicable group purchasing 

organization to be resolved between the 

parties. 

(v) Covered recipients and physician 

owners or investors may initiate 

disputes at any time after the 45-day 

period begins, but before the end of the 

calendar year, but any changes resulting 

from disputes initiated outside the 45- 

day period, may not be made until the 

next time the data is refreshed. 

(4) Data disputes. (i) In order to be 

corrected prior to the publication of the 

data, applicable manufacturers and 

applicable group purchasing 

organizations must notify CMS of 

resolved disputes and changes to the 

information submitted by no later than 

15 days after the end of the 45-day 

period (that is, 60 days after the 45-day 

review period begins). 

(ii) Disputes which are not resolved 

by 15 days after the end of the review 

and correction period, may still be 

resolved, but any changes resulting from 

the disputes may be made until the next 

time the data is refreshed. 

(iii) If the dispute is not resolved by 

15 days after the end of the 45-day 

review and correction period, CMS 

publicly reports and aggregates the 

applicable manufacturer’s or applicable 

group purchasing organization’s version 

of the payment or other transfer of 

value, or ownership or investment 

interest data, but marks the payment or 

other transfer of value or ownership or 

investment interest as disputed. 

(h) Errors or omissions. (1) If an 

applicable manufacturer or applicable 

group purchasing organization discovers 

an error or omission in its annual report, 

it must submit corrected information to 

CMS immediately upon confirmation of 

the error or omission. 

(2) Upon receipt, CMS notifies the 

affected covered recipient or physician 

owner or investor that the additional 

information has been submitted and is 

available for review. CMS updates the 

Web site at least once annually with 

corrected information. 

§ 403.910 Delayed publication for 

payments made under product research or 

development agreements and clinical 

investigations. 

(a) General rule. Certain research 

payments or other transfers of value 

made to a covered recipient by an 

applicable manufacturer under a 

product research or development 

agreement may be delayed from 

publication on the Web site. Publication 

of a payment or other transfer of value 

is delayed when made in connection 

with the following instances: 

(1) Research on or development of a 

new drug, device, biological, or medical 

supply, or a new application of an 

existing drug, device, biological, or 

medical supply. 

(2) Clinical investigations regarding a 

new drug, device, biological, or medical 

supply. 

(b) Research or development 

agreement. The research or 

development agreement must include a 

written agreement, a research protocol, 

or both between the applicable 

manufacturer and covered recipient. 

(c) Date of publication. Payments or 

other transfers of value eligible for 

delayed publication must be reported to 

CMS (in the manner required in 

§ 403.904(f)) on the first reporting date 

following the year in which they occur, 

but CMS does not publicly post the 

payment until the first annual 

publication date after the earlier of the 

following: 

(1) The date of the approval, licensure 

or clearance of the covered drug, device, 

biological, or medical supply by FDA. 

(2) Four calendar years after the date 

the payment or other transfer of value 

was made. 

(d) Notification of delayed 

publication. (1) An applicable 

manufacturer must indicate on its 

research report to CMS whether a 

payment or other transfer of value is 

eligible for a delay in publication. The 

absence of this indication in the report 

will result in CMS posting all payments 

publicly in the first year of public 

reporting. 

(2) An applicable manufacturer must 

continue to indicate annually in its 

report that FDA approval, licensure, or 

clearance of the new drug, device, 

biological or medical supply to which 

the payment or other transfer of value is 

related, is pending. 

(3) An applicable manufacturer must 

notify CMS during subsequent annual 

submissions, if the new drug, device, 

biological or medical supply, to which 

the payment is related (or the new 

application of the existing drug, device, 

biological, or medical supply), is 

approved by the FDA. 

(4) Failure to notify CMS when FDA 

approval occurs may be considered 

failure to report, and the applicable 

manufacturer may be subject to civil 

monetary penalties. 

(5) If, after 4 years from the date of a 

payment first appearing in a report to 

CMS, there is an indication in a report 

that the payment is subject to delayed 

reporting, it is reported regardless of the 

indication. 

(e) Confidentiality. Information 

submitted and eligible for delayed 

publication is considered confidential 

and will not be subject to disclosure 

under 5 U.S.C. 552, or any similar 

Federal, State, or local law, until on or 

after the date on which the information 

made available to the public as required 

in this section. 

§ 403.912 Penalties for failure to report. 

(a) Failure to report. (1) Any 

applicable manufacturer or applicable 

group purchasing organization that fails 

to timely, accurately or completely 

report the information required in 

accordance with the rules established 

under this subpart is subject to a civil 

monetary penalty of not less than 

$1,000, but not more than $10,000, for 

each payment or other transfer of value 

or ownership or investment interest not 

reported timely, accurately, or 

completely. 

(2) The total amount of civil monetary 

penalties imposed on each applicable 

manufacturer or applicable group 

purchasing organization (regardless of 

whether the applicable manufacturer 

was a part of a consolidated report) with 

respect to failures to report in an annual 

submission of information will not 

exceed $150,000. 

(b) Knowing failure to report. (1) Any 

applicable manufacturer or applicable 

group purchasing organization that 

knowingly fails to timely, accurately or 

completely report the information 

required in accordance with the rules 

established under this subpart is subject 

to a civil monetary penalty of not less 

than $10,000, but not more than 

$100,000, for each payment or other 

transfer of value or ownership or 

investment interest not reported timely, 

accurately, or completely. 

(2) The total amount of civil monetary 

penalties imposed on each applicable 

manufacturer or group purchasing 

organization (regardless of whether the 

applicable manufacturer was a part of a 

consolidated report) with respect to 

knowing failures to report in an annual 

submission of information will not 

exceed $1,000,000. 


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9528 Federal Register / Vol. 78, No. 27 / Friday, February 8, 2013 / Rules and Regulations 

(c) Total annual civil monetary 

penalties. The amount of civil monetary 

penalties imposed on each applicable 

manufacturer or applicable group 

purchasing organization under 

paragraphs (a)(1) and (b)(1) of this 

section are— 

(1) Aggregated separately; 

(2) Subject to separate aggregate totals 

under paragraphs (a)(2) and (b)(2) of this 

section, with a maximum combined 

annual total of $1,150,000. 

(d) Determinations regarding the 

amount of civil monetary penalties. In 

determining the amount of the civil 

monetary penalty, factors to be 

considered include, but are not limited 

to, the following: 

(1) The length of time the applicable 

manufacturer or applicable group 

purchasing organization failed to report, 

including the length of time the 

applicable manufacturer or applicable 

group purchasing organization knew of 

the payment or other transfer of value, 

or ownership or investment interest. 

(2) Amount of the payment the 

applicable manufacturer or applicable 

group purchasing organization failed to 

report. 

(3) Level of culpability. 

(4) Nature and amount of information 

reported in error. 

(5) Degree of diligence exercised in 

correcting information reported in error. 

(e) Record retention and audits. (1) 

Maintenance of records. (i) Applicable 

manufacturers and applicable group 

purchasing organizations must maintain 

all books, contracts, records, documents, 

and other evidence sufficient to enable 

the audit, evaluation, and inspection of 

the applicable manufacturer’s or 

applicable group purchasing 

organization’s compliance with the 

requirement to timely, accurately or 

completely submit information in 

accordance with the rules established 

under this subpart. 

(ii) The items described in paragraph 

(e)(1)(i) of this section must be 

maintained for a period of at least 5 

years from the date the payment or other 

transfer of value, or ownership or 

investment interest is published 

publicly on the Web site. 

(2) Audit. HHS, CMS, OIG or their 

designees may audit, inspect, 

investigate and evaluate any books, 

contracts, records, documents, and other 

evidence of applicable manufacturers 

and applicable group purchasing 

organizations that pertain to their 

compliance with the requirement to 

timely, accurately or completely submit 

information in accordance with the 

rules established under this subpart. 

(3) The requirements in this subpart 

are in addition to, and do not limit, any 

other applicable requirements that may 

obligate applicable manufacturers or 

applicable group purchasing 

organizations to retain and allow access 

to records. 

(f) Use of funds. Funds collected by 

the Secretary as a result of the 

imposition of a civil monetary penalty 

under this section must be used to carry 

out the operation of this subpart. 

(g) Notice, hearings, appeals, and 

collection. Civil monetary penalties 

imposed under this section are subject 

to the provisions set forth in subparts A 

and B of part 402 of this chapter, 

including those pertaining to notice, 

opportunity for a hearing, appeals 

procedures, and collection of penalties. 

§ 403.914 Preemption of State laws. 

(a) General rule. In the case of a 

payment or other transfer of value 

provided by an applicable manufacturer 

to a covered recipient, this subpart 

preempts any statute or regulation of a 

State or political subdivision of a State 

that requires an applicable manufacturer 

to disclose or report, in any format, the 

type of information regarding the 

payment or other transfer of value 

required to be reported under this 

subpart. 

(b) Information collected for public 

health purposes. (1) Information 

required to be reported to a Federal, 

State, or local governmental agency for 

public health surveillance, 

investigation, or other public health 

purposes or health oversight purposes 

must still be reported to appropriate 

Federal, State, or local governmental 

agencies, regardless of whether the same 

information is required to be reported 

under this subpart. 

(2) Governmental agencies include, 

but are not limited to, the following: 

(i) Agencies that are charged with 

preventing or controlling disease, 

injury, disability. 

(ii) Agencies that conduct oversight 

activities authorized by law, including 

audits, investigations, inspections, 

licensure or disciplinary actions, or 

other activities necessary for oversight 

of the health care system. 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program; Program No. 93.773, Medicare— 

Hospital Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: July 2, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: January 23, 2013. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2013–02572 Filed 2–1–13; 4:15 pm] 

BILLING CODE 4120–01–P 


srobinson on DSK4SPTVN1PROD with RULES2