Sunshine Act compliance explained: Requirements, challenges, and solutions

The Sunshine Act requires life sciences companies to report payments and transfers of value made to physicians and teaching hospitals. Each transaction needs to be documented and submitted with precision.

The challenge isn’t understanding the law. It’s managing the complexity of compliance. Data often sits in multiple systems, and manual reconciliation makes it difficult to ensure accuracy. Automation changes how you manage this requirement. By centralizing spend data and applying consistent rules, compliance becomes faster and more reliable.

What is the Sunshine Act?

The Sunshine Act is a U.S. federal law that requires manufacturers of drugs, medical devices, and biologics to report payments and other transfers of value made to physicians and teaching hospitals. The law was introduced in 2010 as part of the Affordable Care Act and is also known as the Open Payments Program.

Under the Sunshine Act, you are required to submit annual reports to the Centers for Medicare & Medicaid Services (CMS). These reports capture both direct payments, such as consulting fees and research funding, and indirect transfers, including meals, travel, and educational materials. In 2024, CMS reported more than 16.16 million records with a combined value of over $13.18 billion.

The goal is transparency. By making financial relationships between healthcare providers and life sciences companies public, regulators aim to reduce conflicts of interest and strengthen patient trust. You gain clarity on what must be reported. But the obligation to track and document each payment rests with your finance and compliance teams.

Who needs to comply with Sunshine Act reporting requirements?

The Sunshine Act places reporting responsibility on organizations that manufacture, distribute, or arrange for the purchase of covered drugs, devices, biologics, and medical supplies, ensuring regulatory compliance. Compliance is not limited to manufacturers alone. It spans the ecosystem of life sciences companies that shape how products reach healthcare providers.

You fall under the reporting rules if your company fits into one of the following categories:

• Applicable manufacturers: Producers of drugs, devices, biologics, or supplies reimbursable by Medicare, Medicaid, or CHIP. Reporting applies whether the product is marketed in the U.S. directly or through affiliates.
• Entities under common ownership: Subsidiaries or sister companies that assist with the manufacturing, marketing, promotion, or distribution of covered products. Even if they do not sell products themselves, they inherit the financial reporting obligation.
• Group Purchasing Organizations (GPOs): Companies that buy or negotiate purchases for healthcare providers, such as hospitals or practices, must disclose ownership interests and report payments made to physicians or teaching hospitals.
• Foreign manufacturers: Firms outside the U.S. with products reimbursed by federal healthcare programs are also included when those products are sold in the U.S.

The reach of the law is extensive. This breadth ensures that most financial interactions between life sciences companies and healthcare providers are captured, regardless of corporate structure or geography.

What information must be tracked and reported for compliance under the law?

Compliance with the Sunshine Act is carried out by life sciences manufacturers and group purchasing organizations. As a finance leader, you carry the responsibility to ensure that every transfer of value to physicians and teaching hospitals meets CMS requirements.

The obligation is placed on your organization, not on providers, which makes accurate tracking across departments a core part of maintaining compliance.

Payments to physicians and teaching hospitals

Direct payments cover cash, checks, electronic transfers, or other monetary compensation. These payments can relate to a wide range of activities such as consulting, research participation, or general services. For you, this means every dollar paid directly to a physician or teaching hospital must be captured in a structured way.

Ownership and investment interests

You must disclose ownership or investment stakes held by physicians in your company or in related group purchasing organizations. This requirement ensures visibility into potential conflicts of interest.

For finance teams, it involves maintaining accurate records of equity arrangements, profit-sharing agreements, or other financial stakes that extend beyond service payments.

Research funding and clinical trial support

Research-related payments often represent large amounts and complex structures. This includes grants for clinical studies, investigator fees, or support provided to research institutions. These payments often represent significant amounts, with CMS data showing over $8.52 billion in research-related payments in 2024.

Tracking these payments requires coordination between finance, legal, and research teams to ensure that both direct and indirect costs are accounted for in the final report.

Consulting fees, honoraria, and speaking engagements

Healthcare providers are often paid for their expertise through advisory boards, speaker programs, or training sessions. In 2024, this category was the largest share of General Payments, accounting for $1.34B — 40% of all dollars reported — across over 500K transactions. These payments are reportable because they reflect direct financial relationships that can influence medical practice. For you, this means tracking not only the fee itself but also related costs such as travel or accommodations tied to the engagement.

Meals, travel, and lodging

Even routine expenses such as a working lunch or reimbursed travel for a conference must be disclosed. In 2024 alone, meals, travel, and lodging accounted for $615M of spend — just 18% of the $3.33B in General Payments — but represented an outsized 95.8% of all transactions reported.

This imbalance makes them especially burdensome: They dominate compliance workloads by volume despite representing a small share of total dollars. As a result, they are challenging not only for Finance teams to manage but also for Medical Affairs teams to stay on top of. Automation is often essential to link these small but frequent transactions to the correct provider and ensure nothing slips through the cracks.

Educational materials, equipment, and supplies

Items intended for training or clinical use, such as textbooks, demonstration devices, or sample supplies, are considered reportable transfers of value. While these may appear low in dollar value, they form a large share of the total number of records CMS receives each year. For compliance, you need clear categorization to distinguish these items from general business expenses.

Charitable contributions and grants

Donations to nonprofits or grants provided at the request of a physician or teaching hospital must also be included. These transactions can blur the line between philanthropy and influence, which is why regulators require them to be disclosed. In 2024, this category represented a small fraction of General Payments, which is about $125.9M in total spend across fewer than 10K transactions. Tracking them still requires clear documentation of both purpose and recipient to ensure transparency.

Royalties and licensing fees

Payments made to physicians for intellectual property rights, patents, or licensing agreements are often high-value transactions. In 2024, these payments totaled $853M — 26% of all General Payments reported with an average transaction size of $50.6K. These reflect collaborations in product development and must be captured with precise details. For finance leaders, this means working closely with legal and R&D teams to make sure intellectual property agreements are fully reported.

Is manual Sunshine Act compliance challenging for finance teams?

Staying compliant with the Sunshine Act is harder when reporting relies on manual processes. The law demands accuracy, completeness, and timeliness, but manual systems often fall short.

• Fragmented data sources: Spend data is scattered across cards, accounts payable, procurement, research, and charitable contributions. Each source records information differently. Without a central system, you end up reconciling mismatched formats, correcting duplicate entries, and filling gaps manually.
• High transaction volume: CMS received more than 16 million payment records. Each record required details like the recipient’s name, the amount, the date, and the type of payment. When you manage this volume through spreadsheets, small mistakes quickly compound.
• Cross-department involvement: Sunshine Act data rarely live in finance alone. Compliance teams monitor regulatory rules, research teams track clinical trial payments, and procurement manages vendor interactions. Without consistent workflows, records are interpreted differently, making it harder to prove compliance alignment across the organization.
• Changing CMS requirements: Templates, definitions, and validation rules evolve regularly. A manual approach makes it harder to adjust, creating compliance gaps that may only surface during audits.
• Hidden opportunity costs: Life sciences companies spend thousands of hours each year on compliance. Repetitive reconciliation tasks often consume these hours.

The challenge is not only the effort involved. It is that manual processes increase the likelihood of errors, inconsistencies, and delays, which directly put Sunshine Act compliance at risk.

Where automation fits in Sunshine Act compliance workflows

Automation supports Sunshine Act compliance by ensuring that every required payment detail is captured, validated, and organized in real time. Instead of collecting spreadsheets from multiple departments, data flows directly from financial and research systems into one platform.

Each transaction is categorized, matched to the correct provider, and checked against CMS rules. The result is a record that is accurate, consistent, and ready for audits.

Which expenses benefit most from compliance automation

Not every transaction has the same impact on Sunshine Act compliance. Some expenses create risk because of their high volume, while others involve complex agreements or flow across multiple systems.

Manual tracking often leaves gaps that undermine compliance. Automation strengthens oversight in the areas where errors are most common, giving you complete and accurate data before submission.

High-volume routine expenses

Meals, small gifts, and routine interactions with healthcare providers generate thousands of records each year. Each transaction requires provider names, dates, payment amounts, and context.

When you track them manually, it is easy to miss or misclassify details. Incomplete records make your compliance submission vulnerable to errors. Automation captures these expenses directly from cards or expense reports and links them to the correct reporting category. This ensures a full record of high-volume transactions.

Travel and lodging transactions

Airfare, hotel stays, ground transportation, and conference packages often create multiple receipts for a single event. Manually splitting and linking these charges to the right provider leaves room for inconsistencies.

Automation improves compliance by pulling travel spend into one system and then matching each charge to the right provider. It also groups related costs into a single record, reducing the risk of duplicate entries or missing details.

Sana Benefits, for example, used Ramp to reduce out-of-policy travel expenses by 10% reduction. This shows how automated tracking not only improves compliance but also strengthens cost management.

Research and clinical trial funding

Research payments are among the largest transfers of value and involve multiple stakeholders. Grants, investigator fees, and study-related costs must all tie back to protocols and provider records.

Without automation, consolidating this data accurately is difficult and exposes your organization to compliance gaps. Automated systems link direct and indirect research costs to the correct contracts and providers, creating a clear audit trail that supports compliance requirements.

Recurring vendor or consultant payments

Payments for consulting, advisory boards, or contracted services often repeat monthly or quarterly. Manual processes risk inconsistent categorization across vendor reporting periods, which can create compliance discrepancies.

Automation increases reliability by recognizing recurring patterns and applying consistent categorization rules. Each payment is matched to the correct provider and reporting category without relying on manual input.

Out-of-policy or unusual transactions

One-time grants, large non-routine transfers, or expenses flagged during reviews are more likely to be misclassified when tracked by hand. These outliers present heightened compliance risk because they do not fit standard categories.

Automation applies pre-set rules, flags anomalies, and routes them for review before submission. This reduces corrections and strengthens the completeness of your compliance record.

What makes automation the foundation for Sunshine Act compliance?

Automation supports Sunshine Act compliance by capturing every transaction at the point of spend and aligning it with CMS requirements. Instead of piecing data together at the end of the year, you maintain a continuous record that is accurate and complete.

The strength of automation is its consistency. Systems apply the same rules across meals, research payments, travel, and consulting fees, which creates uniform compliance practices across departments and a single reliable source of truth.

Compliance also benefits from greater transparency. Finance, compliance, and leadership teams work from the same real-time data, which reduces gaps and builds confidence that reporting meets regulatory expectations.

Where Ramp fits in your Sunshine Act compliance process

Ramp serves as a compliance-first expense platform that helps you meet Sunshine Act requirements with accuracy and consistency. Each payment captured through Ramp is enriched with the necessary details and mapped to CMS-defined categories. Instead of reconciling data from separate systems, you maintain a single, complete record covering cards, bills, procurement, and reimbursements.

The platform automates compliance workflows by tracking physician payments, categorizing spend in real time, and linking each transfer of value to the correct provider. This reduces the risk of errors and ensures your data meets regulatory expectations.

Ramp also produces audit-ready compliance reports without extra formatting. For finance leaders in healthcare and biotech, this shifts Sunshine Act compliance from a manual burden into a continuous process built into daily operations.