The California Sunshine Act is shorthand for two laws working together: the federal Physician Payments Sunshine Act, which requires drug and device makers to report payments they make to doctors and teaching hospitals, and California’s AB 1278, which requires California physicians to actively tell their patients where to find that data. Manufacturers who don’t report face civil penalties up to $1,000,000 per year. Physicians who don’t post the required patient notices face discipline from the Medical Board of California.
What California Doctors Must Tell Patients
AB 1278, codified at Business and Professions Code sections 660 through 665, puts three separate notification duties on physicians and surgeons licensed in California.
At every initial office visit, the physician must give the patient a written or electronic notice about the federal Open Payments database, directing them to openpaymentsdata.cms.gov. If the practice keeps paper records, the patient or their representative signs and dates the notice, and the physician keeps a copy in the file.1California Legislative Information. Bill Text – AB-1278 Physicians and Surgeons: Payments: Disclosure
Every physician must also post a visible notice at each practice location where patients are likely to see it. That notice has to include a link to the Open Payments database and language explaining that the federal Sunshine Act requires disclosure of payments over ten dollars from manufacturers to physicians and teaching hospitals.1California Legislative Information. Bill Text – AB-1278 Physicians and Surgeons: Payments: Disclosure
Since January 1, 2024, any physician who maintains a practice website must post the same Open Payments notice conspicuously on that site. When a physician is employed by a healthcare organization, the employer is responsible for meeting the posting and website requirements.1California Legislative Information. Bill Text – AB-1278 Physicians and Surgeons: Payments: Disclosure
One exemption matters here: physicians working in hospital emergency rooms are not required to give any of these notifications.1California Legislative Information. Bill Text – AB-1278 Physicians and Surgeons: Payments: Disclosure
What Manufacturers Must Report
The federal side of the framework lives at 42 U.S.C. ยง 1320a-7h. Any manufacturer of a drug, device, biologic, or medical supply reimbursable under Medicare, Medicaid, or CHIP has to report payments and transfers of value to covered recipients. Group purchasing organizations also have to report physician ownership and investment interests.
The reporting is detailed. For each payment, the manufacturer discloses the recipient’s name, business address, and specialty; the dollar amount; the date; the form of payment (cash, in-kind services, stock, or other); and the nature of the payment, which can include consulting fees, travel, research grants, royalties, food, or entertainment. If the payment relates to a specific product, that product is named as well. Ownership or investment interests held by physicians or their immediate family members in a manufacturer or group purchasing organization must be reported too, including dollar value and any related payments.2Office of the Law Revision Counsel. 42 U.S. Code 1320a-7h – Transparency Reports and Reporting of Physician Ownership or Investment Interests
Dollar Thresholds
Not every small transfer counts. The federal law sets a minimum threshold that adjusts each year for inflation. For calendar year 2025, individual payments under $13.46 are excluded unless total payments to that same recipient exceed $134.54 during the year. Payments below the threshold at large-scale conferences and public events are excluded outright and don’t count toward the aggregate.3eCFR. 42 CFR 403.904 – Reports of Payments or Other Transfers of Value
Reporting Deadlines
Manufacturers submit their data to the Centers for Medicare and Medicaid Services (CMS) between February 1 and March 31 each year, covering payments made in the prior calendar year.4Centers for Medicare and Medicaid Services. Open Payments Timeline The information then goes public through the Open Payments database after a review and dispute period.
Who’s Covered and Who Isn’t
On the manufacturer side, coverage is broad. Any company making or distributing a prescription drug, biologic, or FDA-regulated device is in scope if the product is reimbursable under Medicare or Medicaid. Entities under common ownership that help with production, marketing, or distribution are also included. Companies whose covered-product revenue is less than ten percent of gross revenue face somewhat narrower reporting duties but are not exempt.
On the recipient side, federal “covered recipients” include physicians (MD, DO, DDS, DPM, OD, and DC), physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants, certified nurse-midwives, and teaching hospitals. Medical residents, students, and pharmacists are not covered. California’s AB 1278 notification duties reach a narrower group: physicians and surgeons licensed in California.
Federal regulations also exempt certain kinds of transfers from reporting altogether: product samples and patient coupons or vouchers, educational materials meant for patient use, short-term device loans, warranty replacements, ordinary commercial discounts and rebates, and indirect payments where the recipient’s identity is unknown and cannot reasonably be determined.3eCFR. 42 CFR 403.904 – Reports of Payments or Other Transfers of Value Paid consulting arrangements, speaker fees, and industry-funded dinners are not on that list.
Penalties for Not Complying
Federal Penalties on Manufacturers
Federal penalties split along whether a failure was accidental or knowing. A manufacturer or group purchasing organization that fails to submit required payment information on time faces civil monetary penalties between $1,000 and $10,000 per unreported payment, capped at $150,000 for an annual submission.5GovInfo. 42 USC 1320a-7h
Knowing violations cost far more. A manufacturer that knowingly fails to report faces penalties between $10,000 and $100,000 per unreported payment, capped at $1,000,000 per annual submission.5GovInfo. 42 USC 1320a-7h CMS also runs audits and can add penalties for inaccurate or incomplete submissions.6Centers for Medicare and Medicaid Services. Audits and Penalties for Open Payments Reporting Entities
California Penalties on Physicians
California doesn’t fine physicians. Under AB 1278, a physician who fails to provide patient notices, post the required signage, or include the Open Payments notice on a practice website has committed unprofessional conduct. The Medical Board of California can pursue disciplinary action, which may include formal reprimand, probation, or restrictions on the physician’s license.1California Legislative Information. Bill Text – AB-1278 Physicians and Surgeons: Payments: Disclosure The consequence goes to the physician’s ability to practice.
How to Check the Payment Data
All reported payment data is public at openpaymentsdata.cms.gov. You can search by physician name, teaching hospital, or manufacturer. Each record shows the type, amount, and purpose of the payment, along with any product it relates to. Before starting an expensive new medication or agreeing to a procedure involving a specific device, patients can check whether the prescribing or recommending doctor has received payments from the company that makes that product.
Physicians and other covered recipients can register in the CMS Identity Management system to review payments attributed to them before publication. The pre-publication review and dispute window runs from April 1 through May 15 each year. During that window, covered recipients can flag inaccurate records so the manufacturer has a chance to correct them before the data goes public. Disputes filed after May 15 but before December 31 are resolved during a January data refresh. A covered recipient can also designate an authorized representative to handle the review.7Centers for Medicare and Medicaid Services. Review and Dispute for Open Payments Covered Recipients
Errors do happen. A group dinner can be attributed to the wrong physician, and a research payment can be miscategorized as a consulting fee. A physician who never checks the data leaves any mistake sitting in a public database.