By Stephanie Wise, Ombud Inc.
The Physician Payment Sunshine Act mandates transparency within physician-industry relationships. Data recording begins August 1, 2013, so it is necessary for physicians, office managers, and other industry professionals to understand the implications of this section of the Affordable Care Act.
The Sunshine Act only requires relationships to be reported, as they exist-no behavioral change is called for. Additionally, the penalties directly associated with failure to comply-an annual maximum of $1.15 million-will be charged to the applicable manufacturers. However, if uneducated about the processes and technologies necessary to reconcile reported transfers of value, physicians and teaching hospitals face costly risks.
As a result, the industry has been trying to identify best practices in aiming their processes and technologies for what is finally a confirmed, albeit ambiguous, target.
Introduction to the Sunshine Act
Applicable industry manufacturers and group purchasing organizations (GPOs) are required to report payments or other transfers of value (TOV) made to physicians and teaching hospitals (collectively referred to as covered recipients). Physicians' ownerships and investment interests must also be identified and reported. Those reports are to be submitted electronically to the Secretary of the Department of Health and Human Services (HHS) on an annual basis, and the first is due by March 31, 2014.
According to Dan Carlat, psychiatrist and Prescription Project Director at The Pew Charitable Trusts and an influential voice in urging for fast adoption of the Sunshine Act, "The Sunshine Act doesn't do anything with regard to regulation. It simply will reveal the nature of what's going on now."
Transfers of value will include payments for speaking at or attending speakers' bureau events and payments made to research institutions reported under the names of the principle investigators in addition to many other relationships.
"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," according to the Centers for Medicare and Medicaid Services (CMS).
Those unnecessary costs refer to the initial recommendation of the Medicare Payment Advisory Commission (MedPAC) in 2009 that influenced this transparency initiative. MedPAC is an independent Congressional agency established by the Balanced Budget Act of 1997 to advise the U.S. Congress on issues affecting the Medicare program.
According to MedPAC's recommendation, "At least some [industry-physician relationships] are associated with rapid prescribing of new, more expensive drugs...[and] concern that manufacturers' influence over physicians' education may skew the information physicians receive."
This contrasts the belief of some industry thought leaders that the federal government's regulation of transparency is unnecessary because behaviors and TOV are already being successfully self-regulated. Industry ethical standards like PhRMA Code on Interactions with Healthcare Professionals and AdvaMed Code of Ethics have been encouraging ethical interactions and reasonable expenses between manufacturers and physicians since 2002 and 2004, respectively. While PhRMA Code and AdvaMed Code of Ethics are within the spirit of the Sunshine Act, an element of public education is now incorporated into those relationships.
Costs of Non-Compliance
Although the penalties directly associated with failure to correctly report payments to covered recipients will be charged to the applicable manufacturers, physicians and their practices also stand to risk a great deal.
Penalties for knowing and unknowing failures to report will have a combined annual maximum of $1.15 million for applicable manufacturers, regardless of general support among commenters for higher penalties for knowing failures to report. These penalties may not seem to be a significant deterrent for larger pharmaceutical manufacturers with established and marketed products, but the resulting transparency could be the spark that sets the entire house on fire.
CMS does not have the authority to impose fines for anything other than failure to report timely, accurate information. The reported data, however, will be public record-aggregated, easily searchable public record. Additionally, CMS will be required to submit annual reports to Congress and each state.
This means that all the necessary financial evidence for any indication of wrongdoing will be placed directly in the hands of those who can take action. Like a mob boss being taken down for tax evasion, transparency could result in litigation and significant fines from other areas of the government-for everyone involved, not just the applicable manufacturers.
Physicians also stand to risk their public image and reputation.
Physicians' Role in the Sunshine Act
As of September 30, 2014, the public will be able to see the total TOV by recipient, from each manufacturer. Information on any enforcement activities as a result of failure of the manufacturer to report these expenses will also be published. The aggregated data will be both searchable and downloadable.
Beyond the negative sentiment in the general public, non-compliance and erroneous reporting can create frustration with those the manufacturers want to please the most-the individual physicians. Physicians want to ensure their TOV is reported accurately to the CMS and the public.
Therefore, it is important to note that CMS will not monitor or require a pre-submission approval process. Instead, signed attestation certifying the timeliness, accuracy, and completeness of data by the manufacturer's CEO, CFO, CCO, or other officer will be required at the time of submission. Failure to attest will be considered failure to submit.
Third-party vendors are creating software solutions to help automate this accounting process. Additionally, CMS will be providing an online portal to allow manufacturers and recipients to reconcile the reported TOV after submission, but prior to publication.
These portals, according to Dr. Carlat, "are extremely important for maintaining a good relationship between the pharmaceutical companies and the physicians because you don't want to be in a position where a doctor reads a transparency report listing a payment with which they disagree."
The seamless communication between companies and recipients is essential for agreement and accuracy of the reported payments. Applicable manufacturers, GPOs, covered recipients, and physician owners or investors will be able to sign into a secure site to review the data for a 45-day window prior to publication.
This reconciliation will likely fall to the physician's office staff and might be the staff's first time seeing the reported TOVs. This means the office must be diligently maintaining records of all physician-industry interactions to be able to accurately verify if payments have been reported correctly.
Those records must also be easily accessible in case of a dispute. As soon as a dispute is initiated, manufacturers can begin resolving and correcting. They will have an additional 15 days to resolve disputes, attest, and submit updated data. Disputes not resolved by the end of that 60-day period will be published as originally attested and labeled "disputed" to incent active, timely resolution. No extensions will be granted.
"This is especially important once the payments are placed on a publicly available website," according to Dr. Carlat. "Physicians are very sensitive to their reputations, and they don't want there to be payments that are inflated. They don't want their patients and others to get the idea that they're being somehow bought out by the pharmaceutical industry."
Paperless Technologies Streamline Reconciliation
To the great relief of the industry, the final rule has fundamentally removed reporting of Continuing Medical Education (CME) events from the Sunshine Act. With thousands of medical-sponsored education events throughout the year, the risk of non-compliance and negative sentiment would be substantial. According to the Accreditation Council for Continuing Medical Education (ACCME) Annual Report Data 2011, there were more than 18,000 CME activities with commercial support in 2011, servicing 2.3 million physicians and another 2 million non-physicians. Companies contributed more than $736 million to these activities (excluding in-kind support) and paid another $297 million for advertising and exhibits space.
Vendors were paralyzed with apprehension at the prospect of recording and reporting the granular details required to determine TOV per physician and began solving an extensive, ambiguous problem with several solutions. As of the final rule, however, TOVs from accredited events do not have to be reported as long as the sponsoring manufacturer has absolutely no influence in the speaker or content, which is essentially the definition of a CME event anyway.
Manufacturers will still need technologies and processes implemented for non-CME events. The non-CME events alone constitute hundreds of thousands of healthcare industry events each year.
For example, Advanced Health Media, a provider of technology services designed to manage physician-industry relationships, supports 240,000 promotional and speaker bureaus annually. Each year, the events this one company supports reach one million physician attendees. Those promotional and speaker bureau transactions-plus millions of others-will need to be reported.
A meticulous physician reimbursement process for any event can be cumbersome depending on the manufacturer's compliance regulations. It can involve several forms, agreements, and attendance verification, resulting in lengthy reimbursement times and administrative costs.
Per many manufacturers' compliance regulations, when a physician agrees to participate in a pharmaceutical or medical device meeting, the physician signs off on a range of TOV.
During the event, diligent hosts confirm the physicians filled their event obligations by taking attendance-via physical signatures-five times a day for each the morning session, the afternoon session, breakfast, lunch, and dinner. Judith Benaroche Johnson, President and CEO of RxWorldwide Meetings with experience in internal reporting of event transactions, noted that her company collects approximately 1,200 physical signatures during conferences. (An average of 120 participants sign in to five events each day, for two days per conference.)
After the event, manufacturers or their event planners conduct a reconciliation process for physician expense reimbursement. This begins when the physician submits a signed expense report. The physician needs to print, sign, and fax these forms back to the manufacturer. The meeting planner conducts cross-references and data cleaning to ensure the expense accounting is correct. Once expenses are approved, the meeting planner reimburses the physician and bills the expenses back to the manufacturer. The expense reconciliation process relies on hundreds of physicians to fill out reimbursement forms accurately and completely.
Changing from a physical signature form to an electronic signature form greatly reduces the process time. The Social Security Administration adopted an electronic signature process in April 2012 for form SSA-827, Authorization to Disclose Information to the Social Security Administration (SSA). Tony Notaro, Social Security's Office of Health Information and Electronic Policy, stated that beneficiaries who use the electronic signature process of the SSA-827 save up to 9 days in processing time over those who use the exact same form in its physical signature format.
Electronic signature technologies allow manufacturers to acquire agreements and forms from physicians easily and enable manufacturers to quickly conduct simple queries on the physician obligations and payment seamlessly.
The best-of-breed electronic signature solutions like DocuSign provide a template for the electronically-signed TOV agreements and expense reports, to be customized for the manufacturer's reimbursement process. These documents can include form validation, ensuring the forms are submitted thoroughly and completely. Once these forms are signed, the document becomes part of both the physician and manufacturer's document libraries. This eliminates the need for the physician to print, sign, and deliver the expense report to the manufacturer. Furthermore, this data can be imported into the manufacturer's systems without faxing and data entry.
Physician attendance via electronic signature and mobile devices eliminates the need for planners to fax Excel spreadsheets to the audit department at the final hour. It also eliminates the hours of post-processing sign-in sheets and enables the audit department to run queries on physicians immediately.
Top solutions add another level of security by providing the signer's profile with the signer's name, authentication level, photograph, and GPS location at the time of signing.
For purposes of Sunshine Act audits, manufacturers will be required to maintain all books, records, documents, etc. for a minimum of five years from the date of publication. Mindful healthcare offices may want to maintain records for the same period of time to be prepared in the event of audits that stand to negatively impact the physician's reputation. In cases of delayed publication for new research (four years), this could mean records must be retained for nine years. Electronic Signatures makes this process less of a hassle, enabling physicians to sign off on all payments in a format that manufacturers can keep digitally for this period of time, easily accessible for audits and adding an additional level of accountability in this multi-million dollar sector of the healthcare industry.
Tackling Aggregate Spend
RxWorldwide Meetings runs up to 150 health care meetings a year, with a TOV of about $1,500 per physician. Some of their clients have Corporate Integrity Agreements (CIA) with the government. These early adopters require cost breakdowns to a higher level of detail and perform internal audits to ensure that physicians are booked in reasonable hotels and compensated for modest meals and transportation. Dr. Carlat noted the intangible benefit of being an early adopter, "Some companies such as Eli Lilly, which have been ahead of the game with producing excellent transparency reports may very well have benefitted in terms of their reputation for transparency because of those reports. An enhanced sense of trust in a company is very hard to put a dollar figure on."
Although these companies are ahead of the curve, Ms. Johnson expressed concern about the lack of details CMS initially provided. "Nobody has figured out how to do it, but yet it's going forward," she warned. Prior to release of the final rule and some clarity into required reporting fields, Ms. Johnson's team built the accounting categories into their expense reconciliation platform as they interpreted them.
Additionally, MMIS, Inc. and other vendors went to market without knowing any details of required reporting fields. MMIS offers MediSpend®, a SaaS solution for aggregate spend tracking and reporting that includes a notification center for the physician to review and confirm spend information before it is reported.
Beyond aggregate spend, Lisa Keilty, Vice President at pmc2 and former Senior Manager of Pfizer, explains that both internal and external audits need to show a complete thread from the planning stages through engagement. Compliance audits, for not only the Sunshine Act, but also other international, federal, and state health care regulations, want to know:
- Why was the program put together?
- What were the objectives?
- What happened (plans vs. actual proceedings, attendees, cost)?
- What were the outcomes?
- What are the next steps?
Ms. Keilty noted that many attendee management systems are challenged to capture the granular information like no-shows and opt-outs. She envisions a tool on the operations side of business that integrates attendee management systems with front-end planning and budgeting. This tool would capture the detail required by the Sunshine Act in addition to each physician's acknowledgement of the TOV. This information would then be reported back to the planner, manufacturer, and physician.
Still Waiting for Answers
Despite the release of the final rule on the Sunshine Act, the industry is still waiting for clarity of implementation. CMS does not consider the financial burden of compliance to be substantial. However, the vague implementation guidelines to allow for flexibility make it difficult to determine the actual cost implications for applicable manufacturers and covered recipients. Applicable manufacturers and GPOs will have to report TOVs from the later half of 2013 by March 31, 2014, regardless of this uncertainty in the technologies and procedures necessary to document specific TOVs per physician per event and deliver that value to CMS.
Direction has been provided for the following provisions, but the associated procedures required for information collections remained unclear in the final rule.
There was no detail in how manufacturers will submit:
- Records and Reports of Payments or Other TOVs, Physician Ownership, and Investment Interests
- Registration of Applicable Manufacturers and GPOs with CMS prior to the end of the reporting year
- Attestation by the CEO, CFO, CCO, or other Officer of the applicable manufacturer or GPO that the information reported is timely, accurate, and complete
- Voluntary supporting documentation providing an explanation of reasonable assumptions and methodologies used in reporting
- Updates to the Review and Corrections Period by Physicians and Teaching Hospitals
- Notifications of Resolved Disputes
- Notifications of Errors and Omissions
CMS has finally answered most questions about what needs to be reported, leaving early adopters to determine whether they have in fact wasted resources. However, CMS remained ambiguous in the final rule about how that data needs to be reported.
"We're still in the dark on a lot of information," according to Ms. Keilty. She would love to have seen the physician portal with the release of the final rule, even if only in draft form. More standardization guidelines for information collection would have also been helpful.
Following the release of the final rule, CMS also released proposed templates for data reporting. The PDF files are now available for download and comment.
Big pharmaceutical companies have been very aware of regulations and the Sunshine Act iterations. They have spent 2-3 years, if not longer, developing robust accounting systems. However, the early absence of federal terms of reference and accounting rules has allowed each company to come up with a philosophy and practice as to how they are going to determine a TOV per physician.
Most likely, those early adopters will become the leaders of the implementation process, and the technology to support the act will develop before CMS answers all implementation questions.
While streamlining processes for compliance with the Sunshine Act, manufacturers and physicians should keep in mind one return that cannot be measured with standard ROI calculations-trust.
Sunshine Act Means a Renewed Sense of Trust in Physicians
"I think the main benefit is going to be a renewed sense of trust," according to Dr. Carlat. "The public believes that doctors are still often being given large gifts, that they're taken out to sporting events, that they're treated to Caribbean adventures on the drug company tab, and these things are very rarely happening now. They used to happen, but these days they happen very rarely, if at all. I think once transparency reports are published widely the public will understand that the vast majority of physicians who are taking payments are taking relatively small payments and that many of the payments are for completely legitimate activities."
Transparency, in the words of Ms. Keilty, "is just good business." The details of the monetary relationships between manufacturers and physicians will soon be public knowledge. Patients will be scrutinizing those dollar amounts and the availability of information. Any lack of reporting will not only result in fines, but also patient scrutiny. Not being transparent-via accurate accounting and verification systems-is risky.
Stephanie Wise is a researcher for Ombud, Inc, an independent enterprise technology research firm. Ombud's team of researchers analyzes enterprise technology solutions and their effects on business processes. For more information about Ombud's research in the healthcare industry, please visit http://ombud.com/r/AG.
