Questions Linger Over Scope, Utility of Drug, Device Company Payment Data

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By James Swann and Madi Alexander

A two-and-a-half-year-old payment reporting program for drug and device companies remains problematic and complex, company executives and health-care attorneys told Bloomberg BNA.

The Centers for Medicare & Medicaid Services’ Open Payments program requires drug and device manufacturers to report all payments to physicians and teaching hospitals, but the program is still plagued with issues ranging from a confusing process for fixing flawed records to a cumbersome database that’s hard for consumers to use, all of which is adding to a costly administrative burden, industry stakeholders say.

Open Payments updates

The program covers a wide range of payments made to physicians, including those for research, food, education and royalties and ownership interest in drug and device makers. Total payments for 2015, the most recent year for which data are available, were $7.33 billion. Research payments accounted for $3.9 billion, followed by $2.6 billion in general payments (food and travel expenses, for example) and $832 million in ownership interest.

At United Therapeutics, for example, the company was told by the Centers for Medicare & Medicaid Services to delete over 5,000 payment records and then re-submit them, despite the fact that only 20 records had problems, Rebecca McCarty, senior vice president, chief compliance officer and associate general counsel, told Bloomberg BNA.

United manufactures several hypertension medications, including Remodulin and Tyvaso, among other products, and is based in Silver Spring, Md.

McCarty said United identified about 20 line item errors in the 2015 Open Payment data that involved the items being classified as general payments instead of research payments for physicians.

“We were instructed to remove all the general payments and then re-upload them,” McCarty said. As a result, a Jan. 17 update of Open Payments data shows United deleted 5,177 records, even though the records have all been put back in the system, with the exception of the 20 items, McCarty said.

Physicians will have a second chance to review the re-submitted payment data in April, McCarty said, since the data are being treated as if new.

It’s very hard to manipulate the data within the Open Payments program, McCarty said, and the collection and reporting process is onerous for the company.

“The end goal of more transparency is good, but it’s just not user-friendly,” McCarty said.

The Open Payments program, created under the Affordable Care Act, requires manufacturers of drugs, devices and other medical supplies, along with group purchasing organizations, to report to the Centers for Medicare & Medicaid Services certain payments made to physicians and teaching hospitals.

The payment data are released to the public annually in June, and updated at least once a year to reflect corrections or other changes. Last summer's release of 2015 data has been revised to show additional payments.

Administrative Burdens

The program’s complexity has placed a “huge burden” on companies, which have to find a way to track their expenses through multiple systems, K Royal, a privacy and compliance consultant who previously worked at San Jose, Calif., device maker Align Technology, told Bloomberg BNA.

Many companies haven’t been able to employ someone full-time to manage the data collection, Royal said, and vendors have been expensive and not necessarily efficient or effective.

Compounding the problem is the fact that many manufacturers have multiple internal departments that make physician payments and have never had to track where all the payments have been going, Royal said. Open Payments requires manufacturers to keep a record of what they pay physicians and hospitals and then report the data to the government.

Manufacturers often host educational lunches for physicians, which Royal said is a good example of how complex it can be to track individual physician payments.

Certain providers can attend for free and all of them can bring guests, who typically eat for free or at a reduced cost.

The cost of the meal has to be divided among the number of attendees plus staff from the hosting manufacturer, Royal said. This can also prove complex, because historically many companies haven’t kept track of staff members who have attended the lunches.

Companies also have to determine who ate and who didn’t, and whether there were any walk-ins or no-shows, Royal said.

“This doesn’t sound like much on a one-event level, but multiply that times weekly events throughout the nation and the complexity gets staggering,” Royal said.

Sales staff have generally been the organizers of educational lunches and haven’t focused on the payments that now must be reported, Royal said.

Data Validation

Open Payments’ promise of transparency is commendable, and the CMS has worked hard to ease the collection burden, but problems persist with data submission and validation, Matthew Wetzel, vice president and assistant general counsel at AdvaMed, told Bloomberg BNA. AdvaMed is a medical device trade group based in Washington.

Deleted payments in 2015 update

“The actual process for submitting data is fraught with administrative hurdles and challenges,” Wetzel said.

He said drug and device companies have invested a lot of resources building compliance programs focused on collecting and validating data, yet the CMS still insists on doing its own internal validation, often using out-of-date data.

Manufacturers generally have the most up-to-date data on physicians, while the CMS data are often not updated for years, Wetzel said.

The CMS internal validation often rejects records that are valid, leading to increased costs and burdens for manufacturers, Wetzel said.

Instead of performing internal validation, the CMS could instead conduct post-submission audits on sample sets of data, Wetzel said. As to whether that might happen in the near future, Wetzel said it’s unclear what the Trump administration’s perspective is on payment transparency.

Wide Net

The wide-ranging scope of Open Payments further complicates compliance efforts for drug and device manufacturers, Royal said.

The program doesn’t just target companies that receive government funding or have products that are reimbursable by the government, Royal said—it also targets companies that could be reimbursed.

For example, if a company manufactures a drug or device that isn’t Medicare reimbursable but is marketed in a state where it potentially could be Medicaid reimbursable, the company might get swept into Open Payments reporting, even if the government would never willingly reimburse for the product, Royal said.

The Open Payments program doesn't specify that companies have to comply with reporting requirements if their products are reimbursed by the government, Royal said. “The government should allow an exception for those products that aren't intended for reimbursement and not knowingly submitted for reimbursement,” Royal said.

This kind of company should never be included in the Open Payments reporting requirement, because in standard practice it would never qualify for government reimbursement, Royal said.

However, the Open Payment regulations require reporting for any products “for which payment is available,” even if there’s never any reimbursement, Royal said.

“The government should allow an exception for those products that aren’t intended for reimbursement and not knowingly submitted for reimbursement,” Royal said.

The CMS didn’t respond to a request for comment on concerns about the Open Payment program.

To contact the reporter on this story: James Swann in Washington at jswann1@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

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