As Second Open Payments Release Date Nears, Industry Feels Increased Burdens

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By James Swann

May 8 — The federal government in June will, for the second time, release data to the public that show how much money drug and medical devices manufacturers paid to doctors in 2014, and pharmaceutical and device companies are saying the ongoing data reporting requirements have been burdensome.

On June 30, the Centers for Medicare & Medicaid Services will release the second wave of data as part of its Open Payments program that was created by the Affordable Care Act. The law requires manufacturers of drugs, devices and other medical supplies and group purchasing organizations (GPOs) to report certain payments to physicians or teaching hospitals that are over $10.21.

The initial release of data was in September 2014 and contained 4.4 million payments totaling roughly $3.5 billion. It covered payments that took place in the last five months of 2013.

However, problems with the program are still being worked out, including data validation issues, physician concerns about the review and dispute process and problems submitting payment data to the CMS.

For example, Elizabeth Carder-Thompson, an attorney with Reed Smith in Washington, told Bloomberg BNA that CMS still has problems with its validation system to verify payment data submitted by drug and device companies.

The Open Payments program only allows companies to attest and submit payment data that can be validated by the CMS, Carder-Thompson said.

For example, if a manufacturer submits data on payments made to a specific provider, the CMS must be able to validate the identity of the provider before the payment data can be accepted.

Carder-Thompson said there have been some concerns within the industry over how the CMS is verifying payment data submitted to the Open Payments program.

“Our clients have questioned CMS’ strict reliance on certain sources, including the National Plan and Provider Enumeration System (NPPES), the Provider Enrollment, Chain and Ownership System (PECOS) and Truven Health Analytics, to verify the accuracy of reported data,” Carder-Thompson said.

Data Submission

Carder-Thompson said some of her clients were also concerned about whether their payment data would be included in the database because the CMS system refused to accept their data, and they had trouble meeting the March 31 deadline.

For companies whose data couldn't be validated and submission wasn't possible, “the company was told to remove any un-validated payments from their report and re-submit the report so it only included validated data,” Carder-Thompson said.

“According to CMS, there would be a record of the fact that a company tried, but failed, to validate a payment, and they could work out later how to submit the payment [data] to CMS,” she said.

Carder-Thompson said there should be a better or more efficient methodology for this.

Drug, device and supply companies faced several challenges prior to the March 31 deadline for submitting 2014 payment data, Chris White, general counsel and senior executive vice president at the Advanced Medical Technology Association () told Bloomberg BNA.

For example, manufacturers discovered that some physicians weren't on the CMS's validated physician list. The list was developed to help manufacturers avoid inconsistencies when submitting payment data to the CMS.

Manufacturers can cross-check their payment data against the CMS list to ensure they're including the correct provider information in their data submissions, but they can't submit their payment data if their provide information isn't on the CMS list.

Possible Legislative Changes

Moving forward, White said, there's draft text within the 21st Century Cures legislative package that would correct one of the health-care industry's long-standing concerns involving the required reporting of costs associated with reprinting textbooks and peer-reviewed journals gifted to physicians.

The program requires drug and device manufacturers to report gifted medical textbooks, reprints of peer-reviewed scientific clinic journal articles and abstracts of those articles not intended for patient use.

The legislative language would exempt the cost of gifted reprints from the Open Payments reporting requirements, White said. Reprints, which typically are reproductions of materials found in medical textbooks or journals, are inherently educational, White said, and should therefore not have to be reported.

The 21st Century Cures legislation is focused on getting new drugs and devices onto the market faster, including requiring the Food and Drug Administration to develop a framework for patient-focused drug development.

Manufacturers are also concerned that the Open Payments data are reported to the public with little to no information explaining why the payments were made, White said.

“Greater transparency around manufacturer and provider relationship is good, but with just names and numbers, it's hard to understand the context,” White said.

Payments between manufacturers and physicians can help foster innovative technologies and new treatments, but the Open Payments database indicates only how much money was paid to a physician, not what the money was to be used for by the physicians, White said.

White said the financial relationships between manufacturers and providers are complex and multifaceted, and “it's no surprise that there will be challenges and frustrations.”

In addition, White said, manufacturers were burdened in the current data submission cycle by the increase in the volume of payment records that had to be submitted to the CMS. For 2014, manufacturers submitted only five months of payment records, compared with an entire year's worth of records for 2015.

However, communication and collaboration between the CMS and has been good, White said.

“There's been a great deal of stakeholder outreach from CMS,” he said.

Review and Dispute

Manufacturers have also had some trouble with the review and dispute period for Open Payments data, which began April 6 and runs until May 20, White said. During this 45-day period, providers can review payment data submitted by drug, device and supply companies that pertain to them and initiate a dispute if they believe the data are inaccurate.

White said the limited structure of the review and dispute process makes it difficult for manufacturers to resolve any provider disputes.

For example, the current system doesn't provide contact information for the individual initiating the dispute.

“It's difficult to resolve a dispute without contact information for physicians and teaching hospitals,” White said.

Reed Smith's Carder-Thompson also stressed the importance of providing manufacturers with contact information.

“Our clients are spending significant time trying to track down contact information, such as e-mails and phone numbers, when a dispute is filed,” Carder-Thompson said.

She also said it would be helpful if more information on the nature of the dispute were provided to the manufacturers.

“For example, the individual filing the dispute could be required to answer certain questions—such as specific reason for the dispute—as opposed to just allowing them to complete a free text field,” Carder-Thompson said.

White said it would also be helpful if the CMS developed a way to prevent physicians from repeatedly disputing the same payment transactions, which can be time consuming for manufacturers to handle.

Additionally, White said, it would be helpful if the CMS allowed providers to question manufacturers about payments without lodging a formal dispute.

Compliance Costs

Jeremy M. Sternberg, an attorney with Holland & Knight in Boston, told Bloomberg BNA that from an industry perspective, complying with the Open Payments program is both expensive and time consuming.

“They're doing it, but there's also a discussion going on about the cost-benefit of the program,” Sternberg said.

For pharmaceutical manufacturers, the cost of collecting and submitting Open Payments data means less money is left for core business activities, Sternberg said.

“I think most of the kinks have been worked out, but there's still a sense that there's data inaccuracy in the Open Payments program,” Sternberg said.

The initial public data release in 2014 was greeted with fanfare, but Sternberg said the reaction will likely be much more muted in 2015, and in subsequent years.

Although Sternberg said he doesn't expect any significant changes to the program soon, “I have heard some industry chatter about creating a higher threshold for the reporting of payments.”

Payments below the undecided threshold wouldn't have to be collected, Sternberg said, which would lessen the burden on the industry.

Carder-Thompson said the CMS should explore whether to seek a statutory amendment that would exempt low-value transactions from reporting requirements, or exempt low-dollar items from the dispute process.

“The sad reality is that we see much time and energy devoted to arguing over such items as $11 sandwiches,” Carder-Thompson said.

Drug manufacturers and GPOs submitted their payment data for 2014 in February, and doctors and teaching hospitals began the 45-day review and dispute phase April 6.

Sternberg said that although the CMS has reported receiving 6 million hits on the Open Payments website, he's curious who's using it.

“CMS wants consumers to look at the data and then talk to their providers, but is that really happening?” Sternberg asked.

's White also said it's hard to tell who's viewing the data.

Program Impact.

Kirk Nahra, an attorney with Wiley Rein in Washington, said the Open Payments program “seems to be working fine, at least in terms of doing what it set out to do.”

Nahra said the payment data are flowing from manufacturers to the CMS, but it's not clear if there's “a lot of specific upside” to the program.

White also said it's hard to know whether the program has had an overall positive impact, noting it's “a subjective valuation.”

Holly Campbell, a spokeswoman for the Pharmaceutical Researchers and Manufacturers of America (PhRMA), said the association's member companies are committed to the Open Payment program's goal of transparency.

As the program has matured, manufacturer experience with submitting payment data and conducting reviews has improved, Campbell said.

Campbell said that PhRMA “appreciates CMS’s engagement with industry in response to issues raised,” such as the physician validation database as well as the review and dispute process.

Whistle-Blower Activity

Beyond the cost of compliance for manufacturers, the Open Payments database may become a source for whistle-blower lawsuits, several attorneys said.

For example, attorneys could comb through the Open Payments database looking for large transfers of money from manufacturers to physicians and use the data to bolster cases alleging improper physician behavior.

Beneficiaries could also use the database to research their doctors and determine if there's a connection between a doctor receiving funds from a pharmaceutical manufacturers and the doctor prescribing the same company's medication.

Nahra said that although while it's too early to tell, “I expect we will see some, more in terms of supporting pre-existing claims than in creating them, but that will take more time to become visible or measurable.”

Holland & Knight's Sternberg said he suspects attorneys might be using the Open Payments database for possible whistle-blower lawsuits, and the database itself is likely a useful source of information for plaintiffs attorneys trying to bolster False Claims Act cases.

Echoing these comments, Brian Roark, an attorney with Bass Berry & Sims in Nashville, Tenn., said that as courts continue to enforce the requirements for a False Claims Act case, “relators will try to use Open Payments data to attempt to shore up otherwise deficient claims.”

Kevin G. McAnaney, an attorney with the Law Offices of Kevin G. McAnaney, New York, said the Open Payments database has caused many hospitals and provider groups to rethink their conflict of interest policies as they've uncovered payment information about their providers in the Open Payments database.

User-Friendly Program

Looking toward the future, White said AdvaMed has been encouraged by the CMS's commitment to making the Open Payments program more user friendly, including streamlining the website and allowing for easier searches.

“CMS also seems to be focusing enforcement efforts on entities that haven't submitted any data, as opposed to those that have,” White said.

White said industry stakeholders are committed to submitting correct data, and some have purchased external data sources to help with this goal.

“We want the public to understand our collaboration with providers,” White said.

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