Life Science Compliance Update

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November 21, 2016

Open Payments Discussed at MedPAC November Meeting

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The Medicare Payment Advisory Commission meets publicly in Washington, D.C. to discuss various Medicare issues and policy questions, as well as to develop and approve reports and recommendations to Congress. During the November public meeting, Ariel Winter and Amy Phillips discussed, “Payments from drug and device manufacturers to physicians and teaching hospitals, 2015.”

Ms. Winter and Ms. Phillips discussed the background and description of the Open Payments (public reporting) program, results of their analysis of 2015 data from Open Payments, as well as possible future changes to Open Payments.

Background

The pair went back to where it all started, discussing the fact that the Commission recommended public reporting of financial relationships between drug and device manufacturers and providers and other organizations in 2009. In 2010, Congress created the public reporting system through the Patient Protection and Affordable Care Act (PPACA), and in 2013 CMS implemented the Open Payments system.

Since that time, the media and researchers have been trying to use the data found in the Open Payments system to shed light on physician-industry ties. For example, according to DeJong et al., 2016, “physicians who received industry-sponsored meals related to brand-name medications prescribed those medications at a higher rate.” Yeh et al., 2016, discussed the way physicians in Massachusetts who received industry payments prescribed brand-name statins to beneficiaries at a higher rate. And even prior to Open Payments being established, Wazana 2000 and Watkins et al., 2003, such a link was being discussed – prior studies found that physicians’ interactions with manufacturers are associated with prescribing of newer, more expensive drugs.

For new readers, the Open Payments program requires manufacturers and group purchasing organizations (GPOs) to report certain payments and transfers of value to physicians and teaching hospitals. The term physicians includes: medical doctors, osteopaths, dentists, optometrists, podiatrists, chiropractors, and others. Most financial interactions are subject to reporting (i.e., speaking fees, royalties, meals, research funding, investment interests, etc.), though samples, educational materials for patient use, product discounts and rebates are excluded. Presently, data from August 2013 through December 2015 is accessible to the public.

Data Analysis

According to Ms. Winter and Ms. Phillips, the total amount of payments was similar in 2014 and 2015, as evidenced by the slide below:

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In 2015, physicians received about 80% of total payments (roughly $6.2 billion, split among 618,000 physicians). Of those 618,000 physicians, 502,000 were MDs or Dos, and 116,000 were dentists, optometrists, podiatrists, and chiropractors. Generally, the mean payment per physician was $3,242, while the median payment per physician was $157. The mean ownership/investment interest per physician was $264,990, while the median ownership/investment interest per physician was $4,651.

Interestingly, the top 5% of physicians accounted for 86% of general payments, in dollar amounts. Half of those top 5% of physicians are from five different specialties: internal medicine, cardiology, orthopedic surgery, psychiatry/neurology, and oncology/hematology.

In 2015, teaching hospitals received the other 20% of total payments (roughly $1.3 billion). General payments to hospitals amounted to $605 million, with one hospital alone accounting for half of general payments to hospitals. Royalty or license payments accounted for 70% of general payments to hospitals, but received by only 8% of hospitals. Additionally, gifts were most prevalent type of payment – they were received by 78% of hospitals, but account for only 2% of general payments.

Below are some slides showing physician payment and ownership breakdowns:

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Future Changes to Open Payments

Based on MedPAC’s 2009 recommendations, possible changes to Open Payments include: require reporting of payments to advanced practice nurses and physician assistants (the number of APNs and PAs billing Medicare has continued to grow); require reporting of payments to patient advocacy organizations; and require manufacturers and distributors to report information about drug samples to the HHS Secretary, which should then be made available through data use agreements.  

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This is an interesting story. Thank you for writing and posting it.

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