Life Science Compliance Update

August 19, 2015

CMS Provides an "Update on Open Payments Reporting" at CBI Transparency and Aggregate Spend Conference

Doug Brown

Hundreds of people flocked to Washington, DC this week for a three-day conference on Open Payments reporting and associated state and international transparency initiatives. CBI’s Ninth Annual Transparency and Aggregate Spend Conference featured keynote speaker Doug Brown, the Group Director of the Data Sharing & Partnership Group in the Center for Program Integrity at the Centers for Medicare and Medicaid Services (CMS). Brown has been a familiar face to those working in the aggregate spend space, and this year provided a recap of some improvements his agency has made to the Open Payments system, a summary of the physician payment data CMS recently published, and a forecast about what’s coming next for manufacturers.   

Updates and Improvements

Brown first walked through improvements that CMS has made to the Open Payments reporting process. “The biggest highlight,” he noted, was that 98 percent of reported records were accepted. This is a dramatic improvement over the 2013 reporting period, where a large percentage of payments were rejected and “de-identified” in the initial public database. The improved acceptance rate was due to a number of improvements CMS put into place, including making updates to its matching logic to combine the NPPES and PECOS database, and creating a validated physician list for companies to reference when submitting physician information. Brown noted that validation issues may still remain regarding students and specialists, but that the improvements “went a long way to making the process simpler” for both industry and CMS.

CMS is making additional enhancements to the system based on industry questions and interactions with the Open Payments Help Desk. CMS will also make improvements to the system as CMS deems appropriate based on their review of rejected physician data. Brown noted, however, that CMS’s data matching job is not always easy: “I not only need to make sure that the individual’s first and last name match up with the NPI [National Provider Identifier] and state license number, I also have to validate that the individual you are referring to is also a covered recipient physician,” stated Brown. CMS does not accept records for nurse practitioners, physician assistants, or physical therapists, for example. Brown also expounded upon the future validated physician lists, noting that the next iteration of the list will be added to and released in early 2016. Brown expects to conduct a number of calls between now and then as well. 

Review and Dispute

Brown next went into the "Review and Dispute" experience from 2014. His analysis found that covered recipients with higher payments or reports of ownership are more likely to register with Open Payments in the first place, which is a necessary step to get in and review and dispute reported data. In fact, the median value of payments associated with registered physicians is about 4.5 times greater than the median value associated with non-registered physicians.

A common industry concern with the dispute process was the potential for physicians or teaching hospitals to dispute every payment—be it on the belief that payments were incorrect or perhaps simply on principle to show their displeasure with Open Payments. Brown alleviated some of these concerns by noting that only a handful of physicians actually disputed 100 percent of their payments. He looked at physicians with at least five transactions and found that only 28 covered recipients disputed all of their transactions. 

CMS received just over 30,000 disputes total, covering 25,000 unique payments. As a reference, manufacturers reported approximately 11.4 million financial transactions attributed to over 600,000 physicians and more than 1,100 teaching hospitals in 2014. Around 2.7 percent of payments made to registered physicians were disputed, while 3 percent of the payments associated with registered physicians were affirmed. Brown also found that disputes were split somewhat evenly by covered recipient: teaching hospitals disputed 38 percent; physicians disputed 35 percent; principal investigators were somewhat lower at 27 percent. Disputes between research payments and general payments were pretty evenly split, noted Brown. 

Future Enhancements

Brown walked through a number of expected enhancements to Open Payments, first stating that CMS is working to facilitate the relationship between the reporting entity and the covered recipient. This concern stemmed from manufacturers articulating that many of the disputes they saw were initiated not because physicians had a problem with reported payments, but because the physicians simply had questions for the manufacturer. Thus, CMS wants to work on a process to facilitate a less adversarial discussion.

On the data reporting side, Brown also expects that limitations on entering special characters in text fields will be removed. Open Payments issues related to how the system accepts or rejects special characters have been a common problem; Brown notes that special characters should be allowed in every field possible

Brown also stated that manufacturers will be able to download their payment transaction information, regardless of how big the file size is. Currently companies have to get the Help Desk involved if their file is too big. Brown noted that manufacturers will also be able to download dispute information and virtually any interface on the system. Brown wants the download-capability to extend to physicians and teaching hospitals as well.

Finally, Brown addressed manufacturers’ concerns about physicians levying multiple disputes on the same payment—for example, covered recipients may dispute the date of payment, amount of payment, etc. Brown hopes that improving the discussion between manufacturers and physicians, as noted above, will drive down multiple disputes.

Data Publication and Media Coverage

Brown next walked through a high level overview of Open Payments data, which included 11.4 million financial transactions attributed to over 600,000 physicians and more than 1,100 teaching hospitals, totaling $6.49 billion. He also outlined that many media outlets have been covering this data, and articulated CMS’s desire that Open Payments is understood in the appropriate context. Brown invited stakeholder comments on how CMS is presenting the data, and how to best portray the information to the public.

CMS’s Open Payments website has had a total of 6.5 million hits, including clicks to information on reporting, downloading the data, and the covered recipient search tool. Brown stated that the agency is working on another set of analytical tools to help users visualize the data and expected to have these new capabilities available by the end of the year. However, he also noted that the full data set itself has been downloaded 50,000 times, indicating great interest in analysis.

What’s next?

Brown went over a number of the new reporting rules going forward for manufacturers. First, he indicated that 17 percent of submissions failed to report the marketed name of the drug associated with the payment in addition to the National Drug Code (NDC). Going forward, CMS is updating its reporting system to reject records that don’t have data in this category. Brown wanted to make sure companies got a head start on setting up the proper system to capture this marketed name data. He also reiterated the recent change requiring that device manufacturers must report the marketed name of their device as well.

Brown also provided a concise summary of the reportability of continuing medical education payments after CMS removed the explicit safe harbor for certain accredited events. Starting in 2016, all payments follow the same reporting “pathway”: Anytime manufacturers make a direct or indirect payment to a covered recipient, this is a reportable event, including continuing medical education payments. Brown stated, however, that most of the CME industry has regulations and firewalls in place that prevent industry from making direct or indirect payments to physicians due to these protections in place. “Only direct or indirect payments are reportable to CMS,” stated Brown.”Payments you are making to support CME that don’t meet the definition of indirect payments are not reportable events.” 

Notes Gleaned From the Questions and Answer Session

*CMS plans to open the Open Payments system for submission in early February, around the same time period as the last reporting year.

*CMS will release its updated Teaching Hospital list in October.

*40,000 physicians and teaching hospitals registered to go through the review and dispute process. However, Brown noted that this relatively small percentage represented 30% of the total payment value that was reported in 2014.

*CMS is working to better present the information reported against principal investigators to distinguish payments that didn’t go directly to a physician.

*Brown is debating adding a moderator to the telephone Q&A sessions, though noted the conversational style helps facilitate continuity and follow-up questions.

*CMS has stated that their teaching hospital list is a “complete list” of teaching hospital covered recipients. However, Brown noted they are working to articulate how manufacturers should report indirect payments made to teaching hospitals, such as where manufacturers make payments to a foundation or an office that doesn’t share the exact name or Taxpayer Identification Number (TIN) as the hospital on CMS’s list. CMS is planning to hold a Q&A in the future to “start the conversation” from their perspective of how they would like manufacturers to go about reporting these indirect payments. 

*CMS does not have current plans to add additional filters to the Open Payments data review page.


August 11, 2015

District Court Rules on Reporting Overpayments and False Claims Act Liability


A number of important healthcare decisions have come out of the Southern District of New York over the last week. Yesterday, we wrote about the Amarin case, where the court held that a firm may promote truthful and non-misleading off-label information about a drug under the First Amendment. Last week, the court also handed down an important False Claims Act decision related to overpayments from Medicare and Medicaid. The Affordable Care Act provides that any person who has received an overpayment from the government and knowingly fails to report and return it within 60 days after the date on which it was identified has violated the False Claims Act. However, the ACA does not define what it means to “identify a false claim. Last week, the New York District Court was the first court to attempt to do so, and agreed with the government that the 60 day period begins when a “provider is put on notice of a potential overpayment, rather than the moment when an overpayment is conclusively ascertained.”

Read the opinion here

In Kane v. Healthfirst Inc., et al. and United States v. Continuum Health Partners Inc., et al., Mr. Kane, blew the whistle on his former employer, Continuum Health Partners Inc., after he allegedly provided his managers with an emailed spreadsheet of over 900 potential Medicare and Medicaid overpayments caused by a software glitch. He was fired soon after, and the company failed to return all of the overpayments due within 60 days; they instead spread payments out over several years.  

Both the Department of Justice and the State of New York intervened, arguing that by “intentionally or recklessly” failing to take necessary steps to timely identify claims affected by the software glitch or timely reimburse the government for the overbilling, the defendants violated the False Claims Act and its New York corollary.

In their motion to dismiss the government’s complaint, the defendants argued that Kane’s email was notice only of potential violations and was not sufficient to trigger the 60-day time. The court disagreed. “Permitting a healthcare provider that requests and receives an analysis showing over 900 likely overpayments to escape FCA liability by simply ignoring the analysis altogether and putting its head in the sand would subvert Congress’s intent," states the opinion. 

Despite this conclusion, the court did recognize the challenge imposed by the 60-day limit:

 “Under the definition of “identified” proposed by the Government, an overpayment would technically qualify as an “obligation” even where a provider receives an email like Kane’s, struggles to conduct an internal audit, and reports its efforts to the Government within the sixty-day window, but has yet to isolate and return all overpayments sixty-one days after being put on notice of potential overpayments.”

The court went on to say that “while such claims might qualify as 'obligations,' the mere existence of an 'obligation' does not establish a violation of the FCA." In this context, "it is only when an obligation is knowingly concealed or knowingly and improperly avoided or decreased that a provider has violated the FCA." The court added "[t]herefore, prosecutorial discretion would counsel against the institution of enforcement actions aimed at well-intentioned healthcare providers working with reasonable haste to address erroneous overpayments. Such actions would be inconsistent with the spirit of the law and would be unlikely to succeed.” 



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