Life Science Compliance Update

July 21, 2016

CMS Delays Hospital Ratings – No Stars Yet

The Centers for Medicare and Medicaid Services (CMS) postponed publication of its hospital ratings after numerous members of Congress objected to the rating system's possible unfairness. The publication may now be published this month, but could see delay if there is additional pressure from industry and/or Congress.

Originally, CMS had planned to release a new star ratings system on Hospital Compare on April 21. The current star ratings, which went live in April 2015, incorporate only patient experience scores, and the new overall star ratings intend to include quality measures such as readmissions, mortality, effectiveness of care and timeliness of care in addition to patient experience scores.

In its announcement to delay the publication, CMS said it developed its methodology in coordination with many stakeholders, but it would delay the overall star ratings release in response to "targeted concerns about specific calculations" and feedback from stakeholders. Congress is a major source of these concerns.

"Many prominent hospitals that are in the top echelon of other quality rating reports, and handle the most complex procedures and patients, will receive one or two stars (out of possible five), indicating that they have the poorest quality in comparison to other hospitals," lawmakers wrote to CMS Acting Administrator Andy Slavitt in an April 18 letter signed by 225 members of Congress.

The lawmakers' specific concerns included CMS' insufficient disclosure of its methodology and the possibility the rating system gives excessive weight to the "patient experience of care" category, as reported by patients, which accounts for 25 percent of a hospital's score, according to CMS's Quality Net website. The remaining criteria categories are outcome (40 percent), efficiency (25 percent), and clinical process of care (10 percent).

American Hospital Association president and CEO Rick Pollack hailed the delay as "a necessary step as hospitals and health systems work with CMS to improve the ratings for patients, and the AHA commends CMS for their decision. Health care consumers need reliable, factual information to make critical care decisions."

The American Hospital Association wrote to hospitals in a January 27 Quality Advisory report that of the 3,600 hospitals rated, 87 (2.4 percent) are expected to receive five stars and 858 (23.5 percent) to receive one or two stars.

Previously, CMS explained how it arrived at the 2016 star ratings in a report describing its methodology for calculating overall hospital quality.

The ratings, which measure hospitals on a five-star scale, took into consideration 113 measures of inpatient and outpatient quality, according to the report. The data are derived from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey.

CMS grouped quality measures in seven categories, weighted by importance. The categories and their weighting are: mortality (22 percent), safety of care (22 percent), readmissions (22 percent), patient experience (22 percent), effectiveness of care (4 percent), timeliness of care (4 percent) and efficient use of medical imaging (4 percent).

Additionally, as has been reported, last year CMS created a star rating to represent the views of patients in surveys. Two sets of researchers recently determined that hospitals with more stars in patient experience tended to have lower death and readmission rates.

Hospital Compare received 3.7 million unique page views last year, according to a paper published this in the journal Health Affairs. The author, analyst Steve Findlay, called the traffic "not at a level commensurate with [the] stature and potential" of the federal government's health care facility comparison sites.

July 08, 2016

CMS Proposed Physician Fee Schedule 2017 – Includes Open Payments Questions

CMS released its proposed Physician Fee Schedule on July 7, including a section on Open Payments. CMS notes it does not intend to finalize any requirements related to Open Payments directly as a result of this proposed rule. However, CMS does indicate it may undertake future rulemaking that will impact Open Payments.

The proposed rule can be found here, along with its page on the Federal Register website on July 15th. The CMS Proposed Physician Fee Schedule 2017 - Open Payments Section can be downloaded. Comments are due to CMS by 5 p.m. on September 6, 2016. When commenting, refer to file code CMS-1654-P. Comments may be submitted electronically at Follow the instructions for "submitting a comment."

Open Payments Background

Under the section titled, "Reports of Payments or Other Transfers of Value to Covered Recipients: Solicitation of Public," CMS writes about the February 8, 2013 published document in the Federal Register (78 FR 9458), "Transparency Reports and Reporting of Physician Ownership or Investment Interests", the agency's final rule (Open Payments Final Rule) which implemented section 1128G of the Act, as added by section 6002 of the Affordable Care Act. Under section 1128G(a)(1) of the Act, manufacturers of covered drugs, devices, biologicals, and medical supplies (applicable manufacturers) are required to submit on an annual basis information about certain payments or other transfers of value made to physicians and teaching hospitals (collectively called covered recipients) during the course of the preceding calendar year.

Section 1128G(a)(2) of the Act requires applicable manufacturers and applicable group purchasing organizations (GPOs) to disclose any ownership or investment interests in such entities held by physicians or their immediate family members, as well as information on any payments or other transfers of value provided to such physician owners or investors. The Open Payments program creates transparency around the nature and extent of relationships that exist between drug, device, biologicals and medical supply manufacturers, and physicians and teaching hospitals (covered recipients and physician owner or investors).

Since the publication and implementation of the Open Payments Final Rule, stakeholders have provided feedback to CMS regarding aspects of the Open Payment program. CMS writes that it has identified areas in the rule that might benefit from revision. In order to consider the views of all stakeholders, CMS is soliciting comments to inform future rulemaking. CMS specifically says it does not intend to finalize any requirements related to Open Payments directly as a result of this proposed rule; rather, it expect to conduct future rulemaking.

Open Payment Questions in Proposed Rule

CMS ("We" as written in the proposed rule) offers a laundry list of questions to which it would like to receive comments:

  • We would like to know if the nature of payment categories as listed at §403.904(e)(2) are inclusive enough to facilitate reporting of all payments or transfers of value to covered recipient physicians and teaching hospitals. We also seek feedback on further categorization of reported research payments.
  • Although there is a 5-year record retention requirement at §403.912(e), our regulations are currently silent on how long applicable manufacturers and applicable GPOs remain obligated to report on past years of payments or ownership or investment interests. We are soliciting feedback on how many years an applicable manufacturer or applicable GPO should continue to monitor and report on past program years for Open Payments reporting purposes.
  • We are continuing to refresh all years of program data in addition to newly submitted payment records. We are interested in receiving feedback on how many years of Open Payments data is relevant to our stakeholders to help us determine how many years to continue to publish and refresh annually on our website. In addition, we are looking for feedback on how many years may be useful or relevant to Open Payments data users as archive files available for download on our website.
  • We are seeking feedback on a requirement for all applicable manufacturers and applicable GPOs as defined in §403.902 to register each year, regardless of whether the entity will be reporting payments or other transfers of value, or ownership or investment interests for the program year. We also seek comment on requiring applicable manufacturers and applicable GPOs to include the reason for not reporting any payments or other transfers of value, or ownership or investment interests.
  • We are constantly striving to ensure that all published Open Payments data is valid and reliable. As part of this effort we are seeking comment on a requirement for applicable manufacturers and applicable GPOs to pre-vet payment information with covered recipients and physicians owners or investors before reporting to the Open Payments system, which we understand is an increasingly common practice. Specifically, we would like feedback on pre-vetting based on threshold payment values or random samplings of covered recipients. We are also interested in hearing how applicable manufacturers and applicable GPOs are successfully pre-vetting payment or transfer of value records.
  • We continue to receive feedback that the current definition of a covered recipient teaching hospital, as defined at §403.902, makes reporting payments or transfers of value difficult for applicable manufacturers. Section 1128G of the Act is silent on the definition of a covered recipient teaching hospital. We are soliciting feedback on the specific hurdles that the current definition presents. Additionally we would like to receive proposed alternative operationally feasible definitions or definitional elements of a covered recipient teaching hospital.
  • We have heard from stakeholders that verifying receipt of payments or transfers of value to teaching hospitals is a difficult process on the recipient end for a various number of reasons (such as size of hospitals, number of departments, etc.). Without context around a payment record, teaching hospitals have reported difficulties verifying payments attributed to them. This leads to payment disputes. We are seeking feedback on adding a new non-public data element to assist in review and affirmation of payment records. Some examples might be hospital contact name or department etc. Would a free form text field be preferable? Should this field be mandatory to facilitate review of any attributed payments to a teaching hospital?
  • Some reporting entities have expressed interest to upload data into the Open Payments system before the end of the calendar year for which the data is collected. We believe this may increase data validity and minimize disputes. We solicit feedback on the benefit for applicable manufacturers and applicable GPOs to report data to CMS early or ongoing throughout the year.
  • We recognize that some entities may experience mergers, acquisitions, corporate organizations and reorganizations, and other structural corporate changes. We seek feedback on how we might change our reporting requirements to ensure that industry can properly, and easily, represent these changes while still monitoring for compliance with reporting requirements.
  • We have received feedback from industry that there is confusion surrounding requirements for reporting ownership and investment interests. Keeping in mind that these reporting requirements are statutorily mandated, we solicit feedback on operationally feasible definitions regarding ownership or investment interests. Specifically, we would like feedback on the terms "value or interest" and "dollar amount invested." We also solicit comments on additional terms that may require further clarification to facilitate compliance with reporting requirements.
  • We solicit ideas on how to define physician-owned distributors (PODs) for data reporting purposes, as well as what data elements PODs should be required to report. We also seek feedback on what portion of the reported data we should share on our website.
  • From a data collection perspective, we welcome suggestions on ways to streamline or make the process more efficient, while facilitating our role in oversight, compliance, and enforcement.
  • With respect to all solicitations, we are requesting an estimate of the time and cost burden associated with reporting for purposes of compliance with the Paperwork Reduction Act.

Other Highlights of the Proposed Rule

Impressively, the American College of Cardiology issued a succinct summary of the proposed rule almost immediately after its release. The summary can be found here. Some of the key points raised by CMS in this proposed rule:

  • Under the proposal, physicians will see a 0.1 percent conversion factor payment decrease on Jan. 1, 2017. CMS estimates that the physician rule will increase payments to cardiologists 1 percent from 2016 to 2017. This estimate is based on typical practice and can vary widely depending on the mix of services provided in a practice.
  • CMS proposes to implement the new appropriate use criteria (AUC) requirement for advanced imaging services (i.e., SPECT MPI, CT, and MR).
  • Updates to the Medicare Shared Savings Program, including alignment of measures to those proposed in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) proposed rule, and the proposal to allow eligible professionals to report Physician Quality Reporting System (PQRS) data separately when the Accountable Care Organization fails to report on behalf of the clinician.
  • Proposed policies for calculating 2017 and 2018 Value-Based Modifier cost and quality tiering when data issues or other unanticipated program issues arise, which may affect the data used for scoring.
  • Given the implementation of the MACRA Quality Payment Program in 2019, CMS does not propose major policy updates related to the PQRS, EHR Incentive Program and Value-Based Modifier, as these programs will be replaced by the Merit-Based Incentive Payment System and Advanced Alternative Payment Model programs.
  • CMS proposes to review claims, survey practitioners and observe care to accurately value 10- and 90-day global services. Any practitioner who furnishes a 10- or 90-day global procedure would report new pre- and post-operative services codes for this data collection.
  • To recognize the additional resource costs of practitioners who spend an extraordinary amount of time outside the in-person office visit caring for patients, CMS proposes to pay for non-face-to-face prolonged services using existing Current Procedural Terminology codes 99358 and 99359.

We will offer a more in-depth look at this year's proposed Fee Schedule in the coming weeks. You can find last year's review here.

July 01, 2016

Open Payments 2015 Data Released


The Centers for Medicare & Medicaid Services (CMS) published the 2015 Open Payments data, along with newly submitted and updated payment records for the 2013 and 2014 reporting periods yesterday, June 30, 2016.

As a broad overview, for Open Payments program year 2015, health care industry manufacturers reported $7.52 billion in payments and ownership and investment interests to physicians and teaching hospitals. This amount encompasses 11.9 million records attributable to 618,931 physicians and 1,116 teaching hospitals.

The Open Payments 2015 program year is the second full year of data available and allows the public the opportunity to explore trends in the health care industry manufacturers' payments to physicians and teaching hospitals for items and services such as food and beverage, travel, education, honoraria, and research.

In the 2015 program year, there was a notable shift toward charitable contributions and fewer payments to physicians in the form of honoraria and gifts. In terms of dollar value, companies increased charitable contributions on behalf of physicians by over 120%. Payments for food and beverage, travel and lodging, and consulting fees were either flat or slightly declined. Payments for honoraria declined by about fifty percent and by more than thirty percent for gifts.

Open Payments Changes 2014-2015

Graph from CMS blog post 6-30-2016

Annual Comparisons

To compare year to year progress of Open Payments Records and Reporting, see the below table, which highlights the number of records and covered entities for 2013, 2014, and 2015. For 2015 the number of companies reporting payments actually dropped by 7.8%, the number of physicians remained the same, the number of teaching hospitals dropped slightly probably due to consolidation in that industry. Total number of payments grew by less than .3% so no real differences.


The total payments made to physicians actually fell in two of the major categories, when comparing 2014 data to 2015 data, as outlined in the chart below.

When examining the same data for teaching hospitals, interestingly, the payments for research dropped a significant amount while general payments rose slightly. The drop in research could be caused by more payments selected for delay of reporting.

When combing through the data, it is easy to see companies that seem to have constant interactions with physicians. The below chart lays out the top ten global pharmaceutical companies, and looked at total spending for research and general databases. It is interesting to note that although there was little change year over year in the total amount spent, there were significant differences in spending on a company by company level.


A spokesman for Novartis, the manufacturer with the largest amount of reported payments $539 million with $513 million or 95% of their funding is in research in 2015, stated,  these payments show our "ongoing strong commitment to R&D leading to one of the most robust pipelines in the industry." In addition "we consult doctors to get their insights and advice on diseases and products to help ensure we're developing medicines that meet the needs of patients. We facilitate programs where physicians who are experts in their fields meet with their peers to help educate them about the appropriate use of FDA-approved medicines; this helps physicians to make informed prescribing decisions with their patients." Novartis should be applauded for the 45% increase in research spending as opposed to being maligned by the media for having the largest total spend.  

Changes in spending for GlaxoSmithKline and Novartis are likely a result of an asset swap the companies did in 2015.

Roche/Genentech is also highly ranked on the list but the vast majority of their $325,804,125 in general payments, ($306,412,967) goes towards a royalty settlement to City of Hope National Medical Center in California.

This recent release still concerns the American Medical Association (AMA), which noted that "continued data errors and registration challenges during the previous two years have thwarted many physicians from participating in the review and validation process" and that the "integrity goals of the Open Payments database will not be met as long as physician review is obstructed by a registration procedure that is confusing, time consuming and overly burdensome."

Shantanu Agrawal,MD the director of the CMS office of program integrity, wrote in a blog post, "the Open Payments Program does not identify whether financial relationships are beneficial or may indicate conflicts of interest."

Overall the media has shown very little interest in this years publication of the Open Payments Data.  It will be interesting to see if this trend continues in future years.

The August issue of our sister publication, Life Science Compliance Update, will have a full analysis of the Open Payments data. Please register here for a sample issue to learn more.


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