Life Science Compliance Update

November 21, 2016

Open Payments Discussed at MedPAC November Meeting


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.


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:


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:



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.  

November 14, 2016

OIG Releases FY 2017 Work Plan


The United States Health and Human Services (HHS) Office of Inspector General (OIG) recently released its 2017 Work Plan, which summarizes new and ongoing reviews and activities that OIG plans to pursue with respect to HHS programs and operations during the current fiscal year (and beyond). The Work Plan is updated throughout the year, and this edition describes OIG audits and evaluations that are either currently underway or planned, as well as certain legal and investigative initiatives that are continuing. The Work Plan also notes items that have been completed, postponed, or canceled, and includes new items that have been started or planned since April 2016.

Some of the projects that are described in the Work Plan are statutorily required, such as the audit of the Department’s financial statements (mandated by the Government Management Reform Act).

Additionally, OIG does not provide additional details on jobs to be undertaken or information on the status of jobs contained in its Work Plan. For example, while estimated issue dates are included in the Work Plan, OIG will not provide revised estimates, nor will it provide current status updates.

Open Payments

The Work Plan notes that the Physician Payments Sunshine Act (PPSA) requires that manufacturers disclose payments made to physicians and teaching hospitals to CMS. Manufacturers and group purchasing organizations (GPOs) must also report ownership and investment interests held by physicians. OIG plans to analyze 2015 data extracted from the Open Payments website to determine the number and nature of financial interests.

OIG will also determine how much Medicare paid for drugs and durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) ordered by physicians who had financial relationships with manufacturers and GPOs. OIG plans to determine the volume and total dollar amount associated with drugs and DMEPOS ordered by these physicians in Medicare Parts B and D for 2015. The expected issue date of a “Data Brief on Financial Interests Reported Under the Open Payments Program” is FY 2017.

Skilled Nursing Facility Reimbursements

Another area of focus will be skilled nursing facility (SNF) reimbursements, with a special focus on therapy documentation. According to the report, “Previous OIG work found that SNFs are billing for higher levels of therapy than were provided or were reasonable or necessary. We will review the documentation at selected SNFs to determine if it meets the requirements for each particular resource utilization group.”

OIG also noted it plans to conduct reviews into how state agencies conduct nursing home complaint investigations, whether incidents of abuse and neglect at SNFs were properly reported, and the outcomes of the National Background Check program for long-term care employees.

Protecting Access to Medicare Act of 2014 (PAMA)

In the report, OIG states that it will conduct a review of Medicare payments for certain clinical diagnostic laboratory tests, as mandated under Section 216 of PAMA. OIG will perform the required annual analysis of the top twenty-five laboratory tests by Medicare payments and analyze the implementation and effect of the new payment system. OIG will also analyze Medicare payments for clinical diagnostic laboratory tests performed in 2016 and monitor CMS’ implementation of the new Medicare payment system for these tests.

This work continues to build upon previous analyses performed by CMS of Medicare Part B laboratory test payments in 2014 and 2015 and our review of CMS’ progress toward implementing the new Medicare payment system.


These three topics are just a small sample of what is covered under the OIG 2017 Work Plan. We encourage pharmaceutical and medical device companies, clinical laboratories and other healthcare entities to review the Work Plan in full to determine areas of government focus. The Work Plan can serve as a useful resource for companies planning and prioritizing compliance activities for the upcoming year, including training, auditing, and monitoring. Other reports issued by the OIG after a review can also be a valuable resource regarding the OIG’s current analysis of industry activities.

November 03, 2016

CMS Issues Final Rule on CY 2017 Physician Fee Schedule


Centers for Medicare & Medicaid Services (CMS) issued a final rule updating payment policies and payment rates for services furnished under the Medicare Physician Fee Schedule (PFS), on January 1, 2017. In the rule, CMS finalized a number of new PFS policies that will improve Medicare payment for those services provided by primary care physicians for patients with multiple chronic conditions, mental and behavioral health issues, and cognitive impairment conditions.

The final rule addresses other topics related to the Medicare program, such as release of certain Medicare Advantage bid data and Part C and Part D Medical Loss Ratio (MLR) data, enrollment requirements for providers and suppliers in Medicare Advantage, and the Medicare Diabetes Prevention Program (MDPP) expanded model.

CY 2017 Identification and Review of Potentially Misvalued Services

CMS considered many public comments, and finalized misvalued code changes that achieve 0.32 percent in net expenditure reductions. As these changes do not fully meet the misvalued code target of 0.5 percent, there is a required adjustment to the 2017 overall physician update. The 2017 PFS conversion factor is $35.89, an increase to the 2016 PFS conversion factor of $35.80.

Table 52 on p. 1329 depicts the estimated payment impact by specialty, including +1 percent for allergy and immunology; 0 percent for cardiology and neurology; 0 percent for pediatrics; +3 percent for family practice; -5 percent for independent labs; and -1 percent for interventional radiology.

Primary Care, Care Management, and Cognitive Services

CMS also finalized a variety of coding and payment changes for primary care, care management, and cognitive services. Some of the key policies in the final rule include: make separate payments for codes describing non-face-to-face prolonged evaluation and management services; revalue existing CPT codes describing face-to-face prolonged services; make separate payments using new codes to pay primary care practices that use interprofessional care management resources to treat patients with behavioral health conditions; and make separate payments for codes describing chronic care management for patients with greater complexity.


Medicare Shared Savings Program

CMS codified several proposed policies in the final rule. These include:

  • Updating ACO quality reporting requirements, including changes to the quality measure set and the procedures for quality validation audits, revisions to terminology used in quality assessment, revisions that would permit eligible professionals in ACOs to report quality separately from the ACO, and updates to align with the Physician Quality Reporting System and the final Quality Payment Program;
  • Modifying the assignment algorithm to align beneficiaries to an ACO when a beneficiary has designated an ACO professional as responsible for their overall care; and
  • Establishing of beneficiary protection policies related to use of the Skilled Nursing Facility 3-day waiver.

Data Collection on Resources Used in Furnishing Global Services

The rule finalizes a claims-based data collection strategy that diverges from the proposed rule. The agency says the final policy “significantly reduces the burden on practitioners compared to the proposed rule.” It: (1) requires reporting of post-operative visits only for high-volume/high-cost procedures; (2) uses existing CPT code 99024 instead of the proposed G-codes; (3) requires reporting only from a sample of practitioners consisting of those in larger practices (10 or more practitioners) in specified states (FL, KY, LA, NV, NJ, ND, OH, OR, RI); and allows all others (e.g., in smaller practices or other geographic areas) to report voluntarily while being encouraged to report. Further details on information to be reported can be found beginning on page 160 of the final rule.


As noted beginning on p. 90, CMS finalized a number of additional codes to its list of services that may be furnished through telehealth, including: End-stage renal disease (ESRD) related services for dialysis; advance care planning services; and critical care consultations furnished via telehealth using new Medicare G-codes.

CMS notes that, although it “expect[s] these changes to increase access to care in rural areas, based on recent utilization of similar services already on the telehealth list, [CMS] estimate[s] no significant impact on PFS expenditures from the additions relative to overall PFS expenditures.”

Appropriate Use Criteria (AUC) for Diagnostic Imaging

Building on its steps to begin implementing this PAMA directive last year, the final rule finalizes the first eight priority clinical areas: (1) coronary artery disease (suspected or diagnosed); (2) suspected pulmonary embolism (newly changed to be a distinct area from coronary artery disease); (3) headache (traumatic and non-traumatic); (4) hip pain; (5) low back pain; (6) shoulder pain (to include suspected rotator cuff injury); (7) cancer of the lung (primary or metastatic, suspected or diagnosed); and (8) cervical or neck pain. 

Altered mental status, abdominal pain, and suspected stroke were removed from the proposed list. In future rulemaking, CMS plans to address outlier calculations that may inform whether clinicians will be subject to prior authorization. The final rule also addresses the clinical decision support mechanism (CDSM) requirements, noting that CDSMs are “electronic tools through which a clinician consults AUC to determine the level of clinical appropriateness for an advanced diagnostic imaging service for that particular patient’s clinical scenario.” It describes the CDSM application process, and exceptions for ordering processionals. The application deadline for the first round of preliminary and full qualifying CDSMs March 1, 2017.

Medicare Advantage (MA) Provider and Supplier Enrollment

CMS has finalized a requirement for providers and suppliers who furnish services to MA beneficiaries. They must undergo screening and enrollment requirements akin to providers in other Medicare programs. Additionally, the rule prevents enrollment by those that have had their Medicare enrollment revoked or have been excluded by the Office of the Inspector General (OIG). CMS believes that the new requirements will help protect both beneficiaries and the Medicare Trust Funds. The enrollment provisions will be included in CMS contracts with the designated plans and programs, and will begin in two years, effective on the first day of the plan year. A fact sheet provides a list of the types of providers and suppliers to which the new screening requirement will apply.

Open Payments

There were no Open Payments program changes proposed, or finalized, within the final rule. CMS has asked on several occasions for public comments on the Open Payments program, which “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 Open Payments was finalized in the 2015 PFS, various stakeholders have provided CMS with feedback and, as a result, CMS has identified areas that might benefit from revision or subregulatory clarification down the road, including: expansion of the nature of payment categories; length of continued reporting obligations; length of time in which Open Payments data remains relevant to users; definition of a teaching hospital; the impact of mergers, acquisitions, and other business dealings on reporting; and clarification on the definitions of ownership and investment interest terms.

While CMS notes that they received a varied response, that the comments “broadly supported our effort to engage the program’s stakeholders before revising or creating new reporting requirements,” and that CMS will “consider the public comments received in the future through possible rulemaking or publication of subregulatory guidance.


The CY 2017 PFS final rule is the latest showing of the Administration-wide strategy to create a health care system that results in better care, smarter spending, and a healthier population.


Preview | Powered by FeedBlitz


March 2017
Sun Mon Tue Wed Thu Fri Sat
1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 31