Life Science Compliance Update

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.

May 12, 2016

Senate Finance Committee Majority Staff Releases Updated POD Report

Orin hatch

The Senate Finance Committee Majority Staff recently issued a report entitled, “Physician Owned Distributorships: An Update on Key Issues and Areas of Congressional Concern.” This report serves as an update to the Committee’s 2011 Physician Owned Distributorship (POD) report, which focused on concerns Senator Orrin Hatch had about the “spike in the utilization of medical procedures by physicians invested in these entities.”

The 2011 Report

The 2011 report came about based on information provided by a surgeon who was offered the opportunity to become an investor/owner in a POD and who felt that the arrangement appeared questionable. The Senate investigation concluded that “in the absence of stronger enforcement guidance, these entities would continue to grow at a rapid pace,” and resulted in two bipartisan letters being sent by Hatch and other senators, one to the Centers for Medicare and Medicaid Services (CMS) and the other to the United States Department of Health and Human Services (HHS) Inspector General, both calling for an investigation.

The HHS OIG stated that the guidance it had already issued was more than sufficient and that additional guidance was not necessary. CMS indicated in its response that it would address these issues in its final regulatory language. The final regulations issued in February 2013 did include PODs among the entities that are required to report to CMS any ownership interest and investment interests that are held by physicians.

2011 to Present

Since the time of the 2011 report, the Senate Finance Committee and its staff have continued to keep an eye on the growth and development of PODs. In forming this updated report, Committee staff reached out to “healthcare entities, including physicians (both those who participate in a POD and those who do not), insurers, medical device manufacturers, state and federal government agencies, medical ethics boards, hospitals, and patients.” In addition to those stakeholders, Committee staff spoke with representatives of several PODs and POD advocacy groups.

On November 17, 2015, the Finance Committee held a hearing on PODs, for which Chairman Hatch and Ranking Member Wyden issued the following joint statement:

While the vast majority of doctors operate with the highest ethical standards, those with a vested stake in medical device distributorships raise a number of concerning questions about the physician’s motivation in prescribing a procedure, as well as the overall cost to the health care system. When physicians have a financial incentive to recommend and perform a surgery, a potential conflict of interest and occur and jeopardize the health of patients. With this hearing, the Committee will have the opportunity to hear views on all sides of the debate, and we look forward to a constructive conversation on how to ensure major health decisions are made in the best interest of the patient and not the physician’s pocketbook.

That hearing did hear from several different viewpoints, including: Dr. Scott Lederhaus, President of the Association for Medical Ethics; Dr. John Steinmann, of the American Association of Surgical Distributors; Suzie Draper, the Vice President of Business Ethics and Compliance at Intermountain Healthcare; and Kevin Reynolds, the son of a patient who was treated by a POD physician.

Throughout the hearing and in the days that followed, it became clear that PODs are a concern for several members of the Committee, including the Chairman. Therefore, it is likely that, even following the release of this report, the Committee will conduct additional oversight efforts.

The 2016 Report

The 2016 report essentially went through the history of PODs from 2011 through today. The report discussed the Special Fraud Alert (SFA) issued by the HHS OIG, which was issued to “inform the medical community of the dangers posed by PODs,” and many health systems have implemented new policies to avoid those dangers.

The report also discussed an analysis of whether or not POD surgeons perform surgery at a higher frequency than non-POD surgeons. The Committee found that POD surgeons saw 24% more patients than non-POD surgeons, that POD surgeons performed fusion surgery on nearly twice as many patients as non-POD surgeons, and that POD surgeons performed surgery 44% more often than non-POD surgeons. Those findings concerned the Committee, and prompted several recommendations, covered in more detail below.

The Sunshine Act

The report also carved out a section on the Sunshine Act and its impact on POD arrangements. The Committee believes that “there are serious gaps in Sunshine reporting of POD arrangements,” and that those “shortcomings prevent patients and hospitals from having access to information about the financial interests of physicians.” It will be interesting to see if the Committee tries to force further transparency of PODs through the Sunshine Act, via additional inquiries and requests for CMS to release additional rules. 

Committee Recommendations

The Committee is concerned that there is a lack of transparency relating to PODs and issued three recommendations along those lines:

(1) for an update to federal law, requiring physicians to disclose any ownership they or their family members have in non-publicly traded device companies to the hospitals where they practice, and also disclosure to patients;

(2) to require hospitals and ambulatory surgical centers to not only examine Open Payments data, but also document that they have taken that data into account when making device purchasing decisions; and

(3) that CMS and HHS OIG should examine whether current compliance guidance about PODs is sufficient, or if it needs to be supplemented.

The Committee also issued a recommendation to the GAO to examine the costs and benefits of CMS requiring hospitals that choose to purchase from PODs to perform enhanced quality assurance and utilization review activities in connection with surgeries using POD-supplied products, out of a concern that hospitals that purchase from PODs perform medically unnecessary or overly complex surgeries.

The Committee is recommending law enforcement continue (and expand) their efforts to charge and prosecute doctors, PODs, and hospitals, that are violating the law.

The Committee is also making recommendations relating to PODs and their shifting payment structures. The Committee makes three recommendations revolving around that general idea:

(1) that CMS undertake increased enforcement actions to ensure compliance with Sunshine Act reporting requirements;

(2) that HHS OIG study the impact of the Special Fraud Alert (SFA) and recent litigation on PODs and update its 2013 report and SFA as needed; and

(3) that CMS provide additional Sunshine Act guidance or rulemaking to make clear that the exception from reporting requirements for employment applies only to manufacturers, and only to bona fide employment.

April 20, 2016

CMS Update Call on Open Payments

Recently, the Centers for Medicare & Medicaid Services (CMS) held a National Provider Call on Open Payments: Program Overview and Prepare to Review Reported Data. Robin Usi and Erin Skinner took turns educating participants how to identify the parts of the review, dispute, and correction process and how to take appropriate actions in the Open Payments system.

What is Reported?

As a reminder, any direct or indirect payments, or other transfers of value, that are made to covered recipients (i.e., physicians, teaching hospitals, physician owners, investors). Certain ownership or investment interests that are held by physician owners or investors, or their immediate family members are also reported.

Who is Responsible for Reporting?

Applicable manufacturers of covered products and entities under common ownership with applicable manufacturers who also provide assistance and support, as well as applicable Group Purchasing Organizations (GPOs), are required to annually report to CMS.

Who is Reported On?

There are three categories of individuals and entities that are reported on – covered recipient physicians, covered recipient teaching hospitals, and physician owners or investors. Covered recipient physicians cover individuals, such as: doctors of medicine or osteopathy legally authorized to practice medicine or surgery by the state; doctors of dental medicine or dental surgery legally authorized to practice dentistry in the state; doctors of podiatric medicine legally authorized to perform by the state; doctors of optometry legally authorized to perform as a doctor of optometry by the state; and chiropractors licensed by the state and legally authorized to perform by the state. Covered recipient teaching hospitals can change from year to year and each year, Open Payments publishes a list of these teaching hospitals on their website.

Program Year Timelines

For the 2015 program year, data collection ran from January 1, 2015 through December 31, 2015. Payment data was submitted by applicable manufacturers and GPOs from February 1, 2016 through March 31, 2016. Therefore, the review and dispute period for physicians and teaching hospitals is April 1 through May 15, 2016, and the period for applicable manufacturers and GPOs to review and correct the data runs fifteen days after that close, to June 1, 2016. The data is scheduled to be displayed on the website on June 30, 2016.

Registration Process

In order to be able to review and dispute any data reported in the Open Payments system prior to its publication, users must register for the Open Payments system using the two-step registration process. Physicians and teaching hospitals who registered during 2013 or 2014 do not need to register again. Additionally, a physician may nominate one authorized representative to perform system functions on their behalf and teaching hospitals can designate up to ten authorized representatives and authorized officials to act on its behalf in the Open Payments system.

Review, Dispute, and Correction Record Statuses

There are several different status' that can show for each record. A status of "initiated" means the dispute has been initiated by a physician, teaching hospital, or principal investigator. Once the reporting entity acknowledges the dispute, the status will change to "acknowledged." If the reporting entity and physician, teaching hospital, or principal investigator have resolved the dispute in accordance with the Final Rule and no changes were made to the disputed record, the status will change to "Resolved No Change." If the dispute was resolved by the reporting entity with updates made to the record, the status will change to "Resolved." If the physician, teaching hospital, or principal investigator has withdrawn the dispute, the status will reflect that.

Question and Answer Session

At the end of the call, the presenters allotted time for questioners who had previously submitted questions and for those who were on the call and had specific questions.

The first question was whether or not every physician in a particular practice need to register for the Open Payments system. The answer was yes, each physician needs to register since all payments are reported to physicians individually. Once a physician has registered, they can appoint an authorized representative, but each physician needs their own account.

It is also important to note that CMS does not send an email of alleged payments to physicians, making it important for physicians to register for Open Payments so they can see what payments are being assigned to them.

Another question was asked about whether there are any plans for an institutional reviewer role in the future to allow compliance officers to review data for teaching hospital faculty process review and dispute. While CMS cannot speak to any current plans, they took comments under advisement for future improvements to the program.

For any other help or issues, CMS recommends that you contact the CMS Open Payments Help Desk.


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