Responding to Sunshine
By Mary Bennett
On August 1, mandated Sunshine Act data collection began. We’ve all heard it many times, so those involved should be ready by now, right? Much preparing has (or should have) been done by the pharmaceutical and device industry, physicians, their employers and other involved stakeholders. But weaknesses remain that could lead to reporting mistakes, angry physicians, employer embarrassment and media frenzy. But how prepared is the industry?
Industry preparedness appears to be varied, though by now most companies know if they are “applicable manufacturers” bound by the Physician Payment Sunshine Act. As early as February 2012, two-thirds of surveyed life science companies said they were 50 percent to 100 percent ready to identify, gather, compile and report the necessary data.
Some larger manufacturers have even been doing “trial runs” of their systems by gathering and posting their data on secure websites or sending letters so that key physicians receiving payments above a threshold amount can verify the numbers. Smaller manufacturers seem less prepared; some remain in the earliest stages of identifying the physicians for whom they need to collect and report.
What’s the cost of noncompliance? Let’s not forget that a reporting error by a manufacturer may trigger penalties least affordable by small players – $1,000 to $10,000 per occurrence and up to $150,000 annually. For intentional failure to report, fines can be as high as $100,000 per instance, with an annual cap of $1 million.
So how do organizations create processes to ensure compliance? Do they buy them or build them? That’s the question being discussed by most manufacturers today. Data tracking systems for Sunshine can be a massive undertaking for most IT departments, leading many companies to make the decision to outsource solutions. What was once a cottage industry of high tech data capture technology has mushroomed to focus on the tech needs growing out of Sunshine. Very small companies and some others plan to track the data manually, but that’s inefficient and mistake prone.
The long awaited final rules have helped to both clarify some issues and leave other questions unanswered. The regulations are detailed regarding what is included and excluded in the “transfer of value” that must be reported. The Centers for Medicare & Medicaid Services (CMS) have created an internet FAQ page to address related questions. By now, large and some small industry players have identified the universe of physicians with which they contract for services and have identified how those payments must be reported.
It is not too soon for manufacturers to develop their assumptions document. Sunshine permits companies to submit a non-public document outlining the assumptions they used to categorize their physician payments. This will likely be a living document as the process evolves, but it will help internal users approach data input in a uniform way. Good database systems will have this embedded as a foundation element.
While system and data set development have already consumed a lot of manufacturer time, resources and funds, training has been identified as the biggest Sunshine challenge for industry. All tracking systems rely on accurate and thorough data entry by a host of users – e.g. finance, sales, marketing, medical affairs – who must input all required “transfers of value” to a “covered recipient” (physicians, chiropractors, dentists, and others). Without proper training, manufacturers face the inevitable risk of “garbage in, garbage out.” And, as noted earlier, those errors can get expensive.
So far, training has covered a spectrum. Some companies have trained heavily on data identification and system entry. The trainees are the people who generate the “transfer of value.” Think marketing staff who engage a physician speaker and host a dinner for program attendees; medical affairs personnel who contract with advisory group participants and pay travel costs; sales reps who provide an in-office “Lunch and Learn” for a physician and staff. At the other end of the spectrum, some companies have not yet begun to train.
Smart manufacturers are planning for the second wave of Sunshine – physicians and hospitals caught off guard by the data. Manufacturers who want to get ahead of the game will train employees who are responsible for dealing with the expected barrage of inquiries and complaints from media, physicians, employers and others. When questions and issues are handled badly, it can damage relationships, company reputation and the ability to partner with thought leaders. That ultimately can have a negative impact on patients.
Currently, industry attention is largely focused on the front end of the process. Hopefully, manufacturers will shift their attention, no later than August 1st, to prepare for the impact.
Teaching hospitals may be the best prepared for Sunshine because they already know that their top physicians are in high demand and frequently consult for the pharmaceutical/device industry. While large hospital systems have long-standing annual disclosures, there are indications that the disclosure submissions do not receive close scrutiny, or in some instances, are ignored.
Compliance is usually through the honor system, but if a physician lies or makes an over-the-limit disclosure, it rarely gets caught – or worse, it is tolerated. Recall the chairman of the Psychiatry Department at Emory University who lost his position in 2009 for such a lie only after it was investigated by Senator Grassley. During the prior years, evidence suggests that his behavior was known and tolerated because of the prestige he brought to the university.
We have been told that “seek forgiveness instead of permission” is the way some health care professionals approach outside work in the state systems, despite policies that may limit the amount of their earnings from industry. Imagine the taxpayer reaction to state government-employed physicians making big money through side work for industry. The public will demand explanations. For example, how can physicians earn so much using only vacation time? If consulting fees equal four times their hospital salary, whom is the employer?
The advent of Sunshine is a wake-up call for hospital systems. With the publication of physician payments, hospital systems have an incentive to start reviewing physician disclosures and reconciling them with their policies and the CMS database. Hospitals are reviewing their policies and, if they have no limits or disclosure requirements, they are moving toward requiring both. Their reputations are on the line.
Half of the more than 1,000 physicians surveyed in January 2013 said “they didn’t know that the law requires pharmaceutical and medical device companies to track any payments or ‘transfers of value’ to physicians and teaching hospitals as of August 1, 2013.” This is simply another indicator that physicians are arguably the least prepared for Sunshine out of all stakeholder groups.
Once the first set of data is made public by CMS on Sept. 30, 2014, there certainly will be shock waves. In fact, the first ripples will occur when the 60-day physician review/resolution period begins on March 1, 2014. Evidently, at least half of the physicians will be surprised and maybe angered. At least some of them will dispute the data. It may be a payment attributed to the wrong “Dr. John Smith” because of a faulty NPI. It may be what looks like a minor quibble (e.g. “I came to the $50 meal but only for dessert, so I should be assigned less than $50.”) It could be something more fundamental, like ignorance of the rules (e.g. “Why can’t you write the check for my consulting work to my practice instead of me?”) The industry needs to be ready with proper responses.
After the first ripples, many physicians will scramble to register with CMS so that they can receive updates and notifications about the information that is reported. The physicians will get educated on Sunshine and start reconciling past income with what is projected to appear on the public website. The most prepared physicians will want to create a talk track or handout explaining their payment data to patients who ask. Physicians will then likely want to open dialogue with their industry partners to determine the impact of future payments on reporting and conduct some serious re-assessment of those relationships. Next up will be discussions with their office managers to set up a tracking system for reportable transfers of value.
Looking into a crystal ball, here are our top predictions for the Sunshine Act one year from now:
Look for community, government and teaching hospitals to implement more rigorous policies dealing with physician conflicts of interest, outside consulting and disclosure. And within a year, those entities will be diligently reviewing the disclosures and comparing them to the posted CMS data. They will step up enforcement of their policies.
There will be an initial retraction to physician participation in industry engagements. In a March 2013 survey of over 1,000 physicians, “43 percent said inaccurate reporting would adversely affect their interactions with industry and 21 percent said they would sever their relationship with a company that reported incorrect information.” We will see physicians opt out in small and big ways – e.g. “Don’t bring food to my office”; “I will not consult or be a speaker because I don’t want to deal with questions from patients and other stakeholders.” It will be more difficult for industry to engage key opinion leaders and, sadly, to obtain important medical opinion on drugs and devices.
The temptation will be stronger for industry to conduct “cost/benefit” analyses when engaging physician partners due to easy access to the cost data. The industry must be vigilant to conduct any analysis in aggregate and to avoid including non-promotional dollars spent. While it is important for manufacturers to understand how they spend their money, misuse of the data is inevitable. Watch for some of these situations to hit the news.
A few stubborn states will continue to require separate and distinct reporting at the state level, further adding to the reporting burden.
Federal and state government agencies will regularly consult the data to uncover investigation opportunities. The IRS may start auditing physician tax filings once they see the posted data. The DOJ will be looking for potential violations of the Anti-Kickback Statute (AKS), where payments may be seen as inducements to prescribe products. And if a claim is submitted to a federal healthcare program for payment of items prescribed in violation of AKS, the False Claims Act could be implicated. We will see cases brought that link Sunshine to both of these laws.
Insurance companies will use the CMS database to counter physician complaints that they are not making enough money from patient insurance reimbursement.
There will be a flurry of headline activity, TV news shows, embarrassment, anger and frustration when the data is first disclosed, but it will die down as CMS and industry work the kinks out of the
process and physicians become Sunshine-savvy. The Sunshine Act will take its place among the myriad healthcare laws. The new transparency will build trust between industry, the providers and the public. It will become another risk area routinely overseen by drug and device manufacturers’ compliance programs.
Mary Bennett is a registered pharmacist and a VP in the ethical leadership group at NAVEX Global, a compliance consulting company.
Posted: August 2013