Survey Says: 2015 U.S. Trends in Aggregate Spend, Disclosure and Transparency
By Don Soong, General Manager, Transparency, IMS Health
What are key trends in the transparency compliance landscape? And, how are life sciences manufacturers tackling growing requirements—including the U.S. Sunshine Law and rules defined by the European Federation of Pharmaceutical Industries and Associations (EFPIA)? To address those questions, IMS Health surveyed individuals from 47 pharmaceutical, medical device and biotech manufacturers, with all respondents being very involved (79 percent) or somewhat involved (21 percent) in ensuring their company complies with aggregate spend and transparency laws and regulations.
When the annual survey was first conducted in 2009, only a handful of U.S. states required disclosure of certain healthcare practitioner (HCP) payments. Since then, state requirements have expanded and the Sunshine Law, which requires manufacturers to report physician spend on a federal level to the Centers for Medicare and Medicaid (CMS), has been implemented. Meanwhile, EFPIA regulations—another set of complex transparency standards—have been adopted across 33 countries in Europe.
IMS Health’s latest findings illuminate details around respondents’ aggregate spend reporting solutions, how they get data into their systems, how they have adapted to specific challenges arising from Sunshine, and what they are doing to prepare for the trend toward global transparency.
Growing reliance on automated solutions
For survey respondents, compliance and disclosure requirements continue to be an integral part of doing business. This year’s results are consistent with the trend we have seen over the years—with 79 percent of companies using an automated solution for compliance reporting per Sunshine and other requirements. That number has steadily increased over the past six years, with just over half of companies using an automated solution in 2010.
By contrast, the number of companies using a manual spreadsheet solution is down to just 15 percent (versus 24 percent in 2014). All but one of those respondents are from smaller companies with annual revenues of less than $5 billion. The findings suggest that while start-up or specialty manufacturers with a single product or a limited target HCP audience may be able to manage payments on a spreadsheet, most companies need an automated solution for consolidating and cleansing data and preparing reports in the necessary formats. That’s particularly true for CMS submissions—which have a subjected validation process that covers more than 250 warning and error situations.
Pre-integrated data, please
Seventy percent of respondents prefer their aggregate spend and disclosure solution to include a pre-integrated customer data solution—a number that has stayed consistent in recent years. This high percentage is not surprising given the role of complete and accurate data in achieving compliance. Having a robust customer list empowers companies to address disclosure needs at both the federal and state levels.
Unifying management of transparency and sample reporting
Just over half of respondents are using a single system for both aggregate spend/transparency reporting and sample reporting. That number has continued to increase over the past couple of years (34 percent in 2013 and 49 percent in 2014), likely due to required reporting per Section 6004 of the Affordable Care Act and per Vermont state reporting. Overall, there appears to be expanding ownership for both payment and samples disclosure under singular compliance teams.
Driving business insights
A high percentage of respondents (70 percent) continue to use aggregate spend data to gain additional business insights into their HCP programs. Starting in 2013, CMS has made other manufacturers’ data available. With the ability to compare and contrast spending with peer companies of similar size and with similar product portfolios, companies can perform simple industry benchmarking. Taking a more analytical view of the data, companies can support applications for marketing and financial reporting—and ultimately make more informed decisions around HCP programs. In addition, a more analytical approach arms compliance teams with proactive views of the payment data, helping to ensure proper context and understanding, both internally and externally, around HCP relationships.
Managing data: An ongoing challenge
Capturing accurate HCP and healthcare organization (HCO) spend data is crucial to complying with aggregate spend and transparency disclosure reporting requirements. Given the need to manage diverse data sources, systems and formats, it is also a very complicated process. Most companies prefer to obtain spend data using spreadsheets (38 percent) or a combination of methods (45 percent). The continued reliance on spreadsheets is likely due to the costs associated with implementing automated data feeds—which require a data capture system and integration of that system to the aggregate spend solution. Establishing data feeds for numerous third-party vendors is often cost prohibitive, making it crucial for a reporting solution to support multiple methods of data entry.
Mastering the customer list
Just 55 percent of respondents require their third-party vendors to use their company’s customer master list, including their unique IDs. Using an enterprise customer master (cMDM) is a major asset to ensure accurate spend reporting for each HCP. Companies with multiple business units using different customer databases and third-party vendors often face complex challenges when trying to integrate and consolidate customer and payment data. It is likely that companies that do not require their vendors to use their company customer master IDs are taking a manual approach to matching or are relying on the matching capability within their cMDM to align spend records against their customer master.
Sunshine: More companies offering pre-submission review
This year, more companies (47 percent) report that they initiated a pre-submission review—giving covered recipients access to relevant spend information via a private, secure portal and prior to report submission. The goal: to keep the channels of communication open and to increase satisfaction among physicians.
While CMS provides a secure website for this purpose, physicians must manage any disputes directly with the manufacturer. In addition, there is only a 45-day review period to resolve any disputed transaction. After that, CMS moves forward with publishing the transaction, marking it as a disputed transaction. CMScorrects such transactions the following year (if applicable), potentially leading to some dissatisfied physicians.
Companies that initiated a pre-submission review were split on which group of physicians were to be included. While half disclosed to all HCPs, 27 percent disclosed based on a certain spend threshold. Among companies disclosing only to certain physicians, the threshold varied.
Most take advantage of preemption; few opt to submit assumptions document
Sunshine preempts any state laws requiring reporting of the same information concerning payments or other transfers of value made by applicable manufacturers to covered recipients. Thus, manufacturers only need to report to states in cases where state laws are more stringent or require different types of information. This year, more than half of respondents (54 percent) say they are taking advantage of preemption—only reporting to the states the information not covered under Sunshine.
Meanwhile, each company maintains a Sunshine-related assumptions document that explains reasonable assumptions made and methodologies used when reporting physician payments to CMS. Although manufacturers have the option to file their assumptions document along with their report to CMS, only 28 percent plan to do so. Nearly half (48 percent) do not plan to submit an assumption document, while 24 percent are unsure.
More choose not to label payments as ‘delayed’
By flagging payments as delayed, manufacturers can shield the visibility of payments on products still in development. Flagged payments are not disclosed to the public until the relevant product is approved or after four years. While flagging payments could protect some pipeline information, companies seem to be split on whether the extra work is worth the effort—with those choosing not to delay rising to 44 percent in 2015 from 26 percent in 2014.
Identifying HCPs not in the CMS Validated Physician List
For the 2013 data submission, manufacturers were required to provide each physician’s name, business address, NPI and state license number. For those reports, most companies used a combination of sources to identify the physician. For CMS, it became clear that unique identification of physicians was not an easy or error-free process using its available matching capabilities. Consequently, in November 2014 the agency introduced the concept of a Validated Physician List—an “answer key” containing a CMS-approved combination of NPI and state license numbers from such sources as NPPES and PECOS.
With the CMS Validated Physician List, manufacturers can be assured that all physicians on the list will be readily accepted by CMS as identified. However, the Validated Physician List is “living,” and manufacturers are bound to submit new physicians. To manage this process in a systematic way, some manufacturers have split their submissions into two sets of files—the first containing payments to physicians on the list, the second containing payments to those not yet on the list. Because the number of payments for newly added physicians is much lower, this approach allows for easier management of any rejections and resubmissions required in the remediation process.
Time to go global?
With transparency regulations increasing around the globe, this year’s survey gauged interest in a global approach to aggregate spend and transparency reporting. About one-fourth consider it a necessity to implement a global solution. Aggregate spend and transparency solutions that can be used across borders enable a manufacturer not only to implement consistent compliance standards across the company, but also to make business decisions and optimize spend by comparing HCP marketing data.
The survey revealed a mix of global and regional approaches—with the majority of companies (51 percent) having a solution that is centralized regionally (that is, with data integration, business rules and reporting defined and controlled by regional governance). Each company’s decision for global versus regional likely comes down to differences in reporting requirements and the need to consider data privacy laws. However, the 23 percent of respondents who say their solution is centralized globally (that is, with data integration, business rules and reporting defined and controlled by corporate governance) will be able to better compare program data across regions—making it beneficial for companies to work toward a similar global approach.
EFPIA: Challenges ahead
As part of EFPIA disclosure—and due to European privacy laws—companies need to have physician consent to publicly disclose physician information related to any payment. Physicians can consent at many levels (per transaction, for a specific date range, for all payments related to a particular product and so on), and they can revoke consent at any time. Any payments that are made and do not get physician consent to report can be reported only in aggregate by payment category. Although we wanted to explore how the industry is going to handle this potentially arduous task, most of the U.S. survey respondents (66 percent) do not have responsibility for EFPIA compliance. Those who do have responsibility for EFPIA indicate a variety of ways to handle consent.
Final thoughts
For pharmaceutical, medical device and biotech manufacturers, 2015 brought the second year of Sunshine reporting, and 2016 will bring the first year of reporting for EFPIA. Companies are actively implementing and fine-tuning their transparency and disclosure systems and processes. In doing so, they must address a range of needs, including the CMS Validated Physician List and the extensive number of submission error codes.
Looking ahead, we expect to see a trend toward cloud-based payment ecosystems that integrate high-quality healthcare and practitioner reference data with payment capture systems—and that make information accessible via online portals and customer support centers. Additionally, we expect companies to use analytics to further evaluate their HCP/HCO programs. Analytics can help in identifying ways that payment information could be misconstrued in the public realm. More importantly, they can help companies transform their compliance activities into an opportunity to enhance their HCP/HCO programs for greater efficiency and effectiveness.
