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Open to Misinterpretation: Sunshine Act Disclosures Can Cloud Context of Reasons for Payments

Posted By: Bret S. Bissey, MBA, FACHE, CHC, CMPE and Jennifer Shimek / June 2, 2015

Pharmaceutical Compliance MonitorA new wave of Open Payments (Sunshine) Act data will be available June 30, featuring updated 2013 and a first look at 2014 data about payments made to providers by drug and device makers. Data issued for the first time in September represented a benchmark when the Centers for Medicare and Medicaid Services required disclosures from drug and medical device makers about what they pay doctors and teaching hospitals.

Disclosures provide transparency and can reveal potential conflicts of interest in healthcare. Current disclosures on the Open Payments Website (click here) lose a lot of context about why drug or device makers are paying doctors or teaching hospitals. The site gives the potential for “false positives” and “false negatives” about compliance and ethical behavior in the relationship between the industry and providers.

For the vast majority of providers, the disclosures may be fairly innocuous, such as a drug company representative buying lunch for the physician and office staff to discuss drug indications. The purpose of this transparency is to show what resources are dedicated to the marketing of drugs, what doctors and teaching hospitals are gaining from drug companies, and to confirm clinical decisions are not influenced by personal gain.

The Open Payments Website is a clearinghouse that allows users to enter a physician’s name, teaching hospital name or the company name (making the payment). The site lists the amount of payment, the date, and the nature of the payment.
The nature of the payments is where the context can get complicated. A big number, which can stir media attention or the frustration of healthcare advocates, can be misleading. Big payments to a teaching hospital could mean that most of the funds were for costly research, leaving little for the bottom line. The relationships between providers and the industry do undergo vetting within hospitals to ensure that the funding is for appropriate teaching relationships and not influencing clinical judgment.

In another circumstance, it could make a shocking headline when a doctor receives large payments from drug or device manufacturers, especially when it is tagged for travel and meals. In a pre-PHRMA code era, this kind of payment could conjure up images of luxury excursions. Often, the reality is that the lodging and meals are reimbursement for conducting a course or giving a speech at a medical conference.

Deciphering Open Payments (Sunshine) Act DataThe doctor often receives fee for the time speaking. However, here’s what gets lost in the context of the disclosure, such as opportunity costs. The doctor is not at the practice seeing patients and much of that money paid by the pharma company or device maker goes to the hotel to cover lodging. The fees and reimbursement should reflect fair market value for the time dedicated to the event. That disclosure still needs to be made or confirmed by the providers, since there is a big degree of reputational and legal risk for not following the law. Unfortunately, the bad actors generate attention, which makes the legitimate activities more scrutinized.

Are there some egregious cases of doctors cashing in from pharmaceutical companies? Yes. Are the disclosure requirements associated with the Open Payments Act fool proof? No. It is only a matter of time before some unethical actors try to game the system and some companies will look at “creative” ways to get money into the hands of doctors and push limits. The Open Payments Website could be a treasure chest for potential whistle-blowers, especially if there is evidence of failures to report payments. For some unethical providers and industry executives, the Open Payments Act could represent a Pandora’s Box of issues that could serve as a reminder of all Medicare fraud and abuse issues that arose among providers in the 1990s and continues today.

Another consequence of drug makers essentially “putting all their cards on the table” about their marketing relationships creates opportunities for drug makers to analyze and benchmark the data to see where they can fine tune their marketing efforts. Also, disclosures allow to measure the effectiveness of marketing spending with advanced data & analytic tools. (See table)

The next round of disclosures is set to begin soon. The industry and providers should have background about significant payments at the ready to clear up any misperceptions and protect their reputations or potential claims of substandard medical care. While some providers and pharmaceutical companies may be looking at this with some trepidation, they shouldn’t overlook the opportunities to make themselves smarter with this new competitive intelligence and validate the ethical components of their business.

Read the original article published by Pharmaceutical Compliance Monitor >

Bret S. Bissey, MBA, FACHE, CHC, CMPE

Prior to joining MediTract, Mr. Bissey was the SVP, chief ethics and compliance officer at UMDNJ, where he successfully led the compliance program to adherence with a rigorous five-year Corporate Integrity Agreement with the DHHS/OIG that occurred following a Deferred Prosecution Agreement. Prior to UMDNJ, Bissey served as the director of the Regulatory Compliance Practice at IMA Consulting, the chief compliance and privacy officer at Deborah Heart and Lung Center (operating under a CIA) and the VP of compliance at Cabot Marsh/QuadraMed. Mr. Bissey earned a Bachelor of Science in business administration and marketing from Shippensburg University of Pennsylvania and an MBA in marketing and healthcare administration from Wilkes University. Mr. Bissey is a frequent national speaker on healthcare compliance and is the author of The Compliance Officer’s Handbook. He is a Fellow of the American College of Healthcare Executives and a member of the Health Care Compliance Association (CHC), American College of Medical Practice Executives and the Healthcare Financial Management Association.

About the Author: Jennifer Shimek

Jennifer Shimek

Jennifer Shimek is a principal in the Short Hills office of KPMG’s U.S. Forensic Advisory Services practice, where she specializes in regulatory enforcement and compliance.