chevron-down Created with Sketch Beta.
June 19, 2014 Articles

Opening Pandora's Box: The Open Payments Reporting Requirements

Techniques to help ensure that the submission of Phase 2 transactions is as timely, complete, and accurate as possible.

By Christian Dingler and Jack Tanselle

While the platitudes change, it is clear that the Open Payments initiative is an inflection point for the pharmaceutical and medical-device industries. All applicable manufacturers have submitted summary aggregate-spend information for the 2013 reporting period, and are now focused on compiling, validating, and reporting transaction-level spend information for Phase 2 submission. As announced by the Centers for Medicare and Medicaid Services (CMS), applicable manufacturers must submit Phase 2 data between June 1 and June 30, 2014, leaving companies just 30 days to finalize seemingly countless transfers of value.

There are potential legal and monetary risks to noncompliance with Open Payments reporting requirements, as internal and external counsel have likely informed their applicable manufacturer clients. As stated within the final rule of the Sunshine Act, failure to submit required Open Payments information can result in civil monetary penalties of up to $150,000 per annual submission. The “knowing failure” to submit required information may expose an applicable manufacturer to $1 million in civil monetary penalties per annual reporting period. Data validation prior to submission is critical, as compliance with Open Payments does not exempt applicable manufacturers from potential liability associated with the federal anti-kickback statute or the False Claims Act. The eventual publication of transactional information is expected to garner much publicity, and an applicable manufacturer’s ability to justify payments is highly important.

While data-validation efforts have likely gone on for some time, the release of an enforceable deadline will predictably invigorate quality-assurance efforts. Many applicable manufacturers plan to submit millions of transaction records, and ensuring the timeliness, completeness, and accuracy of the dataset, to meet CMS standards, may prove challenging.

The following are data-validation techniques that can be applied, with appropriate legal guidance, by an applicable manufacturer to its transaction-level dataset prior to Phase 2 submission. With a goal of increasing overall confidence, these checks will help confirm the submission of timely, complete, and accurate datasets.

Target Testing to Company Policies and Procedures
One consequence of a publicly accessible, queriable payments database is its accessibility to regulators and auditors who review payments against government regulations, industry guidelines, and company-specific policies and procedures. Review company policies on interactions with health-care professionals and look for areas impacted by aggregate spend transparency, including the enforcement of meal limits, fair-market-value maximums, and call plan restrictions by brand.

Do not modify reportable information if conflicts with policy are found, as this can result in dramatic civil monetary penalties. Instead, gather documentation to justify these transactions in a way that aligns with policy language. If no documented approval is available, document the steps taken to rectify and correct future behavior. This display of awareness and follow-up will show that due diligence has been performed and that there is an effective compliance program in place. Ensure fair market value is not exceeded, meal limits are upheld, and meals remain occasional.

Perform Targeted Testing of Each Source System and High-Grossing Covered Recipients
It is important to be deliberate and purposeful in reviewing transactions prior to Phase 2 submission, as no applicable manufacturer can review every reportable payment. Prior to submission, test a small sample of transactions originating from each source system to ensure accuracy and proper aggregation across disparate sources.

Consider prioritizing those transactions that will be heavily scrutinized once publicly available. Upon the release of Medicare billing information in early April 2014, various news outlets including the New York Times and Washington Post highlighted the physicians receiving the highest reimbursements nationwide. This is the expectation for the Open Payments release as well, and it reinforces the need for additional attention on high-grossing covered recipients. For both the non-research and research template, review the transactions associated with the top-grossing physicians and teaching hospitals for payment accuracy (i.e., top 10, top 20, however many the company deems worthwhile when comparing potential spend against potential risk of exposure). Ensure each payment has valid documentation and meets company-specific policy and procedure requirements (i.e., existing documentation should clearly tell the story regarding the spend associated with any recipient; without such clarity, others will come up with their own stories about the relationships between applicable manufacturers and recipients).

Ensure Consistent Reporting Data for All Covered Recipients Across All Reporting Templates
It is critical that applicable manufacturers do not contradict themselves during Phase 2 data submission. CMS may interpret each inconsistency as an instance of misreported data, which carries a sizeable monetary penalty. Prior to submission, ensure that transaction-level data across the three templates tells a unified story to CMS and the public. Confirm that covered recipient-identification data (e.g., covered recipient type, primary address, recipient city, license state, and license number) are consistent for all transactions associated with each covered recipient.

For a simple data-validation check, download a list of all U.S. zip codes and their associated city and state. Compare this against the Phase 2 submission dataset to ensure that all address information is properly reported.

As a measure of negative assurance, review those covered recipients without a national provider identifier (NPI) within the Phase 2 submission file. Ensure documentation is on hand to prove that due diligence was performed in an attempt to obtain an NPI for these covered recipients. If there is a transaction without a listed NPI, ensure that the same covered recipient is being similarly reported throughout all templates.

For those applicable manufacturers submitting a physician-ownership template, ensure that all physician owners listed within the physician-ownership template are reflected as such via the physician-ownership-indicator field within the non-research and research templates. Test the inverse to ensure that all covered recipients listed as physician owners in the non-research and research templates are listed as physician owners within the physician-ownership template.

Proactively Test the Dispute-Resolution Process
From company-managed web portals to 1-800 hotlines to a wait-and-see approach, there is a high degree of variance in the way applicable manufacturers are approaching dispute resolution. Whatever the approach, be sure to appropriately document and test the process prior to Phase 2 submission. Practice conversations with physicians through role-play exercises and reconcile a mock dispute of a random sample of transactions to gain comfort and familiarity with the documented process. In addition to random sampling, consider targeted testing of each source system, each business unit, or each nature-of-payment category to fully develop the dispute-resolution process in anticipation of the public posting of data.

Confirm That the “Over $10/Aggregate $100” Threshold Is Being Properly Applied
One of many challenges presented by Phase 2 Open Payments reporting is in applying the de minimis threshold. Prior to Phase 2 submission, it is important to ensure that the intricacies of the threshold rule are properly applied. Generally, transactions under $10 do not need to be reported, as long as the covered recipient has received less than $100 in aggregate payments from the applicable manufacturer. Based on CMS FAQs and responses during webinars, the threshold is to be applied across the non-research and research reporting templates. For example, a $6 meal must be reported in the non-research template as long as the same covered recipient has a $150 payment reported in the research template. For companies planning to submit a consolidated report for Phase 2, keep in mind that the threshold is to be calculated separately for each applicable manufacturer included within the consolidated report, and should not be based on the aggregate payments across applicable manufacturers.

Prior to submitting Phase 2 data, re-create the threshold check. To do this, combine data from the non-research and research templates and group by covered recipient. Companies submitting consolidated reports should separate transactions by applicable manufacturer. Ensure that all transactions under $10 are associated with a covered recipient who has received aggregate payments in excess of $100; otherwise, any such transactions (i.e., under $10) are not required.

Compare Teaching Hospitals Listed in the Phase 2 Submission Data with the List Provided by CMS
CMS is committed to providing a complete list of teaching hospitals that qualify as covered recipients for each Open Payments reporting period. Prior to submitting Phase 2 data, ensure that all included institutions are present on the 2013 CMS Teaching Hospital List.

Carefully review any teaching hospital that is present on the 2013 CMS Teaching Hospital List that does not appear within the Phase 2 submission dataset, as this could be a potential gap in reporting. Conversely, any teaching hospital within the Phase 2 submission that does not match the 2013 CMS Teaching Hospital List can, after review, be excluded from submission.

Use Resources Provided on the Open Payments CMS Website 
In aggregate-spend reporting, as in most things, the devil is in the details. Use resources provided by CMS and accessible through the CMS Open Payments website. CMS clearly defines the data type, format, field size, and requirement status of each reportable field in all three reporting templates within the submission mapping document.

Use this resource, along with the XML schema-definition file, to ensure that all transactions within the Phase 2 submission meet the criteria defined by CMS. Doing so will allow for the easy identification of data-formatting errors and will facilitate Phase 2 submission.

Ensure That Applicable Manufacturer Name Matches Applicable Manufacturer ID
The degree of difficulty for Phase 2 submission increases for those companies submitting a consolidated report. Each applicable manufacturer included within a consolidated report received a unique ID during mandatory separate registration within Phase 1 of Open Payments. Prior to submitting Phase 2 data, ensure that the applicable-manufacturer or applicable-GPO-making payment-name field and the applicable-manufacturer or applicable-GPO-making-payment ID field match.

Confirm That the Date-of-Payment Range is 8/1/13 Through 12/31/13
The 2013 Open Payments reporting period ranges from August 1, 2013, through December 31, 2013. Ensure that all transactions included within the Phase 2 submission have a date of payment within this range.

Ensure That Non-Required Fields Are Blank
Consider adopting a conservative stance when deciding to report content within non-required fields, especially those that will be publicly displayed. There is no penalty for leaving non-required fields blank (e.g., expenditure category, context of research, and research-information link within the research-payments template), yet any inaccurate or misinterpreted inclusion opens the door for monetary penalties, public scrutiny, and potential government inquiry. Consider the ramifications of each approach, and discuss these options with applicable manufacturer clients. Ensure that the submission data reflect this decision.

When providing legal counsel, keep the above data-validation techniques in mind when working with applicable manufacturers who are preparing for Phase 2 Open Payments submission. The techniques listed above should be combined with existing auditing, monitoring, and quality-assurance efforts as part of a robust compliance system. Be sure to document all efforts to assist in the data validation of future Open Payment submissions. Work to formalize the process into operational instructions or procedure documents that can be adopted for existing state and potentially global aggregate-spend reporting requirements. With time, data-validation techniques will become benchmarked and transparent across the industry just as transfers of value are becoming transparent to the public. Until that time, the above techniques can help ensure that the submission of Phase 2 transactions are as timely, complete, and accurate as possible.

Keywords: litigation, health law, Open Payments requirements, Centers for Medicare and Medicaid Services, CMS, healthcare

Christian Dingler is a senior consultant and Jack Tanselle is a managing director with Navigant Consulting.

Navigant Consulting is a corporate sponsor of the Section of Litigation. Neither the ABA nor ABA entities endorse non-ABA products or services. This article should not be construed as an endorsement.

Copyright © 2014, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).